MARKET REPORT: Rolls-Royce share down almost 10%

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Rolls Royce shares fell nearly 10% yesterday as the company looked for ways to strengthen its finances.

The struggling British engineering group plans to sell £ 1.5 billion to £ 2 billion in shares, as well as flogging assets like Spanish subsidiary ITP Aero to raise funds, according to Bloomberg.

The coronavirus pandemic has devastated the aviation industry, wiping out airline fleets and hammering demand for new aircraft – in turn affecting demand for engines produced by Rolls.

Rolls Royce shares fell nearly 10% yesterday

The Derby-based company, whose share price has more than halved from pre-crisis levels, has already announced that it will cut 9,000 jobs worldwide due to the impact of the pandemic .

He responded to the complaints in an afternoon statement, confirming that he “was examining potential options to strengthen our balance sheet and position ourselves for the recovery after Covid-19”, but did not provide any other details.

After yesterday’s announcement, Rolls’ stock fell 10% or 29.3p to 263.2p.

The company insisted that “no decision has been made,” adding, “Our current financial position and liquidity remain solid.”

If Rolls continues to raise funds by placing stocks, it would only be the last major company to do so during the pandemic.

Builder Taylor Wimpey (down 4.4%, or 6.25p, to 137p) raised more than 525 million pounds last month, while gaming group William Hill (up 1.9%, or 2.25p, to 118.35p) also increased by 224 million pounds. .

Falling Rolls stock prices helped drag the FTSE100 into the red yesterday, marking a moderate weekend for stocks. The core index fell 1.3%, or 83.06 points, to close at 6157.3, despite generally optimistic figures in a closely watched survey showing that the British private sector was ready to recover from the freeze. virus.

Similar surveys in China and the euro area have also shown that business activity is improving.

The final reading for the June British IHS Markit PMI composite (purchasing managers index) was 47.7, higher than a previous reading of 47.6 and well above May 30. A reading of 50 or more indicates growth, with experts indicating that the data has shown that the historical collapse of activity caused by the pandemic has stabilized.

In particular, services fell from 29 in May to 47.1 in June.

Ulas Akincilar, head of trading at Infinox, said: “Few dared to imagine it, but on this evidence, the great British rebound is underway.

“These are things that defy gravity, and even if it is not a total surprise, it is a huge blow of coffee in the arm for the feeling of the British market. Other than Rolls, Footsie’s other major slaughterers included clothing retailer Next, which fell 4.6%, or 232p, to 4798p, and Lloyds Banking Group, which fell 2.6%, or 0.01p, at 31.03 p.

The picture was not much better on the FTSE250 mid-market index, which finished the day down 0.4%, or 65.83 points, to 17,302.03.

But it was not all fate yesterday.

Plastics maker Essentra was the biggest indicator for the index up, gaining 7.2%, or 21.2p, to close at 314.2p, after releasing a trading update.

The firm revealed that the impact of the virus crisis had been more severe in its second quarter but also offered investors a ray of light, saying that revenues are improving month by month.

Essentra said revenue on a like-for-like basis was down 17% in April, 10% in May and just 1% in June.

Healthcare companies were also up, Puretech gaining 4.2p, or 11p, to close at 274p and Oxford Biomedical gaining 2.9%, or 21p, to end the day at 757p.

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