FTSE 100 ticks higher after GDP release, Cisco Systems beats forecasts and unveils job cuts and Admiral impresses as it delivers bumper dividend increase

“The FTSE 100 ticked higher on Thursday morning after decent gains in the US and Asia overnight and as UK GDP figures came in as expected,” says AJ Bell Head of Financial Analysis Danni Hewson.

“Gains in the US followed inflation figures which were a smidge lower than anticipated, solidifying expectations the Federal Reserve will cut interest rates at its next opportunity in mid-September. Later today, US retail sales and the latest numbers from Walmart will tell the market plenty about the state of US consumer demand and whether recent fears over recession have much credence to them.

“The UK economy continued to rebound in the second quarter, having had a patchy recovery from Covid, with the lack of growth in June being pinned on the impact of industrial action and the run-up to the election.

“Overnight in the US digital communications outfit Cisco Systems impressed despite revenue falling for a third straight quarter. Said revenue was at least better than forecast, as were earnings. The company also announced the kind of job cuts which investors have welcomed from tech companies of late as they are taken as an indication of greater financial discipline.”

Admiral

“Insurer Admiral is reaping the rewards today of having steered its ship successfully through choppy waters when the inflationary storm was at its height.

“Unlike its competitors, Admiral hiked premiums as it passed on extra costs to customers. While this lost it business at the time, it now means the company is better positioned to be competitive, assisted by an easing in claims cost inflation which is helping it to attract more customers.

“This is the very essence of taking painful decisions in the short term for the long-term benefit of the company and shareholders are applauding today’s better-than-expected results, buoyed by a bumper increase in the first-half dividend.

“The prudent way Admiral is running its insurance operations is also reflected in a lower combined ratio – or in other words it is paying out proportionately less in claims than it is attracting in premiums.

“Motor insurance remains the profit engine of the group but there was also decent growth in the company’s household insurance arm. Losses in the travel and pet insurance arm are unlikely to keep investors up at night given they largely relate to IT integration costs associated with the acquisition of More Than.

“The next question for Admiral management is whether they continue focus on the motor division, building on its already strong position, or look to diversify by building up the other areas of the business.”

These articles are for information purposes only and are not a personal recommendation or advice.