London close
The FTSE 100 smashed its way through the 6,700 barrier and did not look back, encouraged by upbeat economic news from mainland Europe and China.
The FTSE 100 closed 13 points below its intra-day high at 6,752, up 66 points, or 1.0%, on the day, with miners leading the way, possibly as a result of some short-covering ahead of results from Rio Tinto (LON:RIO) tomorrow.
Rio Tinto (LON:RIO) topped the bill with a 3.9% rise after Liberum Capital abandoned its bearish position and moved to a neutral stance,
Asia-focused bank Standard Chartered (LON:STAN) has an up-and-down day, ending it just 0.2% higher, as investors weighed up progress on restructuring and the halving of the dividend.
Elsewhere in the legal sector, insurer Legal & General (LGEN) increased 7.3p to 270.7p on news of an 18% rise in operating profit to £750mln and a 19% rise in the interim dividend.
Merger activity seems to be all the rage in the pharma sector at the moment, and the latest whisper is that US giant Pfizer, thwarted a while back in its attempt to buy AstraZeneca (LON:AZN), may have a crack at GlaxoSmithKline (LON:GSK) instead.
Dealers were also talking about a potential competing bid from Swiss giant Novartis, although it is thought that would only happen if fellow Swiss company Roche was to agree to buy parts of Glaxo after a deal.
Despite its failure to buy AstraZeneca, Pfizer is still believed to be keen on a major takeover to boost its sales.
In May, Deutsche Bank (DB) said Pfizer would benefit from a Glaxo acquisition, which the German broker dubbed as "Pfizerkline".
It would increase Pfizer's earnings and allow it to unlock its balance sheet and improve its tax position, DB analyst Gregg Gilbert said in a note.
The talk comes in the wake of takeover activity in the sector that most recently included a US$30bn approach from Britain's Shire for US group Baxalta.
While Shire's shares have risen to 5,450p from 1,496p five years ago, Glaxo's shares have only risen a few pounds, from about 1,177p in August 2010 to about 1,419p today.
The lack of upward movement in its shares has led some to highlight Glaxo as being ripe for a takeover.
In March, Glaxo bought Novartis's global vaccines business for US$5.25bn in a deal that created a consumer health joint venture with the Swiss group.; in return, Novartis bought Glaxo's oncology operation for US$16bn.
Among the small caps, Tern (LON:TERN) was wanted, rising 37% to 5.75p, after it said the value of its portfolio has risen more than four-fold over the past 12 months.
Shares in Filtronic (LON:FTC) jumped on news a technical issue with its antennas had been solved and a tooling contract signed with a major telecoms group.
The shares closed at 9.75p, up 30%.
Elsewhere, Rosslyn Data Technologies (LON:RDT) revealed it had won a contract with an unnamed Fortune 500 company that will replace its own analytics platform with Rosslyn’s RAPid Cloud-based system.
Rosslyn’s chief executive Charles Clarke called the deal an “excellent step forward” and shares climbed 1.62p or 14% to 12.88p.
US open
US blue-chips have pulled out of their slump after underwhelming private sector payrolls data eased fears over an early interest rate rise.
Data from payrolls processing firm ADP – not always a reliable indicator to official non-farm payrolls figures out later in the week – said 185,000 jobs were added in the private sector in July, comfortably below the 229,000 added in June.
In other economic data, US trade showed a deficit of US$43.8bn (seasonally adjusted) in June, up 7% from the previous reading.
The Dow Jones average was up 97 points, or 0.55%, at 17,647, while the broader-based S&P 500 climbed 16 points (0.74%) to 2,109.
The Nasdaq Composite, weighed down of late by aggressive selling of shares in index heavyweight Apple, recovered to 5,168, up 64 points, or 1.25%, as the tech giant perked up, despite Bank of America Merrill Lynch downgrading the shares of the iPhone maker to neutral.
“Apple is one of the top positions for many institutional investors so after only a 10% correction, the inclination for fund managers could be to add to holdings,” correctly predicted Jasper Lawler, a market analyst at spread betting firm CMC Markets.
Apple may have roused itself but theme parks and film studios operator Disney (Walt) is still getting a duffing over after revenue figures released last night missed forecasts.
On the upside, renewable energy specialist First Solar is a very bright spot, after beating expectations with its quarterly figures, while online travel broker Priceline was in a happy place after its quarterly profit was better than the market had anticipated.
After the bell tonight electric car maker Tesla is expected to release numbers, with some analysts expecting the company to raise full-year profits guidance.
Back in the UK, the FTSE 100 is having a solid day, up 53 at 6,739, with mining giants BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) leading the charge.
