Paragon maintains full-year lending guidance, PZ Cussons sees profit drop
London open
The FTSE 100 is expected to open 31 points higher on Tuesday, having closed up 0.08% at 7,514.93 on Monday.
Stocks to watch
Mortgage specialist Paragon Banking on Tuesday maintained full year lending guidance, adding that it expected its net interest margin for 2019 to be above the 2.24% reported at the half-year results. Paragon reported a net interest margin of 2.19% in 2018. New lending in the nine months to June 30 was £1.9bn, up from £1.58bn a year ago. Full year volumes in the mortgages division were still anticipated to be around £1.6bn and commercial lending volumes expected to exceed £0.9bn.
Imperial Leather maker PZ Cussons posted a drop in full-year profit on Tuesday as solid performances in Asia Pacific, Europe and the Americas were offset by weakness in Africa. In the year to the end of May 2019, adjusted pre-tax profit fell 12.9% to £69.8m on revenue of £689.4m, down 6.8% on the year.
Beazley's year-on-year profit before tax almost tripled in the first half of 2019, rising 189% to £166.4m in the six months ended 30 June as the specialist insurance business enjoyed strong demand in Europe, Latin America and Asia, and achieved strong premium growth of 12%. Consequently, the business has improved its outlook to include double-digit premium growth over the full year.
IG Group reported a 16% fall in its net trading revenue to £476.9m in its preliminary results on Tuesday, which it put down to the impact of the new ESMA measures and less favourable market conditions throughout the financial year, particularly in the second half. The FTSE 250 trading provider said its total operating costs fell 2% to £284.3m, while its operating profit was off 31% year-on-year at £192.9m.
Newspaper round-up
Huawei equipment will continue to be used in the UK’s 5G mobile networks for now after the government delayed a decision on whether it should be restricted or banned over concerns that the Chinese government could use it to spy on countries. Jeremy Wright, the culture secretary, said the UK had no choice because it is still gauging the impact of US sanctions on Huawei. – Guardian
The travel plans of hundreds of thousands of British Airways passengers face the threat of disruption next month after pilots at the airline voted to go on strike over pay. In the ballot, 93% of BA’s 4,000 pilots voted in favour of taking industrial action after rejecting a three-year pay deal. Strike dates have yet to be announced by the pilots’ union Balpa, which must give two weeks’ notice of any action. – Guardian
Sports Direct has abandoned legal action against Debenhams' plan to close some stores but is continuing to fund another objecting landlord. After falling into administration in April in a move that wiped out shareholders, the department store chain creditors approved closing 50 of its 166 shops and reducing rent on more than 100 as part of a company voluntary arrangement (CVA). – Telegraph
The Gambling Commission has hired investment bankers from Rothschild to pick the next operator of the National Lottery. Camelot, which has been owned by a Canadian pension fund since 2010, has run the National Lottery since its launch in 1994. It is likely to face stiff competition for the right to hold onto the monopoly, which expires in 2023. Former Express and Channel 5 owner Richard Desmond has already expressed interest, calling for the lottery to be returned to British hands. – Telegraph
Dozens of Britain’s biggest companies are at risk of being besieged by activist investors because they are generating lacklustre returns for shareholders, a leading City stockbroker has warned. Centrica, the £5.1 billion business behind British Gas, Kingfisher, the B&Q owner, and Next, the £7.3 billion retailer, are among 54 vulnerable companies, Canaccord Genuity’s Quest team said yesterday. Quest publishes research, produced using its proprietary equity analysis tool, which is highly regarded in the City. – The Times
The government is intervening in the £2.6 billion takeover of Britain’s largest satellite communications provider to review the deal on national security grounds. Jeremy Wright, the culture secretary, has asked the Competition and Markets Authority to examine the security implications of the acquisition of Inmarsat by Apax and Warburg Pincus, the private equity firms, and two Canadian pension funds and report back by September 17. – The Times
US close
Wall Street stocks closed higher on Monday, with attention remaining focused on the Federal Reserve as hopes of a 50 basis point cut to interest rates began to fade.
At the close, the Dow Jones Industrial Average was ahead at 0.07% at 27,172.51, while the S&P 500 was up 0.28% at 2,985.07 and the Nasdaq Composite ended out the session 0.71% stronger at 8,204.14.
The Dow closed 18.31 points firmer after a Wall Street Journal report on Friday suggested that a more cautious 25 basis point cut was likely following comments from multiple officials from the central bank.
Donald Trump, a long-time critic of the Fed, called on the central bank to make "deeper" cuts at its next meeting.
"It is far more costly for the Federal Reserve to cut deeper if the economy actually does, in the future, turn down! Very inexpensive, in fact productive, to move now," tweeted Trump.
"The Fed raised and tightened far too much & too fast. In other words, they missed it (big!). Don't miss it again!"