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FTSE shares fall ahead of Budget, as Paddy Power Betfair slumps

Last updated: 17:10 07 Mar 2017 GMT, First published: 07:00 07 Mar 2017 GMT

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  • FTSE lower

  • FTSE 250 flat

  • Pound falls 0.29% against the US dollar to $1.2203

  • Sterlng down 0.27% against the euro at 1.1535 euros

 

FTSE 100 shares ended lower on Tuesday ahead of the Spring Budget speech on Wednesday and as Paddy Power Betfair (LON:PPB) shares slumped.

The FTSE 100 ended down 0.2% at 7338.

Despite the bookmaker reporting rising revenues and underlying profits, after the costs of last year's merger between Paddy Power and Betfair were taken into account the combined company reported a loss of £5.7mln. The shares led the losers, down 5.9% to 8270p.

Shares in Direct Line (LON:DLG) were one of the top losers too, down 2.9% to 338.2p after the insurer reported a fall in full-year profits due to changes in the way that compensation payments are to be calculated.

But just ahead of Direct Line was number two faller the insurer Standard Life (LON:SL.), down 3.8% to 384.9p after profit-taking a day after the company announced plans to merge with Aberdeen Asset Management (LON:ADN) down 2.8% to 289.95p, itself the fourth top faller in the mid-cap FTSE 250 index.

In the FTSE 250 which was flat at 18,885, shares in Aggreko (LON:AGK) led the fallers as they sank 13% to 921p after the temporary power provider said it expected profits to fall this year.

The FTSE AIM 100 Index ended up 0.1% at 4418 and the FTSE AIM All-Share Index softer at 915.

Losers and gainers in London’s market were evenly matched at 33%.


 

1515 GMT - FTSE 100 heads lower as all eyes turn to spring Budget

  • FTSE 100 down 9 points to 7,341

  • Intertek leading the way for the blue chips

  • Paddy Power Betfair slumps as results disappoint

  • Chancellor to deliver spring Budget tomorrow

 

It’s managed to keep its head (just) above the water for most of the day, but as the London markets headed for the close, the FTSE 100 slipped into the red.

Shortly after 3pm, the blue chip index was down 9 points, or 0.1%, to 7,341.

Bookmaker Paddy Power Betfair plc (LON:PPB) was still weighing on the FTSE and was the biggest faller amongst the big boys.

Shares eased more than 5% to trade at £83.75 on Tuesday afternoon after the company reported a statutory loss in its first results since the two companies (Paddy Power and Betfair) merged last February.

Although revenues doubled year-on-year to £1.5bn, big merger costs hit the enlarged group’s bottom line.

Advertising and PR giant WPP group PLC (LON:WPP) ended its little run in the red following its gloomy outlook last week.

Shares had been hammered at the end of last week and the start of this week, although it edged 1% higher to claw back some of the losses and stand at £17.30.

Quality assurance business Intertek Group PLC (LON:ITRK) flew the FTSE flag for almost all of the day and added 4% to its value after it released a decent set of prelims.

Shares rose to £37.31 on the news that revenues, margins and profits all increased throughout the year, as recent acquisitions started, quite literally, to pay off.

In the small caps, toys, leisurewear and bike group Tandem Group plc (LON:TND) picked up on a bullish trading update.

Stalwart toys such as Batman, Disney Princess and My Little Pony, as well as  'evergreen' licences such as Peppa Pig, Star Wars and Thomas & Friends all did the business, while Tandem’s own brands Kickmaster and Hedstrom, also did well.

Profitability  for the year ended 31 December 2016 for sports, leisure and toys is expected to be significantly ahead of the previous year, the company added, although bikes, which contain the Claud Butler and Dawes brands, is still in the red.

“We remain confident, despite a degree of macro-economic uncertainty, that the Group will show increased profitability in 2017,” said Steve Dawes, chief executive. Shares rose 27% to 130p.

As mentioned earlier, that rise was overshadowed by the surge from Blur Group PLC (LON:BLUR) which more than doubled throughout the day.

Shares gained 156% to exchange hands for 17.6p come closing stages of trading after the e-commerce group said it was close to signing a global electronics business to its user base.

Blur told investors it has entered into final negotiations with the electronics group for a multiple six-figure on-boarding programme across three territories.

With the end of the day almost upon us, all eyes turn to the Chancellor’s first (and last) spring Budget which he is set to deliver tomorrow.

Among other things, Philip Hammond will outline how the government plans to splash the cash over the next 12 months or so.

Here’s a funny and (sort of) useful video explaining how much the government currently spends and on what…

 

1.15pm...FTSE 100 edges higher; investors dig in to Just Eat

It’s been a quiet day so far for the FTSE 100 with the markets seemingly in ‘wait and see’ mode ahead of the Chancellor’s spring budget tomorrow afternoon.