“The sector has been heavily sold down so there looks to be an element of short-covering off the back of a broker upgrade and ahead of Rio Tinto’s Q2 results on Thursday,” suggest CMC analyst Jasper Lawler.
Mid-session market wrap
Upbeat economic news from mainland Europe and China and rising oil prices lifted London shares above a key threshold on Wednesday.
The FTSE 100 Index topped 6,700 to stand 62 points up at 6,748 as Eurozone service sector figures came in only marginally lower than June's four-year high.
It helped investors to shrug off disappointing services numbers in the UK, which showed lower-than-expected growth in July against June.
Connor Campbell at Spreadex said: "That UK services PMI miss brings the figure to a 16 month low.
"More importantly, combined with the performance of the manufacturing and construction PMIs, it points to second quarter GDP of 0.6%, not the preliminary 0.7% reported last week."
Services data from Beijing also eclipsed the UK numbers, showing the Chinese service sector racking up its quickest growth in 11 months.
The improvement in the Caixin China PMI Services index helped US light crude oil to rise more than 1% to US$46.40 a barrel.
That boosted oil majors such as BP (LON:BP.) and Royal Dutch Shell (LON:RDSB), which rose 5.95p to 396.35p and 28p to 1,873p respectively.
US markets were tipped to open mixed on Wednesday with Walt Disney shares set to drag the Dow Jones Industrial Average lower after missing revenue estimates.
Attention also focused on Apple, whose shares risked falling for a sixth day in a row on growth concerns.
Financials dominated the companies reporting on Wednesday in London.
Asia-focused bank Standard Chartered (LON:STAN) ticked up 36.3p to 988.9p as it slashed its dividend by half but reported restructuring progress.
Insurer Legal & General (LGEN) increased 6.9p to 270.3p on news of an 18% rise in operating profit to £750mln and a 19% rise in the interim dividend.
Devro (LON:DVO) sizzled 21.75p to 320.5p as the sausage skin maker reported firm prices and rises in sales volumes in several key markets.
In the small cap space, African Potash (LON:AFPO) saw shares rise for the second consecutive day, by 0.12p to 0.52p.
The company announced a deal yesterday with Comesa, a free trade union of twenty African countries, to provide 500,000 tonnes of fertiliser over three years.
Elsewhere, Rosslyn Data Technologies (LON:RDT) revealed it had won a contract with an unnamed Fortune 500 company that will replace its own analytics platform with Rosslyn’s Rapid Cloud-based system.
Rosslyn’s chief executive Charles Clarke called the deal an “excellent step forward” and shares climbed 1.62p or 14% to 12.88p.
Meanwhile, Stratex International (LON:STI) expects to complete construction of the Altintepe gold mine in Turkey imminently with the first gold pour on track for the end of next month. Shares rose 0.25p to 1.62p.
Conversely, Galileo Resources (LON:GLR) led the fallers after the company completed a placing of 31mln new shares at 1.2p to raise £375,000 to pay licence fees due on its US properties. Shares dropped 0.18p to 1.25p.
Spirax-Sarco Engineering faded 225p to 3164p on news of slowing growth rates in its global markets, which include aerospace and other heavy industries.
Most followed
Standard Chartered (LON:STAN) has suffered its fair share of slings and arrows, and now it's the turn of its shareholders to share the pain.
The emerging markets-focused bank, under new management, has halved the dividend after first half profits slumped 44% to US$1.8bn due to adverse loan impairments.
New chief executive Bill Winters said the lower dividend reflected the bank's “current earnings expectation and outlook”.
The cut shored up the company's common tier 1 equity position – a key measure of the balance sheet strength of banks – and the market responded by nudging the shares up a couple of percentage points.
Some analysts have suggested that the company will still need a monster rights issue to plug a US$5bn hole in its balance sheet.
Scotland's Macfarlane Group (LON:MACF), a manufacturer and distributor of packaging consumable products, does not often hit the headlines but it is garnering some attention today with news of a £2.75mln acquisition.
Given the company is valued at £55mln, this is the very definition of a “bolt-on” acquisition, and it is hard to discern why the news is garnering so much attention, though the prominent coverage given by Scottish titles may have something to do with it.
All the noos that's fit to print, as it were.
The company is acquiring Nottingham-based One Packaging as its seeks to strengthen its packaging distribution activities in the East Midlands.
Distribution, did someone say? Shame One Packaging had not chosen the name One Direction for itself; it might have got even more coverage then.
Also on the acquisition trail is defence technology group Cohort (LON:CHRT), which is buying Empresa de Investigação e Desenvolvimento de Electrónica, a Portuguese company.
