GKN trades in line with expectations, Whitbread hikes dividend 5%

London open

The FTSE 100 is expected to open 14 points higher on Tuesday, after closing down 0.49% to 6,986.40 on Monday.

Stocks to watch

Aerospace and automotive engineering group GKN issued a trading update for the nine months to 30 September on Tuesday, with management sales increasing 21% to £6.9bn, including organic sales growth of 2% - or £151m - in line with expectations. The FTSE 100 company said sales in the automotive businesses continued to perform well against the market and the aerospace division grew in line with expectations, though the land systems markets remained tough. As it had previously anticipated, the group trading margin was lower than the equivalent period last year, which it put down to the commencement of the £35m restructuring programme, launch related costs in GKN Driveline, the absence of last year’s one-off benefits in GKN Aerospace and the inclusion of Fokker Technologies.

St. James's Place reported a 21% rise in gross inflows for the latest three-month stretch to reach £2.8bn, with the political uncertainty after the referendum not having had any distinguishable impact on its day-to-day business. The asset manager said it had seen good momentum since the half-year, with a 95% retention rate for new clients resulting in net inflows of assets under management of £1.66bn over the three months to 30 September. At period end, group AuM stood at £71.4bn - an increase of £12.8bn since the start of the year.

Whitbread sprinkled a 5% dividend hike on a strong set of interim results, with Premier Inn accelerating in the second quarter to offset a slight softening from Costa. Total group revenues rose 8.1% in the six months to 1 September, up from 8% in the first quarter, with like-for-like sales growth improving to 1.9% from 1.8%.

Investment manager 3i Group is to sell its debt management business to Investcorp, a Bahrain-based manager of alternative investments, for around £222m to focus on growing its private equity and infrastructure portfolios. The deal, which is expected to close by the end of March, will generate £222m in cash to the company and a £36m profit, subject to closing adjustments, which will be reinvested in the company’s private equity and infrastructure divisions.

Newspaper round-up

The chancellor’s plans to reduce the deficit are unlikely to get back on track this year, an internal briefing document for ministers has revealed. The Treasury document, which was marked “sensitive”, also revealed the UK faced a £700m bill after the EU referendum result, with Britain’s contribution to the EU growing by 25.9% compared with the same period last year. - Guardian

Britain risks “sleepwalking into brownouts and blackouts” because of a proposed overhaul of energy regulation that could lead to the closure of many small power plants, former energy secretary Sir Ed Davey has claimed. The warning from Sir Ed, who was in charge of UK energy policy from 2012 to 2015, is the starkest intervention yet into a fierce industry debate over plans by regulator Ofgem to change the way Britain’s power grids are paid for. - Telegraph

Glencore has secured a price of almost $100 a tonne for high-quality thermal coal in its latest contract negotiations with a key Japanese buyer, highlighting the dramatic change in fortunes for one of the most unloved commodities in mining. The agreement between the Swiss-based miner and Tohoku Electric was struck at $94.75 a tonne, up nearly 50 per cent from a year ago, and follows a dramatic surge in coal prices brought about by China’s surprise decision to curb domestic output in a desperate attempt to improve the profitability of its miners. - Financial Times

The winner of the next franchise to run the West Coast main line will be offered the chance to operate the country’s first 250mph trains on the HS2 line. The process for the retendering of the West Coast line from London to Glasgow is expected to start next month with the aim of an operator taking over a new franchise from 2018. - The Times

The new head of the Financial Conduct Authority is being urged to remain independent from politicians and instigate change at the City regulator amid fears that rules introduced since the 2008 crisis are being watered down. The call to Andrew Bailey – who took the helm of the FCA in July after a long career at the Bank of England – is made in a report published on Tuesday which says there should be an overhaul of the way financial regulators are run. - Guardian

US close

US stocks finished higher on Monday, bolstered by merger and acquisition deals and better-than-expected manufacturing data.

The Dow Jones Industrial Average rose 0.43% to 18,223.03 points, the S&P 500 gained 0.47% to 2,151.33 points and the Nasdaq grew 1.0% to 5,309.83 points.

Oil prices, however, fell as Iraqi oil minister Ali al-Luaibi said the nation wanted to be exempt from an OPEC deal to cut production.

West Texas Intermediate crude dropped 0.83% to $50.43 per barrel and Brent declined 0.73% to $51.40 per barrel at 2140 BST.

Elsewhere, positive sentiment surrounding merger and acquisition news gave the market a lift.

On the economic data front, Markit’s US purchasing managers’ index rose to 53.2 in October from a three-month low of 51.5 in September, surpassing estimates for an unchanged reading. A level above 50 signals an expansion.

The Chicago Fed National Activity Index - a measure of economic activity - rose to negative 0.14 in September from negative 0.72 in August, compared to forecasts of negative 0.13. The improvement reflected a pickup in production, employment, housing and consumer spending.

Meanwhile, James Bullard, President of the Federal Reserve Bank of St. Louis and voting member of the Federal Open Market Committee, said low interest rates will likely be the normal over the next two to three years.