The FTSE 100 was up 4 points to 7,354, or a massive 0.05%, shortly after 1pm.

It was Donald Trump’s speech which sparked the markets into action last week and hopefully Chancellor Philip Hammond will create a similar stir when he unveils the UK budget tomorrow afternoon.

Given that the Chancellor’s nickname in the press is ‘Spreadsheet Phil’ and the fact the main budget is being pushed back to autumn from this year, that seems unlikely.

If you’re interested in what analysts think Hammond will address in tomorrow’s report, have a read of our preview.

If that’s too much for you to handle on a Tuesday afternoon, three key things to keep an eye out for are: funding for schools, tax hikes for the self-employed and plans to tackle the social care crisis.

Back to the (super) markets and Tesco PLC (LON:TSCO) (down 1.1% to 188p) and WM Morrisons Supermarkets PLC (LON:WRM) (down 1% to 244p) both slipped lower as the markets headed into the afternoon.

The falls came after data from research firm Nielsen showed the ‘Big Four’ have continued to lose market share to discounters Aldi and Lidl in the past three months.

On the FTSE 250, online food delivery marketplace Just Eat PLC (LON:JE.) sizzled more than 6% higher to 550p after it reported some consensus-beating numbers in its final results.

The company posted a 36% year-on-year rise in orders to 136mln, with pre-tax profits almost tripling to £91mln on increased revenues of £375mln.

Although the numbers look good on the surface, dig a little deeper and it seems there’s a worrying trend developing.

In 2014 – the year in which Just Eat listed – the company posted like-for-like order growth of 50%. That then slowed to 46% in 2015, before the downward pattern continued into 2016.

Although today’s order numbers remain impressive, they do show that Just Eat’s growth isn’t exponential. Indeed, ever since it listed back in the spring of 2014, the London-based firm’s order growth has only ever slowed.

Going the other way was Direct Line Insurance Group PLC (LON:DLG) which was down more than 3% to 337p.

The insurer said last week’s changes to the way accident victims are compensated dented pre-tax profits by £217mln.

The Ministry of Justice announced a new method of calculating compensation payments for those who suffer long-term injuries, which resulted in insurers having to pay out more.

As a result, Direct Line’s profits for 2016 took a 30% hit to fall to £353mln.

Among the small caps, and there has to be mention for Blur Group PLC (LON:BLUR) which more than trebled after the e-commerce group said it was close to signing a global electronics business to its user base.

Blur told investors it has entered into final negotiations with the electronics group for a multiple six-figure on-boarding programme across three territories.

Shares soared more than 240% on the back of the news to 20.6p.

On the forex front, the pound continued its losing streak against the US dollar and was down another 0.4% to US$1.219.

That’s now eight straight losing sessions for sterling and it’s the only major currency down versus the dollar this year. 

 

10am...FTSE 100 inches higher but Paddy Power plummets

For the past two trading days (Friday and Monday), the FTSE 100 has headed straight for the red within minutes of the opening bell.

That trend didn’t continue for a third day though, with the blue chip index jumping 10 points as the clock hit 8am this morning.

It has stayed in and around that area for most of the day so far and currently sits 8 points up on yesterday’s close at 7,358.

Much of the rise has come from the miners which are in recovery mode from yesterday’s falls after they were hit by weaker metals prices and slower-than-expected economic growth in China.

Rio Tinto PLC (LON:RIO) (up 1.4% to £33.16) and BHP Billiton plc (LON:BLT) (up 1.1% to £13.52) were the standouts in the sector early doors today.

Holding the torch for the index though was Intertek Group PLC (LON:ITRK) which added more than 4% after it released a decent set of prelims.

Revenues, margins and profits all increased throughout the year, as recent acquisitions started, quite literally, to pay off.

Possibly the biggest mover amongst the big boys though was Paddy Power Betfair plc (LON:PPB), which slumped more than 5% to £83.45.

In its first full-year results since the two companies (paddy Power and Betfair) merged last February, the enlarged bookmarker posted a loss of £5.7mln.

That came despite revenues almost doubling to £1.5bn, as merger-related expenses - £116mln worth – hit the bottom line.

Elsewhere, there was some good news for the UK car industry as Vauxhall’s new owner, PSA, said it wasn’t considering shutting down its two plants in the UK any time soon.

Speaking to the BBC, PSA chief executive Carls Tavares said: “We’re not talking about shutting down plants. Why? Because if you look at the PSA Group today, our capacity utilisation rate is 98%.”

 

9am...FTSE 100 boosted by miners; blur leads the small-caps with 50% jump

The FTSE 100 was in positive territory but it wasn’t quite the rally predicted by the spread betting firms ahead of the opening as the index of blue-chip shares mustered a 9 point gain to 7,359.10.

