FTSE 100 analysis: Glencore shares drop despite additional returns – Top UK stocks

FTSE 100 falls

The FTSE 100 is down 0.2% in early trade this morning.

Poor economic data out of China is feeding through to Europe this morning as both imports and exports experienced larger declines than hoped, stoking further fears about the economic recovery in wake of abandoning its fight against Covid-19 earlier this year. Imports were particularly bad after falling 12.4% from last year in July while exports were down 14.5%, when economists had forecast a fall in imports of just 5% and a 12.5% drop in exports.

The economic calendar is quiet today with a speech from the Federal Reserve’s Patrick Harker, US balance of trade figures and IBD/TIPP economic optimism data. That is ahead of key inflation data out of China on Wednesday and the US on Thursday, followed by the data dump from the UK due on Friday.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, is down heavily this morning and on the cusp of testing the two-week low of 7,513 hit on Friday. A slip below here risks seeing the index slip toward 7,450.

The index has successfully moved above the 50-day moving average during all of the four latest sessions but has struggled to stay above here for long, suggesting this is the immediate upside goal before the other moving averages (which are now converging at 7,630) come into play.

Top UK stock news

Glencore is down 3.1% this morning after revealing it will return an additional $2.2 billion to shareholders, which will take total returns for this year up to $9.3 billion. That will be returned through a $1 billion special dividend and a new $1.2 billion buyback. That positive news came as the commodities giant said revenue was down 20% in the first half and that net income plunged 62% to $4.56 billion, as volumes fell and prices declined. Its Marketing division that trades commodities around the world reported adjusted Ebit of $1.8 billion, less than half what we saw the year before but running ahead of its annual target.

IHG is up 1.4% after it reported significantly higher revenue and profits in the first half of 2023 as demand for travel remains strong, bolstered by higher prices and capacity utilisation. The hotelier said revenue per average room was 24% higher in the first half than last year, helping take total revenue up 24% to $2.22 billion. Operating profit was up 62% to $584 million and came in much higher than estimates. China was key to the performance after revenue per average room rebounded 94% as it reopened the economy. Its interim dividend was raised 10% to 48.3 cents and the current $750 million share buyback is around half complete, IHG said. Comparatives will be harder in the second half.

IWG is trading 0.1% higher after it said it generated record system-wide revenue of £1.67 billion in the first half, up around 14% at constant currency, as Ebitda jumped 48% to £198 million. ‘We continue to grow as expected, producing a record period for IWG with our highest ever revenue in our over 30-year history, up 14% from the first half of 2022. Importantly, we have achieved this alongside increasing EBITDA and cashflow generation, which is reducing net debt,’ said CEO Mark Dixon. It said it exited the first half with improving margins and reiterated its Ebitda goals for the full year, adding that net debt should keep declining.

Abrdn is down 5% after it said revenue increased and losses narrowed in the first half as a bigger contribution from ii countered challenging market conditions and net outflows because of the risk-off environment. Net operating revenue was up 4% to £721 million and its loss before tax narrowed to £169 million from £326 million, driven by lower valuations on its listed holdings. This period benefited from a full contribution from ii, whereas last year it only contributed for one month. Assets under management were down 1% at £496 billion and net outflows totalled $4.4 billion, despite an $1.9 inflow from ii. The interim dividend will be 7.3p and it has extended its existing share buyback programme by another £300 million. Abrdn said its efforts to diversify are starting to pay off.

SIG is down 0.9% after profits were hit in the first half as growth in sales was countered by tighter margins. The supplier of insulation and other materials said revenue increased to £1.42 billion from £1.35 billion the year before but said underlying pretax profit plunged to £15.0 million from £28.9 million. Like-for-likes were also down as volumes declined across the board, countered by higher prices. It said it expects market conditions to remain ‘challenging’ in the second half but that inflationary pressures should moderate and its productivity initiatives should pay off.

Rotork is up 0.4% after reiterating expectations for the full year as it reported double-digit growth in the first half as orders kept flooding in and pushed its order book to record levels. Revenue was up 19.5% at £334.7 million, benefiting from weaker comparatives last year when it was suffering supply chain disruption. Pretax profit was up 35% at £60.2 million. Order intake rose 13.8% to £386.9 million. It raised its interim dividend by 6.3% to 2.55p. ‘The outlook for all our divisions is positive and we entered the second half with a record order book. Whilst mindful of residual supply chain challenges, we anticipate delivering further progress in 2023 in line with expectations on an OCC basis,’ said CEO Kiet Huynh.

Spirax-Sarco Engineering is trading 0.6% higher this morning after announcing CEO Nicholas Anderson will retire in ‘early 2024’, when he will mark a decade in the role. He will be replaced by Nimesh Patel, who will take on the new role on January 16, 2024. Patel has been with the engineering firm since 2020 as chief financial officer.

Chemring Group is up 1.5% after appointing James Mortensen as its new chief financial officer. He will join the board at the start of November and formally take on his new CFO role on the first day of 2024, when Andrew Lewis will step down before leaving the company on January 19.

Quilter is up 6.7% after it identified £50 million of additional cost-savings that can be made by the end of 2025 and said it ‘expects consensus profit estimates for this year to increase materially’ as it reported strong growth in the first half. Adjusted pretax profit was up 25% in the first half of 2023 at £76 million. Assets under management increased 2% from the end of 2022 to £101.7 billion. The interim dividend was raised 25% to 1.5p.

TI Fluid Systems is up 6.5% after announcing it is adopting a progressive dividend policy and plans to launch a share buyback in the second half after outperforming in the first. Revenue increased 13.4% in the first half of 2023 to EUR1.76 billion, outperforming the wider market as light vehicle volumes grew at a slower pace. It said it outperformed in every region apart from China, where it met expectations. Adjusted Ebit jumped to EUR131.9 million from EUR83.7 million and profit at the bottom-line soared to EUR33.5 million from just EUR500,000 the year before. The interim dividend was raised to 2.3 cents from just 1.00 cents the year before and a buyback of EUR40 million will take place by the end of the year. TI Fluid Systems said it expects to keep outperforming but warned revenue will be lower in the second compared to the first, although it is anticipating higher adjusted Ebit margins of over 7%.

Mondi has been reinstated at Equal Weight at Barclays and given a price target of 1,300p, with the stock down 0.8% today at 1,299p. Rival DS Smith was also reinstated at Equal Weight and given a price target of 310p, trading down 1.4% today at 301.1p.

WPP has been downgraded to Hold at Deutsche Bank and is down 1.2% in early trade at 798.58p.

Virgin Money UK has been cut to Underperform by BNPP Exane and is down 5.6% at 163.25p.

Barclays has been downgraded to Neutral by BNPP Exane and is down 1.4% today at 148.78p.

Haleon has been upgraded to Hold at Investec, which has a price target of 320p on the stock. Haleon shares are up 0.3% at 323.7p.

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