EID, as it is known to its friends, is a supplier of advanced electronics, communications and command and control products used by the military.
Cohort is paying €19mln on what is its biggest deal to date outside of the UK.
Not to be outdone, Polypipe (LON:PLP), the largest manufacturer in the UK of plastic pipes, is splashing out £145mln on Nuaire, a provider of ventilation solutions.
Wait! There's another one. Restore (LON:RST), the document management specialist, is paying £1.45mln for The Data Imaging and Archiving Company, an outfit that obviously subscribes to the Ronseal school of branding.
Lastly, happy-go-lucky (it says here) airline Ryanair (LON:RYA) carried a record number of passengers in July, topping the 10mln number for the first time.
Chief marketing officer Kenny Jacobs said the upsurge was down to “stronger forward bookings” and also the success of its 'Always Getting Better' customer experience improvement programme.
London Open
London stocks started Wednesday on the front foot after some positive economic news from China.
The FTSE 100 Index climbed 17 points to 6,703 as the Chinese service sector racked up its quickest growth in 11 months.
The improvement in the Caixin China PMI Services index helped US light crude oil to move up nearly 1% to just over US$46 a barrel.
That boosted oil majors such as BP (LON:BP.) and Royal Dutch Shell (LON:RDSB), which rose 2.45p to 392.85p and 6.5p to 1,851.5p respectively.
US shares were also lower with the Dow Jones Industrial Average shedding 47 to 17,551 after Atlanta Fed President Dennis Lockhart said it would take a significant US economic downturn for him not to support a rate rise from record lows next month.
Attention also focused on Apple which saw its shares slump for a second day running.
The iPhone maker accounts for a huge chunk of the US indices, making up 14% of the Nasdaq and 4% of the S&P 500.
Stock markets in Asia were mixed with handy gains in Hong Kong and Tokyo but modest losses in Shanghai.
British economic news disappointed with figures showing lower-than-expected growth in the service sector in July against June.
Financials dominated the companies reporting on Wednesday in London.
Asia-focused bank Standard Chartered (LON:STAN) ticked up 24.4p to 977p as it reported lower half-year revenue and profits but said it had made restructuring progress.
Insurer Legal & General (LGEN) increased by 5.8p to 269.2p on news of an 18% rise in operating profit to £750mln and a 19% rise in the interim dividend.
Devro (LON:DVO) sizzled 14.25p to 313p as the sausage skin maker said sales volumes were still rising in several important markets and prices had stayed firm.
In the small cap space, African Potash saw shares rise for the second consecutive day.
The company announced a deal yesterday with Comesa, a free trade union of twenty African countries, to provide 500,000 tonnes of fertiliser over three years. Shares rose 35% to 0.5p today and are 72% higher than Monday’s close.
Elsewhere, Rosslyn Data Technologies (LON:RDT) revealed it had won a contract with an unnamed Fortune 500 company that will replace its own analytics platform with Rosslyn’s RAPid Cloud-based system.
Rosslyn’s chief executive Charles Clarke called the deal an “excellent step forward” and shares climbed 8% to 12p.
Meanwhile, Stratex International (LON:STI) expects to complete construction of the Altintepe gold mine in Turkey imminently with the first gold pour on track for the end of next month. Shares rose 5% to 1.4p.
Conversely, Galileo Resources (LON:GLR) led the fallers after the company completed a placing of 31mln new shares at 1.2p to raise £375,000 to pay licence fees due on its US properties. Shares dropped 12.5% to 1.25p.
Market Preview
London’s blue chips are set for quiet start as the August holiday season seems to have taken a grip.
Financial spread bet firms expect the Footsie to shed a few points following a flat Tuesday where the RBS sale, weak commodities and the odd takeover rumour provided most of the interest.
The FTSE closed 2 points lower at 6,687 and a similar decline is being predicted for this morning.
US shares were also lower with the Dow Jones Industrial Average shedding 47 to 17,551, though the attention was focused on Apple which saw its shares slump for a second day running.
The iPhone maker accounts for a huge chunk of the US indices, accounting for example for 14% of Nasdaq and 4% of the S&P 500.
Chartists were having a field day as its 6% drop over the past two days also meant the tech icon had moved below its keenly watched 200 day moving average.
Stock markets in Asia were mixed with handy gains in Hong Kong and Tokyo but modest losses in Shanghai.
Financials dominate the companies reporting today in London.
Standard Chartered gives today’s bank update with the new management trying to halt a slide in revenues over the last three quarters.
The London Stock Exchange and insurer Legal & General also report.