Profits jump at Babcock, Smiths raises growth and margin guidance

London open

The FTSE 100 is expected to open 15 points higher on Wednesday, having closed down 1.22% on Tuesday at 8,025.77.

Stocks to watch

UK weapons maker Babcock reported a sharp jump in half-year profits and held annual guidance as geopolitical tensions increased demand from governments for military hardware. The company on Wednesday posted pre-tax profit of £172m in the six months to September 30, up from £136m a year earlier. Babcock said around 90% of full-year expected revenue was under contract at the start of October. “We commence the second half with good momentum and are confident of making further progress against our medium-term guidance: to deliver mid-single digit average annual revenue growth and achieve underlying operating margins of at least 8% and underlying operating cash conversion of at least 80%,” the company said.

Smiths Group has raised its growth and margin guidance and beefed up its share buyback programme after an “outstanding” first quarter. As a result of the strong start to the year and a record order book, the engineering company now expects full-year organic revenue growth of 5-7%, up from earlier guidance of 4-6%.

Newspaper round-up

The Post Office is expected to announce the closure of dozens of branches and cut up to 1,000 head office jobs as it seeks to reduce costs to secure its financial future. There are about 11,500 Post Office branches across the UK, of which 115 are wholly centrally owned. The rest are operated by independent post office operators under contract and partners such as WH Smith and Tesco. – Guardian

Young people from working-class backgrounds are being “blocked” from entering the creative industries, which remain “elitist” and inaccessible, according to research. A report from the Sutton Trust found stark overrepresentation in the arts for those from the most affluent backgrounds, which it defines as those from “upper middle-class backgrounds”. – Guardian

Rachel Reeves’s inheritance tax raid will deliver a “fatal blow” to farming, the boss of one of Britain’s biggest food producers has warned. Ranjit Singh Boparan, the tycoon nicknamed the “Chicken King”, blasted the Chancellor’s Budget as a “disaster for business” and said it risked pushing up inflation further for households. – Telegraph

Spirit AeroSystems, one of the largest private-sector employers in Northern Ireland, is to receive about $450 million in advance payments from Boeing and Airbus after the supplier raised the alarm about its finances. The struggling company has agreed up to $350 million in advance payments from Boeing, the American aerospace company. Airbus, the European planemaker, will pay up to $107 million. – The Times

Strong demand for sports betting in the US at the start of the National Football League season helped Flutter Entertainment surpass analyst expectations to report 27 per cent quarterly sales growth. The world’s largest online betting company, which moved its primary listing from London to New York this year, recorded revenue of $3.25 billion for the three months to the end of September, up from $2.56 billion a year earlier and ahead of analyst expectations of $3.03 billion. Revenue in the US rose 51 per cent year-on-year to $1.25 billion. In the UK and Ireland, revenue grew 18 per cent to $846 million. – The Times

US close

US stocks snapped a five-day winning streak on Tuesday, pulling back from record levels as the post-election rally ran out of steam with bond yields at a four-month high.

The Dow fell 0.9%, the S&P 500 declined 0.3% while the Nasdaq slipped 0.1%.

All three Wall Street benchmarks hit fresh record highs on Monday following five straight days of gains in the aftermath of last Tuesday's presidential election – with sentiment also lifted by another rate cut by the Federal Reserve on Thursday.

As of Monday's close, the S&P 500 had risen 5.1% over the past week, the Dow gained 6% and the Nasdaq jumped 6.2%.

However, a big surge in yields prompted investors to take profits on Tuesday, with the yield on a 10-year US Treasury up 13 basis points at 4.44%, trading at levels not seen since July.