8.51am: ConvaTec bucks sea of red, Endeavour Mining tumbles
In a sea of red, there are a few dots in the green and one of the leading FTSE 100 risers is ConvaTec PLC.
The Reading, England-based medical products and technologies company raised its 2023 guidance when reporting half-year results sending shares 3.9% higher.
It now expects revenue growth of 6.0-7.5% from 5.0-6.5% previously) with adjusted operating profit margin of at least 20.5% which was previously 19.7%.
In the first-half the firm reported a 42% jump in operating profit to US$123.4 million from £87.1 million while revenue edged higher to US$1.06 billion from US$1.05 billion.
Operating profit margin to 11.7% from 8.3%.
BAE remains the favoured pick in the lead index while the more optimistic noises from Taylor Wimpey have kept Persimmon PLC (LSE:PSN), Berkeley Group Holdings PLC (LSE:BKG) and Barratt Developments PLC (LSE:BDEV) in the green.
Heading the FTSE 100 fallers is Endeavour Mining, down 7.2% after its second quarter figures.
The gold miner, with assets in nations including Senegal and Burkina Faso said pre-tax profit slipped to US$155 million from US$266 million the year before, and fell to US$207 million from US$294 million in the first half of 2023.
Gold production in the second quarter declined to 268,000 ounces from 292,000 a year prior, while the realised gold price rose by 6.1% to US$1,947 per ounce from US$1,835.
Meanwhile, the FTSE 100 continues to fall, now down 83 points at 7,584.
8.15am: FTSE 100 knocked by US rating downgrade
The FTSE 100 opened sharply lower after credit ratings agency Fitch stripped the US of its triple A credit rating.
The agency said its downgrade reflected “expected fiscal deterioration over the next three years” and “a high and growing general government debt burden”.
Fitch also noted an “erosion of governance” over the past two decades “that has manifested in repeated debt limit stand-offs and last-minute resolutions”.
US Treasury Secretary Janet Yellen said in a separate statement that she “strongly” disagreed with Fitch, calling the change “arbitrary and based on outdated data.”
Analysts at Capital Economics felt “it’s a little strange to be downgrading the US at a time when the economy now appears poised to pull off the seemingly impossible trick of bringing inflation back to target without triggering a recession.”
But they think “a lot depends on what happens to interest rates.”
If the “Fed is forced to keep the nominal interest rate above the rate of nominal GDP growth for an extended period, then the debt dynamics could quickly become unsustainable.”
Currency markets were little moved on the news with the pound at US$1.2770, but equities fell back.
At 8.15am, London’s lead index was down 65.97 points, or 0.9%, at 7,600.30 while the FTSE 250 tumbled 123.89 points, 0.7%, to 18,941.77.
In company news, BAE Systems bucked the weaker market soaring 5.3% after raising guidance for sales, Ebit, EPS and free cash flow after a strong first half.
The defence manufacturer reported an order intake of £21.1 billion resulting in a record order backlog of £66.2 billion.
Chief Executive Charles Woodburn said: “With a record order backlog and good operational performance, we’re well positioned to continue delivering sustained growth in the coming years.”
Aarin Chiekrie, equity analyst at Hargreaves Lansdown said: “A strong set of first-half results have shown that BAE occupies a key space in the defence market.”
“And with some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker.”
Shares in Taylor Wimpey PLC (LSE:TW.) also rose, by 3.6%, despite half-year results reflecting the depressed housing market.
Profit and sales fell but in a glimmer of hope, the housebuilder said it expects full-year UK completions excluding joint ventures to be in the range of 10,000 to 10,500, the upper end of previous guidance reflecting a healthy orderbook and strong underlying interest.
It forecast operating profit including joint ventures to be in the range of £440-£470million.
Broker Peel Hunt noted “the midpoint of this range is 9% ahead of our estimate and 2% ahead of consensus.”
7.50am: BAE lifts guidance driven by record orders
Strong numbers from BAE Systems PLC (LSE:BA.) this morning which has raised guidance after a strong first-half, as a record order book reflecting the war in Ukraine underpinned confidence.
The UK defence manufacturer said revenue in the six months ended June 30 jumped 13% to £11.00bn from £9.74bn the year prior while operating profit leapt 19% to £1.23bn from £1.03bn. EPS soared 62% to EPS 31.8p from 19.6p.
Order intake of £21.1bn resulted in a record order backlog of £66.2bn.
Chief Executive Charles Woodburn said: “With a record order backlog and good operational performance, we’re well positioned to continue delivering sustained growth in the coming years.”
Sales guidance is increased by 200 bps to 5% to 7%, EBIT guidance was lifted by 200 bps to 6% to 8% and underlying EPS guidance by 500 bps to 10% to 12%. Expectations for free cash flow were boosted by £600mln to more than £1.8bn.
To cap the good news, shareholders were rewarded with an 11% hike to the dividend to 11.5p while a further £1.5bn buyback programme has been approved which is expected to roll-on after the current programme is completed.
7.27am: Taylor Wimpey nurses wounds after tough first half
Taylor Wimpey PLC (LSE:TW.)’s first half results showed the wounds inflicted by tough trading conditions as rising interest rates knocked the housing market.
In the six months to July 2, the housebuilder said revenue fell 21% to £1.64bn from £2.08bn the year before while pre-tax profit slumped 29% to £237.7mln from £334.5mln before.
House completions slipped to 5,120 homes from 6,922 last year while the net private sales rates of 0.71 in the period compared to 0.90 last year.
Nonetheless, the firm expects full-year UK completions excluding joint ventures to be in the range of 10,000 to 10,500, the upper end of previous guidance reflecting a healthy orderbook and strong underlying interest.
It forecast operating profit including joint ventures to be in the range of £440-£470mln.
Despite the fall in profit, the dividend was boosted to 4.79p from 4.62p, a rise of 3.7%.
7.00am: FTSE 100 seen as lower as Fitch cuts US rating
The FTSE 100 is set to open lower, following weak Asian markets, as Fitch stripped the US of its triple A credit rating, while it’s another bumper day for UK earnings.
Spread betting companies are calling London’s premier index down by around 40 points after it closed down 33.14 points at 7,666.27 on Tuesday.
BAE Systems, Haleon, Smufit Kappa, ConvaTec and Taylor Wimpey are among the companies reporting today in what promises to be another action-packed day.
But equities may take a hit from news Fitch Ratings has moved the US debt rating from triple A to double A plus, citing worsening fiscal conditions and governance.
The rating agency said its downgrade reflected “expected fiscal deterioration over the next three years” and “a high and growing general government debt burden”.
Fitch also noted an “erosion of governance” over the past two decades “that has manifested in repeated debt limit stand-offs and last-minute resolutions”.
Washington narrowly avoided a default projected for June after legislators and the White House reached a deal to raise the federal borrowing limit at the eleventh hour.
US Treasury Secretary Janet Yellen said in a separate statement that she “strongly” disagreed with Fitch, calling the change “arbitrary and based on outdated data.”
Asian markets fell with the Nikkei 225 in Tokyo down 2.2%, the Shanghai Composite in China down 0.9% and the Hang Seng in Hong Kong 2.1% worse off.
Shares in Nomura declined 7.8% after the Japanese investment bank posted disappointing earnings and declining wholesale revenues.
This content was originally published here.
