Mondi posts sharp drop in profits, Rolls Royce delivers jump in earnings

London open

As of 0719 BST FTSE 100 futures were rising by 5.5 points to 7,538.0.

Stocks to watch

Paper and packaging group Mondi reported a sharp fall in interim earnings due to weaker demand, customer destocking and higher input costs. Pre-tax profit for the six months to June 30 more than halved to €418m from €933m a year ago. "So far in 2023, demand and prices have declined sequentially with the exception of containerboard prices which stabilised in the later part of the half year. We saw some benefit from lower input costs which continue to ease as we progress into the third quarter of the year," said chief executive Andrew King.

Rolls Royce delivered a 31% jump in underlying revenues over the first half to reach £6.95bn. Underlying operating profits more than quintupled to £673m and the engineer turned cash flow positive to the tune of £356m after an outflow of -£68m in the year earlier period. Management attributed the improvement to continued growth in its end markets, commercial optimisation and cost efficiencies. Its performance was driven by the Civil and Defence sectors.

In the press

Drax has been accused of costing consumers more than £600 million after choosing not to run a biomass power plant unit that would have supplied electricity at well below market prices during the energy crisis. Instead it burnt biomass in three other units that were able to cash in on high market prices and also profited by selling some biomass pellets to other companies instead of burning them, an investigation by Bloomberg claimed. - The Times

Strikes by French air traffic controllers have fuelled a sharp rise in flight delays across Europe, creating chaos for passengers and threatening to dent the sector’s recovery. Walkouts by staff have pushed up the number of delayed flights on the continent by 36pc in the year to date, according to figures from air traffic manager Eurocontrol. Air traffic control (ATC) capacity and staffing issues accounted for more than half of the disruption, Eurocontrol has found. - Daily Telegraph

The owners of British chip designer Arm are seeking a record float valuation for a UK company when it lists in New York. Softbank, Arm’s Japanese owners, are hoping for the firm to be valued at £55billion when the chip maker is returned to the public stock markets possibly as early as next month. Sources said the British company, whose products feature in about 90 per cent of the world’s smartphones, could be worth between £50billion and £55billion as SoftBank drums up interest from investors. - Daily Mail

US close

Wall Street shares fell on Wednesday after Fitch cut the U.S. government's debt rating by one notch.

"Despite the poor eye candy and initial surprise, the recent US downgrade will unlikely cause a significant Treasuries sell-off or prompt a major shift in investor behaviour mainly because investors experienced a similar downgrade from S&P in 2011 and came away unscathed," said Stephen Innes, Managing Partner at SPI Asset Management.

"While Fitch's rating change does bring attention to the problem, it is not market-shattering news."

The Dow Jones Industrials fell 0.98% to 35,282.52, alongside a 1.38% drop for the S&P 500 to 4,513.39.

But it was the Nasdaq Composite that fared worst, erasing 2.17% to 13,973.45.