“We’ve had yet another record employment rate, while the number of job vacancies is also a new record,” said ONS statistician Matt Hughes.
“From this, it’s clear that the labour market is still growing strongly.”
However, Ben Brettell, senior economist at Hargreaves Lansdown, said:
“All in all, these numbers don’t alter the economic picture of anaemic growth, a relatively tight labour market and under-control inflation,” he said.
“Markets are still expecting the Bank of England to raise interest rates in August. But given the increasingly uncertain climate, I think there’s a real chance policymakers will sit on their hands and wait for firmer signals the economy is on the right track before risking raising borrowing costs.”
Three ratios for valuing shares
Analysts and traders alike commonly use ratios to analyse stocks and ascertain the potential value of their shares. While no method is fool-proof, each ratio has a specific function which makes them almost co-dependent on one-another, should one wish to gain a more complete insight into a stock.
What must be remembered is that when comparing the ratios of different stocks, one should only compare stocks and shares of the same sector, as some sectors have more rapid growth than others – for instance banks versus pharmaceutical.
Rio Tinto ahead of targets for iron ore exports
Mining firm Rio Tinto (LON:RIO) have reported exports ahead of estimations for the trailing quarter, with iron ore exports looking particularly promising.
For the three months through June, Rio saw on-year increases of iron production of 7% to 85.5 million tonnes, while iron exports increased 15% to 88.5 million tonnes. Yearly exports were expected to be between 330-340 million tonnes, with the three months up to December 31st being the most productive period. However, better weather in Western Australia compared to the year before, can account for a large part of the impressive quarter.
“Shipments are expected to be more evenly distributed between the first and second halves compared to prior years when shipments have typically been skewed to the second half,” said a Rio spokesperson.
“Shipments in 2018 are expected to be at the upper end of the existing guidance range.”
Since January, iron exports stand at 168.8 million tonnes, with copper and bauxite production also improving on the year before – up 26% and 3% respectively. Rio’s mineral sands in South Africa have also seen impressive copper and iron yields in recent months, and the sale of their $3.5 billion interest in the Grasberg copper mine will help finance the Oyu Tolgoi underground mine expected to open in Mongolia in 2020.
“Operational performance was solid across most commodities, rounding out a strong first half performance for the group,” said Rio Tinto Chief Executive Jean-Sebastian Jacques.
“Our increasingly flexible Pilbara iron ore system continued to perform well.”
“Our bauxite and copper businesses also delivered strong operating results, demonstrating the success of our ongoing mine-to-market productivity programme, which is increasingly important in an environment of rising cost inflation.”
“Our sustained focus on cash generation, combined with disciplined capital allocation, will ensure we continue to deliver superior returns to our shareholders across the short, medium and long term.”
Not everything has gone to plan for the mining firm so far this year however. While they have resolved industrial disputes in Chile and enjoyed improved weather conditions in Australia, industrial disputes mean production is behind targets in Canada, titanium dioxide production is below targets in South Africa and aluminium exports are down 3% on-year.
Rio shares are currently trading at 4,040p, up 36p or 0.9% since trading began this morning. Analysts from Deutsche Bank have reiterated their ‘Hold’ stance on Rio Tinto stock, while UBS’ ‘Buy’ stance remains unchanged.
John Laing shares rally on potential buy-out
John Laing Infrastructure Fund (LON:JLIF) – a subsidiary of John Laing Group plc (LON:JLG) – has seen its share price spike as they announce talks of a potential buy-out.
The 170 year-old company grew from its roots in construction and in 2010 began investment in infrastructure such as railways and motorways, with widespread investment in infrastructure becoming commonplace after the economic crash, as the UK government sought to offload lame ducks.
The potential buy-out is a bullish move by a consortium of fund managers, who have met the firm with a £145 billion interest being tabled as an initial offering. The consortium, being headed by Dalmore Capital and Equitix Investment Management, have until the 13th of August to make a firm offer or walk away from bidding. The two firms have a history of working together, with £4 and £3 billion in funds under management respectively, the pair acquired 75% of the equity interests in the M25 transport PPP project.
