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(Alliance News) - Stock prices in London opened slightly higher on Tuesday with the FTSE 100 aided by a strong performance from Associated British Foods, while Watches of Switzerland led the midcaps after raising guidance.
The UK flagship index was up 5.06 points, or 0.1%, at 7,305.46 early Tuesday. The FTSE 250 index was up 64.25 points, or 0.3%, at 23,604.63. The AIM All-Share index was up 2.94 points, or 0.2%, at 1,242.55.
The Cboe UK 100 index was down 0.1% at 723.70. The Cboe 250 was up 0.1% at 21,077.10 and the Cboe Small Companies up 0.3% at 15,694.29.
In mainland Europe, the CAC 40 stock index in Paris was up 0.1% and the DAX 40 in Frankfurt was down 0.1%.
In the FTSE 100, Associated British Foods was the best performer, up 6.0%, after the Primark clothing chain owner declared a special dividend on the back of a good annual performance.
For the 53 weeks that ended on September 18, revenue was GBP13.88 billion, down slightly from GBP13.94 billion in financial 2020, but pretax profit rose by 6% to GBP725 million from GBP686 million.
Its Retail unit, which houses the Primark fashion chain, delivered adjusted operating profit of GBP415 million, up 15% from GBP362 million in financial 2020. It said Primark's profit margin was 10.6% in the second half.
AB Foods declared a 20.5 pence final dividend, alongside a 13.8p special dividend, bringing total dividends for the year to 40.5p.
"Deteriorating Primark momentum in late 2020-21 undermined investors' confidence in rebuilding the returns equation to pre-Covid levels. The backdrop seems to have improved early in 2021-22, making a reconfirmation of 10% margin expectations much easier to fathom despite sizeable input challenges. This should help rebuild multiples to more appropriate levels as Primark's growth ambitions are confirmed and a special dividend suggests strong confidence in prospects ahead," said Jefferies analyst James Grzinic.
Rolls-Royce was up 3.1% after the jet engine maker said it secured funding from a consortium of private investors and the UK government to develop small nuclear reactors to generate cleaner energy.
Rolls-Royce, BNF Resources UK and Exelon Generation will invest GBP195 million across a period of around three years. The funding will enable the business to secure grant funding of GBP210 million from UK Research & Innovation funding, the company said.
"Small Modular Reactors offer exciting opportunities to cut costs and build more quickly, ensuring we can bring clean electricity to people's homes and cut our already-dwindling use of volatile fossil fuels even further. In working with Rolls-Royce, we are proud to back the largest engineering collaboration the UK has ever seen - uniting some of the most respected and innovating organisations on the planet," said UK Business & Energy Secretary Kwasi Kwarteng.
BT Group was up 2.3% after Berenberg upgraded the telecommunications firm to Buy from Hold.
Conversely, DCC among the worst blue-chip performers, down 1.3%. The Irish support services firm said it delivered a strong performance in the first half with all divisions delivering growth, despite the global volatility in commodity pricing, supply chains and inflation.
For the six months to September 30, revenue rose 27% to GBP7.52 billion from GBP5.93 billion last year and adjusted operating profit increased 11% to GBP195.8 million from GBP176.1 million. DCC declared an interim dividend of 55.85p, up 7.5% from 51.95p paid last year.
Looking ahead, DCC said it expect that the year ending March 31, 2022 to be another year of "strong operating profit growth and continued development activity" and in line with current market consensus expectations.
In the FTSE 250, Watches of Switzerland was the standout performer, up 9.5%, after the luxury timepiece retailer said it expects a strong performance in the first half.
It will post interim results on December 9.
For the 26 weeks to October 31, revenue was up 45% to GBP586.2 million from GBP414.3 million last year on continued strong demand for luxury watches and jewellery.
Looking ahead, the Rolex authorised dealer said it has continued to generate strong growth and make further progress on its strategic objectives during the year, with investments yielding positive results.
As such, Watches of Switzerland raised its revenue guidance for financial 2022 to a range between GBP1.15 billion to GBP1.20 billion, up from GBP1.05 billion to GBP1.10 billion previous guided.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.3%, S&P 500 up 0.1% and Nasdaq Composite up 0.1%.
The Japanese Nikkei 225 index closed down 0.8% on Tuesday. In China, the Shanghai Composite ended up 0.2%, while the Hang Seng index in Hong Kong ended up 0.2%. The S&P/ASX 200 in Sydney finished 0.2% lower.
The US Federal Reserve on Monday warned in its financial stability report that the rally across markets could quickly reverse if there was another Covid surge or the recovery stalls, while it also raised concerns about the possible contagion from China's property crisis.
"Given the size of China's economy and financial system as well as its extensive trade linkages with the rest of the world, financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth, and affect the US," the report said.
The pound was quoted at USD1.3573 early Tuesday, up from USD1.3558 at the London equities close Monday.
The euro was priced at USD1.1592, flat from USD1.1590. Against the Japanese yen, the dollar was trading at JPY112.93, down from JPY113.18.
Brent oil was quoted at USD83.48 a barrel Tuesday morning, down from USD83.60 late Monday. Gold stood at USD1,821.22 an ounce, marginally lower against USD1,823.51.
The economic calendar on Tuesday has US producer prices at 1330 GMT. Fed Chair Jerome Powell and Bank of England Governor Andrew Bailey will speak virtually at the Conference on Diversity and Inclusion in Economics, Finance, & Central Banking.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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