Merlin reports bumper summer, Capita warns on full-year profits

London open

The FTSE 100 is expected to open 73 points higher on Thursday, having closed up 0.61% at 6,849.38 on Wednesday.

Stocks to watch

Leisure operator Merlin Entertainments posted a trading update on Thursday, outlining its performance over the key summer period. The FTSE 100 firm saw 10.7% total revenue growth across the group, or 3.7% at constant exchange rates. Of that, Midway Attractions and Legoland Parks both grew 3.7%, and Resort Theme Parks saw a 4.5% rise in revenue, all at constant exchange rates. “Merlin continues to deliver overall revenue growth despite challenging trading conditions in certain key markets, testament to a diversified portfolio and a strong new business development strategy across all three operating groups,” said Merlin CEO Nick Varney.

Capita warned that full year profits will be some way short of current forecasts after its third quarter was hit by a slowdown in some areas, one off costs and recent hesitation among clients. The FTSE 100 business process outsourcing group said revenues would grow 4-5% in the calendar year and that underlying profit before tax would be between £535m and £555m, around 13% short of current City forecasts.

FTSE 100 tobacco maker Imperial Brands is on track to meet full year expectations at constant currency and exchange rates as it reports growth from its US acquisitions. The company said it remained in a “strong” position to generate returns for shareholders as it delivers against its strategic agenda.

Newspaper round-up

Theresa May has sufficient support in parliament to drive through the contentious expansion of Heathrow airport if she decides to put it to a vote next month, according to close allies. The government will not make a final decision about how to proceed until an aviation subcommittee — chaired by Mrs May — meets on either October 11 or 18. – Financial Times

The Government is facing fresh calls to overhaul its energy policy to cut costs for consumers, as new analysis claims renewables policies alone will equate to £466 a year for every UK household by 2020. The Centre for Policy Studies (CPS), the right-wing think tank behind the analysis, and petrochemicals giant Ineos are both also calling for the Government to scrap its unilateral UK carbon tax, which pushes up energy bills. - Telegraph

Homes for sale should be given a “traffic light” score to alert buyers to their risk of flooding, according to the Association of British Insurers. The industry body said the red, amber or green warnings on property listings would encourage prospective owners to consider the danger of living in a flood-prone area early, before racking up costs by placing an offer and paying for a formal survey. – Telegraph

The Serious Fraud Office has stepped up its inquiries into the collapse of BHS and the conduct of the department store chain’s former owner Dominic Chappell. The Guardian understands that the SFO has contacted individuals involved in running BHS before it fell into administration in April, and the administrators themselves, and asked for a series of documents. The SFO is thought to be particularly interested in the dealings of Chappell and his consortium, Retail Acquisitions, during the 13 months it owned the retailer. – Guardian

Governments must defeat a rising tide of protectionism to prevent a further slowdown in global growth, the head of the International Monetary Fund has said. Christine Lagarde said policies that restrict trade were a form of “economic malpractice” that would choke off growth, hit jobs and reduce wages. – Guardian

Taxpayers are on the hook for up to £100 million to pay the legal costs of Fred Goodwin, Royal Bank of Scotland and three other former directors to defend claims that they misled investors shortly before the bank’s collapse in 2008. About 27,000 retail investors and several institutions are suing RBS for £4 billion on the ground that they were duped into supporting a £12 billion emergency fundraising in April 2008, six months before the bank was bailed out by the state. – The Times

France has moved to lure London’s financial technology companies to Paris in the aftermath of the Brexit vote with a promise of English-speaking coaches and a simple path through the country’s famously arcane red tape. The move is the latest in Parisian attempts to capitalise on Britain’s looming divorce from the European Union. Like some of their counterparts in Germany, French politicians view Brexit as a golden opportunity and they hope to entice up to 30,000 financial sector workers from the City. – The Times

US close

US stocks closed in the green on Wednesday as oil prices rose after OPEC signalled it would address the global supply glut.

The Dow Jones Industrial Average increased 0.61% to 18,339.24 points, the S&P 500 edged up 0.53% to 2,171.37 points and the Nasdaq climbed 0.24% to 5,318.55 points.

OPEC reached an “understanding” to limit oil production during a meeting in Algeria and is considering reducing output to between 32.5 million to 33 million barrels per day, The Wall Street Journal reported.

The news came as data from the Energy Information Administration showed US crude inventories fell by 1.9 million barrels in the week to 23 September to 502.7 million barrels. The drawdown in crude stocks was offset by a 2 million barrel build in gasoline stockpiles.

The American Petroleum Institute on Tuesday revealed a surprise fall of 752,000 barrels to 506.4m last week.

West Texas Intermediate crude jumped 4.8% to $46.96 per barrel and Brent surged 5.4% to $48.61 per barrel at 2151 BST.

Meanwhile, Federal Reserve chair Janet Yellen delivered her testimony to the House Financial Services Committee. She focused on banks, saying lenders were well capitalised but remain challenged by weak interest income. Yellen also said the US central bank is considering stress tests requiring more capital from the country’s biggest lenders.

In economic data, US durable goods orders were unchanged in August, the Commerce Department revealed, following a 3.6% increase in July. Economists had been expecting a 1.5% decline last month.