This buy-out could set a precedent going forwards, as the current political climate has made many frigid in regard to large-scale investment in UK infrastructure. Further, many of the fund managers in the consortium had contracts with outsourcing group Carrillion, whose collapse had sparked fears of more infrastructure contracts being awarded to the public sector.
“The risk that a potential Labour government might crack down on private involvement in big public projects, particularly after the failure of outsourcer Carillion earlier this year, is perhaps the biggest negative factor,” said AJ Bell’s director of investment Russ Mould.
“However, the revelation of takeover interest for John Laing Infrastructure Fund is helping to revive some interest in the sector, with counterparts International Public Partnerships and HICL Infrastructure also in demand on the stock market.”
JLIF shares are currently trading at 139.1p, down 0.51p or 0.31% since markets opened this morning. The sum offered by the fund managers consortium equates to 142.5p per share, which means the price of the John Laing subsidiary is commanding a premium of 3.4p per share. Analysts from Peel Hunt have reiterated their ‘Buy’ stance on John Laing Infrastructure Fund stock.
UK car sales drop despite increase across EU
The UK has posted a drop in new car registrations by 3.5 percent, despite the 5.2 percent increase across the EU last month.
The European Automobile Manufacturers Association (ACEA) found that new car registrations in the EU last month totalled 1.6 million vehicles.
Demand in Spain was up by 10.1 per cent. In France and Germany, there were increases of 4.7 percent and 2.9 percent respectively.
The ACEA has said that the “strong performance of the new EU member states is worth highlighting.”
Earlier this month, the Society of Motor Manufacturers and Traders (SMMT) said that sales fell by 6.3 percent compared to the same period last year.
Ian Gilmartin, the head of retail & wholesale at Barclays Corporate Banking, was not surprised by the UK figures.
“The industry has rightly been more vocal in recent weeks, with the lack of clarity around what the playing field will look like for the motor market post-Brexit growing. Patience is running out for both manufacturers and retailers, with all parts of the industry hoping to see some material progress to allow them to plan for the future,” he said.
Car manufacturers in the UK are threatening to move operations to the EU following Brexit in March 2019.
“A bad Brexit deal would cost Jaguar Land Rover more than £1.2 billion profit each year,” said the chief executive Ralf Speth, who has argued for more clarity from the government regarding future trade post-Brexit.
“As a result, we would have to drastically adjust our spending profile. We have spent around £50 billion in the UK in the past five years, with plans for a further £80 billion more in the next five. This would be in jeopardy should we be faced with the wrong outcome.”
SSP sales boosted by increase in passenger numbers
SSP Group (LON:SSPG) saw their third quarter figures boosted by a growth in passenger numbers at UK airports, the company said in their latest set of quarterly results.
Revenue rose 5.8% in its fiscal third quarter, up 7.3 percent on a constant currency basis. Like-for-like sales growth jumped 2.7 percent, with the group boosted by gains from the acquisition of Stockheim.
“Like-for-like sales growth in the UK and Continental Europe was broadly in line with that seen in the first half of the year, driven by on-going growth in the air sector,” SSP said.
“As anticipated, trading in the rail sector continues to be softer, with some additional impact from strike action in France.”
The company, who have food outlets at airports internationally, said growth in North America, was also ‘good’, again driven by increasing air passenger numbers.
“Looking forward, whilst a degree of uncertainty always exists around passenger numbers in the short term, we are well placed to continue to benefit from the structural growth opportunities in our markets and to create further shareholder value,” SSP said.
SSP (LON:SSPG) shares are currently up 1.72 percent at 669.40 (1023GMT).
UK wage growth slips to 2.5%
UK wages were up by around 2.5 percent in the three months through May, according to the Office for National Statistics, in line with market expectations.
The 2.5 percent rise was the slowest growth recorded over the last six months, down from 2.6 percent seen the period previously. Pay excluding bonuses came in at 2.7 percent, in line with analyst forecasts, and above the inflation rate of 2.4 percent.
The unemployment rate remained steady at 4.2 percent, with over 137,000 jobs were being created in the three months to May.
