BUSINESS LIVE: Corporation tax hike fears; Evri hiring spree; Pearson backs AI

The FTSE 100 is trading higher this morning, boosted by energy shares as well as investor optimism around interest rate cuts in the US and the UK, while weakness in Pearson limits gains.

Energy shares lead gains with a 1.5% increase, as oil prices rise on fears of a widening conflict in the Middle East. Shell and BP, both of which report this week, have gained over 1 per cent each.

Meanwhile personal care, drug and grocery shares are down 1.4 per cent, weighed by Reckitt Benckiser’s 9.2 per cent slide to their lowest in over 11 years.

Close to 1,000 lawsuits have been filed against Enfamil formula maker Reckitt Benckiser, Abbott or both in federal or state courts.

Global sentiment was upbeat after tech shares rebounded on Wall Street and a largely in-line U.S. inflation report kept intact bets for a September cut on Friday.

This week, all eyes will be on the US Federal Reserve’s rate decision on Wednesday, where investors expect the central bank to take a dovish stance following a slew of data that supports the trend of cooling inflation in the economy.

A crucial jobs report is also due Friday, which could further influence the Fed’s stance.

The Bank of England’s monetary policy decision will steal the spotlight on Thursday. Market participants have priced in about 56 per cent chances of a cut despite recent data showing sticky services inflation.

Pearson is down 3.7 per cent to the bottom of the FTSE 100, despite reporting a 4% rise in first-half adjusted operating profit.

Adam Vettese, market analyst at eToro:

‘Pearson’s results are reflective of some restructuring in some of its business areas with total sales softer than last year and profit sitting flat. Whilst we have not seen any growth in earnings per share, profit margins are creeping up. Effects of inflation and FX headwinds are also reducing which has led the firm to reaffirm its guidance for this year and next.

‘Pearson are continuing to return cash to shareholders via a £200m buyback scheme, which is almost complete and the dividend has been hiked by 6%. This however has increased their total debt position. Shares are down this morning off the back of this update putting them marginally ahead for the year, but it seems investors need a little more convincing about the trajectory of the company.’

British meat producer Cranswick saw sales rise in the first quarter of its financial year, driven by strong demand for its premium ranges and pet products.

Cranswick, which produces fresh pork, bacon, gourmet sausages, poultry items and continental foods, said export sales volumes were strongly ahead in the quarter.

British food producers have been benefiting from a revival in consumer spending and easing costs, after a long spell of staggering demand and supply-chain constraints amid inflationary pressures.

Revenue was 6.7 per cent ahead of the year-earlier period, with the group maintaining its outlook for the current financial year.

FTSE 100 education publisher Pearson is targeting rapidly expanding markets such as early careers and enterprise skilling, with the group’s chief executive embracing ‘advances in AI’ and ‘significant demographic shifts’ as its key drivers of growth in the years ahead.

Pearson has posted a 4 per cent rise in first-half operating profit to £250million, driven by growth across all segments with a particularly strong performance within its English language operations.

The group said it was also boosted by ‘net cost phasing and savings’, but this was partially offset by inflation and restructuring charges in Higher Education.

Pearson boss Omar Abbosh said:

‘Since joining Pearson at the start of the year, I have led a comprehensive review of our business and the markets in which we operate.

‘This process has only reinforced my conviction in the potential of Pearson and the vital role we play in helping people realise the life they imagine through learning.

‘Significant demographic shifts and rapid advances in AI will be important drivers of growth in education and work over the coming years, and this plays to Pearson’s strengths as a trusted provider of learning and assessment services.

‘We are implementing plans across all of our businesses that will see us deliver better products & services with greater efficiency. We’re also focusing on opportunities to progressively build our presence in materially larger and higher growth markets in which we are well positioned to succeed, with a particular focus on early careers and enterprise skilling.’

Delivery giant Evri is planning to hire 9,000 new staff just days after announcing new private equity owners.

The British parcel company wants to expand its team of couriers and warehouse staff amid ballooning demand for its services.

It is focusing on Scotland, Bury St Edmunds, Plymouth and Gatwick.

Almost one in three bosses are pessimistic Labour will hike corporation tax.

In a survey of company leaders, 29 per cent said they believed the profit levy was the most likely to be increased over the next five years.

Keir Starmer’s government has insisted it will cap the rate for the duration of this Parliament.

But the poll of 500 bosses from consultancy BDO revealed wariness towards this pledge.