Mining stocks were in recovery mode after being hit Monday by weaker economic growth from China.

Rio Tinto (LON:RIO) led the way with a 2% rise, followed closely by BHP Billiton (LON:BLT).

Broker upgrades in the wake of last week’s annual results helped boost shares in med-tech specialist ConvaTec (LON:CTEC), which were up 1.9% early on.

Third-quarter figures from the plant hire specialist Ashtead (LON:AHT) weren’t enough to support a share price that has advanced 87% in the past year. Profit-taking explained the 4% drop after the results, analysts said.

The big riser outside the Footsie was blur Group (LON:BLUR), which rocketed 51% after it revealed it was on the cusp of landing a global electronics customer as a user of its e-commerce platform.

Proactive news headlines

BATM Advanced Communications Limited (LON:BVC) has developed the world’s first mobile agri-waste treatment unit and landed its first customer for the product.

Top-level domain specialist CentralNic Group PLC’s (LON:CNIC) revenues more than doubled last year and underlying earnings increased 65%. 

Shares in ATTRAQT Group plc (LON:ATQT) fell 3.67p to 44.83p after it announced around one-quarter of the shares available at 35p each were taken up in its open offer.

Kromek Group PLC (LON:KMK) advanced 2.8% to 32p as it revealed an existing US customer is upgrading its security screening kit, which is provided by Kromek.

Metal Tiger PLC (LON:MTR) has arranged £514,000 of funding for its Thai joint venture ahead of its listing on Aim later this year.

Amur Minerals PLC i(LON:AMC) s to drill a further 15,000m at its Kun-Manie nickel prospect in Russia to develop more targets while it carries out engineering and design at Maly Kurumkon / Flangovy , which is likely to be the first deposit into production.

Haydale Graphene Industries PLC (LON:HAYD) has received a second payment of £160,000 from its recent tie-up with New York-based tech investor Everpower.

Commercial passenger aircraft leasing company Avation PLC (LON:AVA) has announced that US credit ratings agency Egan-Jones has given the firm’s 7.5% guaranteed loan notes, due 2020, a BB rating.

6.45am...rally predicted 

London’s blue chips are heading for a solid start even though US markets dipped overnight.

Financial spread bet firms see FTSE 100 adding up to twenty points when trading starts and almost reversing the fall to 7,350 on Monday.

Politics dominated trading yesterday with the latest outburst from President Trump, North Korea’s missile test and the French presidential election casting a cloud over markets.

Economics will become more to the fore in the run-up to the UK Budget and with another interest rate hike in the US seen as almost a certainty.

The prospect of higer borrowing costs also added to a cautious mood overnight in the US with the Dow Jones Industrial Average shedding 51 to 20,954 and similar scale falls for the S&P 500 and Nasdaq.

Asian markets were mixed with good gains in Hong Kong not matched elsewhere. The Nikkei in Tokyo fell, while Shanghai was flat. 

City pages

  • Chancellor Philip Hammond has been urged by entrepreneurs and tech leaders to exempt newly created companies from business rates. A three-year exemption would give startups breathing space and a chance to find their feet while establishing themselves, they argue, in an open letter. The push was spearheaded by the founder of co-working space Central Working, James Layfield, ahead of tomorrow’s spring Budget. - City Am
  • An exclusive poll by The Independent has revealed Britons overwhelmingly oppose Theresa May’s plan to quit the EU with no deal in place if Parliament rejects the terms she agrees with Brussels. The BMG Research study showed twice as many people would rather the UK stay in the EU or try and secure a different deal, if MPs and Lords do not endorse the agreement the Prime Minister returns from Europe with.
  • Couriers who deliver packages for Marks & Spencer, John Lewis and Hamleys can be charged up to £250 a day if they are off sick and cannot find someone to replace them.Details of the policy applied by the Royal Mail-owned business emerged days after rival courier company DPD was criticised for charging some drivers who take time off for illness. And it will fuel concerns about precarious working conditions in the “gig economy”, amid a series of disputes about the employment status of people who work for firms such as Uber and Deliveroo. - The Guardian.
  • An industry wide report from trade group Oil and Gas UK said the North Sea oil industry is in dire need of fresh capital investment to drive activity in the embattled basin beyond 2020. The report found that the green shoots which have emerged in the last year mask a deeper problem for the oil basin which is suffering from record lows for new capital investment. - The Telegraph
  • Whisteblowers have claimed Talktalk customers been targeted by an industrial-scale scamming operation based in India. Professional fraudsters have been running call centres in two Indian cities where hundreds of workers are paid to dupe UK victims into installing a computer virus, according to three sources. – The Times

Commodities and currencies

  • £/$: 1.2229 - pound lower
  • Gold: US$1,225 down US$0.30
  • Oil (WTI): US$53.04 down US$0.16

 

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