British Land Group shares down as “challenging” retail environment weighs
British Land Group (LON:BLND) reported good financial progress over the last quarter, but said that the retail environment remained “challenging”.
The group reduced its loan-to-value ratio to just 26 percent, adding that it would be increasing its first interim dividend by 3 percent to 7.75 pence.
Its offices division continues to perform well, with the group saying its portfolio was 98 percent occupied with 64 percent of its total development pipeline now let or under offer.
The company has now completed the sale of one of its biggest new developments, 5 Broadgate, for £1 billion and increased its share buybacks by £200 million.
However, the retail market continues to weigh with the company saying it had been “challenging”.
Several big retailers have entered administration of late, and the impact of that and CVAs since 1st April 2017 was 1.6 percent of total group contracted rent, up from 1 percent at the time of the company’s preliminary results in May and retail occupancy stood at 96.4 percent.
The first interim dividend payment for the quarter ended 30 June 2018 would be 7.75 pence per share.
Shares in British Land Group are currently down 1.01 percent at 645.20 (1054GMT).
Dairy Crest revenues up 6pc on cheddar cheese growth
Dairy Crest (LON:DCG) shares edged up on Tuesday morning, after reporting a 6 percent rise in revenues for the group’s key brands.
Combined sales revenues of Dairy Crest’s four key brands – Cathedral City, Clover, Frylight and Country Life – were 6 percent higher in the recent quarter. Cathedral City and Clover, its two biggest brands, were the biggest drivers of growth.
Outlook for the full year remained unchanged after the strong results.
“2018/19 has started as we expected, with our two most important brands, Cathedral City and Clover, delivering a strong performance,” said Mark Allen, Chief Executive.
“Innovation is the cornerstone of this business and we expect to announce several new product launches before the end of 2018.”
Back in May Dairy Crest sought £69.8 million from investors in order to expand, pushing up cheese production from 54,000 tonnes per year to up to 77,000 tonnes as demand soars.
Dairy Crest shares are currently trading up 2.75 percent at 481.50 (1031GMT).
Royal Mail shares boosted by parcel volume growth
Royal Mail (LON:RMG) reported a small rise in revenues on Tuesday, on the back of continued parcel volume growth and a strong performance from its international business.
The group reported a 1 percent rise in underlying first-quarter revenue, despite a 7 percent fall in revenue from letters.
Its international logistics business, GLS, reported a strong performance, with revenue up 11 percent.
“Overall, our trading performance in the first three months of the financial year was in line with our expectations,” Royal Mail said. The company have been struggling over recent years with the decline in letter posting, as well as competition from other couriers.
“Our outlook and other guidance are also unchanged from that set out in our financial report for the full year ended 25 March 2018,” they said.
The news comes ahead of the company’s annual general meeting (AGM) on Thursday, after shareholder advisory firms such as ISS recommended that investors vote against the firm’s remuneration plans.
Shareholders have been unhappy with the proposed remuneration package for incoming chief executive Rico Back, which will be 16.8 per cent higher than that of outgoing boss Moya Greene.
Shares in Royal Mail are currently up 3.16 percent at 496.00 (0921GMT).
Galliford Try update markets on strong full-year performance
Galliford Try shares rose over 5 percent on Tuesday morning, after achieving significant growth in both revenue and profit across the full-year period.
In a trading update, the group said total completions are expected to increase 4.4 percent to 3,442 units from 3,296, with the contracting order book standing at £1.05 billion for the year. The landbank rose 22 percent to 3,300 plots from 2,700 plots, with revenue and profit supported by increasing demand over the period.
The construction divisions entered the new financial year with an order book of £3.3 billion, with projected revenue of 87 percent, up from 84 percent last year. This was boosted by the addition of a new £43 million residential development in Birmingham, a 304-apartment project developed by Court Collaboration.
Galliford Try are set to report strong full-year results, in line with previous guidance, and net cash at 30 June 2018 of £97 million for the year, up from £7.2 million the previous year.
Shares in Galliford Try (LON:GFRD) are currently up 5.88 percent at 882.50 (0902GMT).