FTSE 100 Higher After Royal Mail Posts Strong Earnings

FTSE 100 Higher After Royal Mail Posts Strong Earnings
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The London market has jumped, buoyed by better-than-expected earnings at Royal Mail and further signs of a US interest rate hike next month.

The FTSE 100 Index was 51 points higher at 6330, after the letters and parcels service said it delivered a "resilient" first-half performance.

Royal Mail posted underlying operating profit, down 2% to £342 million over the six months to September 27, but analysts said parcel growth performed well against lower letter deliveries while costs fell more quickly than expected.

The City estimated underlying operating profit would come in at £331 million. Shares lifted 5%, or 22.5p, to 467.7p.

The jump in the Footsie comes after a lacklustre rise of just 10 points in the previous session.

The market also rose on the back of a surge of more than 200 points on New York's Dow Jones Industrial Average overnight.

The mood in the US was lifted by minutes from the Federal Reserve's Federal Open Market Committee, which said "it may well become appropriate to initiate the normalisation process" next month.

Traders took this to mean the central bank may raise rates for the first time in six years in December, which would end months of uncertainty.

Germany's DAX jumped 1%, while France's Cac 40 was flat.

The pound was a cent up against the US dollar at 1.53 as traders ponder the potential rate hike, and slightly lower against the euro at just under 1.43.

Back in London, heavyweight miners were in positive territory, with Glencore up 0.7p to 94.1p, Anglo American 1.3p higher at 450.8p, while Antofagasta climbed 1p to 501p.

Defence giant BAE Systems lifted 7.5p to 484.1p after it was awarded a contract for the fifth Astute class nuclear-powered submarine, taking the total value for work on the vessel to £1.3 billion.

The contract covers the design and remaining build, test and commissioning activities on HMS Anson, the fifth of seven technologically-advanced submarines in the class.

Discount chain Poundland was the biggest faller in the FTSE 250, impacted by higher store opening costs and adding that trading conditions in its third quarter so far have been "highly volatile".

It said pre-tax profit fell 26% to £9.3 million in the six months to September 27. Shares fell 20%, or 55.9p, to 222.7p.

Retail chain Mothercare said its half-year profit more than doubled, offering signs that its turnaround is beginning to gain traction.

The babycare group, which also owns the Early Learning Centre, said its underlying pre-tax profit jumped 112% to £7 million in the 29 weeks to October 10 compared to a year ago, as it lifted sales.

But Cantor Fitzgerald analyst Mike Dennis said: "The UK stores will struggle to sustain meaningful sales growth given various competitors are rapidly gaining share."

Share's slipped 10p to 219.8p.

The biggest risers in the FTSE 100 Index were Johnson Matthey up 237p at 2694p, CRH up 97p at 1875p, Royal Mail up 22.5p at 476.7p, and Hikma Pharmaceuticals up 62p at 2110p.

The biggest fallers were G4S down 6.7p to 225.8p, Imperial Tobacco down 78p at 3492p, Berkeley Group down 46p at 3093p and Persimmon down 25p at 1840p.