Leading shares are on the slide again as volatility in China continues to undermine commodity companies.
But there are a couple of bright spots from businesses reporting positive trading updates. Insurer Admiral - the group behind confused.com - has added 64p to £15.30 after it reported a better than expected 1% rise in first half profits to £186.1m. The improvement came as customer numbers increased and it released reserves set aside to cover the cost of future claims. Peel Hunt analyst Andreas van Embden said:
Admiral’s first half results were steady, with prior year reserve releases supporting a 1% increase in pretax profit. Given Admiral’s significant market position in the UK Motor market, growth is not a priority. Management continues to focus on supporting UK underwriting margins as it pushes through Motor rate increases in the first half of 2015 and protects future profitability. Reserve buffers remain high and will fund the dividend as the company awaits a gradual turn in the UK underwriting cycle. Admiral trades at a 2016 estimated PE of around 15 times supported by a yield of around 6%.
Also on the rise was Hikma Pharmaceuticals, up 48p to £24.48, despite a fall in half year profits from $244m this time last year to $204m, as it confirmed full year revenue guidance for 6% growth. Jefferies said:
Hikma’s adjusted first half was solid driven by blow-out US margins; impressive given the tough base comp and foreign exchange headwinds, which had been well-flagged. Full year guidance was reiterated. In our recent upgrade, we had highlighted our view that the first half was irrelevant given strong upcoming growth prospects from 2016, and we expect the market to look beyond a second half weighted year to these future value drivers.
Stifel analysts said:
Hikma has announced results for the six months ended 30 June 2015 below our expectations primarily reflecting the impact of a strong US dollar. However, full year guidance remains unchanged. Ahead of the recently announced and transformational Roxane acquisition, we believe Hikma is well placed for sustained growth over the next few years. We reiterate our buy rating.
Overall though the FTSE 100 has fallen 72.02 points or more than 1% to 6454.27 - its lowest level since early July - on continuing concern about China, even though the country’s stock market recovered from yet another fall by the time it closed.
So with commodity prices still under pressure, given fears of falling demand from China, mining companies were again the among the biggest losers in the index.
Glencore, which had slumped in recent weeks, was expected to recover somewhat following its results on the basis that the worst could be over. But this has failed to happen and its shares are down 9.4p at 166.70p.
Anglo American is also lower, down 18.4p at 723.5p, while BHP Billiton has lost 16.5p to £10.96.
With worries about the outlook for emerging markets, HSBC has fallen 12.4p to 543.6p.
US inflation will also be in focus later, for any clues it gives as to when the Federal Reserve might raise interest rates. And investors will also be keeping an eye on the German parliament, which is expected to back the Greek bailout agreement although not without some opposition.
