The FTSE 100 ended the day down 20 points to 5,366. European markets fared a little better, with the Dax and the CAC 40 both up.
Nevertheless, investors are beginning to detect a change in market mood. The high anxiety that accompanied signs that economic growth was slowing has given way to a quiet optimism on corporate strength as results have come through ahead of estimates. Andrew Bell, chief executive officer of Witan Investment trust said: “The line of least resistance for equities has been upward since June, despite evidence coming through that the widely feared slowdown in growth is indeed occurring... encouraging news from companies has restored some perspective to market sentiment.”
And there was plenty of better corporate news to encourage markets today. The markets were led up by Aviva, which reported interim profits significantly ahead of forecasts, up 21% to £1.27bn. It also raised expectations for the full year. The improvement came on the back of the group’s cost-cutting programme. The shares were the day’s biggest gainers, up 7.4% to 395p.
There was good news elsewhere in the insurance sector as well. RSA Insurance pleased the market by raising its dividend, even though profits were flat. The shares rose 3.9% to 133.5p. The rest of the insurance sector got a boost by association with Prudential and Standard Life both gaining on the day.
Schroders, Smith & Nephew and Capital Shopping Centres all saw steady gains as they reported earnings ahead of expectations.
Pulling in the other direction was consumer giant Unilever. The market remained unimpressed by its 3.8% underlying sales growth, which was just shy of expectations. It also wasn’t keen on the warning that continued competitive pressures would constrain its ability to raise prices at a time when commodity costs were rising. The shares fell 5.2% to 1,736p.
Barclays followed Lloyds in reporting chunky profits growth. It beat forecasts with a 44% rise in interim profits to £3.95bn. The shares had already seen a strong rise in anticipation of better numbers and weakness in the investment banking division was enough to push them down 4.7% to 324p.
Cobham was the day’s biggest faller. The aircraft parts maker fell 6.7% to 224p in spite of reporting 2% rise in first-half pretax profit. Markets were spooked by contract delays in the US and its warning that markets were unlikely to see a significant improvement in the second half of the year.