FTSE 100 closes 60 pts higher
Vodafone top Footsie gainer
Still waiting for the results from Sports Direct
FTSE 100 closed higher on Friday and on the week as traders are in upbeat mood heading into the weekend.
The Footsie closed up around 60 points at 7,549. On the week as a whole it gained 0.55%.
FTSE 250 was also higher, up over 37 points at 19,857.
In Europe, the German DAX and French CAC 40 also gained, while on Wall Street, the Dow Jones Industrial Average is up around 41 points and the broader based S&P 500 added around 20.
"Stocks are higher heading into the close as traders have gotten over the mixed update from the European Central Bank yesterday," said David Madden, analyst at CMC Markets.
"The prospect of a rate cut in September is still on the table and traders are snapping up relatively cheap stocks. Yesterday acted as a speed bump, and today dealers are reshaping their outlook, which remains broadly positive," he added.
Leading the Footsie charge was communications titan Vodafone (LON:VOD), which soared over 10% as it emerged the company is considering disposing of some of its European Tower Business. It also reported first-quarter results showing improved revenue trends, with organic service revenue for the quarter down just 0.2% compared to a 0.7% drop in the fourth quarter and with this recovery expected to continue.
2pm: Footsie close to intra-day high
The Footsie remains close to its intra-day high, ahead of a US open that is expected to see stocks claw back some of yesterday’s losses.
The index of London’s heavyweight shares was up 43 points (0.6%) at 7,533, just four points below its highest level of the day, with sentiment enhanced by sterling losing a third of a cent against the US dollar.
The mid-cap FTSE 250, which contains far fewer big dollar earners (proportionally) than the FTSE 100, was up by a more pedestrian 43 points (0.2%) at 19,863.
Inchcape advanced 4.2% at 623.5p, despite JP Morgan trimming its target price to 620p from 627p.
Noon: The Footsie perks up after a lethargic start
After a lethargic start, the Footsie has got a bit of a hurry on, helped by investor enthusiasm for housebuilders.
The FTSE 100 was up 41 points (0.5%) at 7,530, and while Vodafone and Pearson continue to top the leader-board, housebuilders such as Berkeley Group PLC (LON:BKG), up 2.7% at 3,953p, Barratt Developments PLC (LON:BDEV), up 1.8% at 667p, and Taylor Wimpey PLC (LON:TW.), up 1.5% at 175.2p, were not far behind.
“The good news for Rightmove is, a vast captive audience makes it an indispensable service for traditional estate agents. That’s proven by Rightmove’s ability to keep pushing prices up and upselling to existing branches, which is an effective antidote to the falling number of physical estate agents,” said Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown.
On the day it was announced annual wind energy provided to the UK grid achieved record levels, Remote Monitored Systems PLC (LON:RMS), which is targeting the sector through its GyroMetric Systems, posted a handy 4.4% rise to 0.60p after an upbeat review of GyroMetric’s activities.
10.30am: Languid advance continues
London’s index of blue-chip shares was up a modest 14 points (0.2%) at 7,503, largely thanks to the warm receptions given to updates from Vodafone, up 8%, and Pearson, up 6.7%.
“Vodafone’s latest quarterly update has given investors somewhat of a reprieve as shares of the telecoms giant have risen by over 7%. The group’s service revenues, which have been under pressure, showed significant improvements against the prior quarter coming in materially ahead of the markets expectations,” reported Helal Miah, an investment research analyst at The Share Centre.
“Management kept their full-year guidance for low single-digit organic growth rates with EBITDA [underlying earnings] expected to be in the range of €13.8bn to €14.2bn,” he added,
The shares slumped 11% to 17.5p as it issued a profit warning as it said underlying full-year profitability before tax is forecast to be broadly comparable to the prior year.
Gross margin improvements in the UK are expected to take longer to materialise than previously anticipated, the board advised.
House broker finnCap responded by cutting its adjusted loss before tax forecast for the current financial year to £11.6mln from a previously forecast loss of £3.3mln.
“Having delivered several updates characterised by forecast stability, today’s update will likely be perceived somewhat by the stock market as a disappointment but to a great extent explicable by wider market turmoil,” the broker said as it bravely stuck with its 12-month price target of 23p.
8.50am: Half-hearted rise for London blue-chips
The FTSE 100 resisted the pull lower of Wall Street to open 19 points to the good at 7,508.43 on what is expected to be sluggish day of trade.
In fact all the action looks likely to be centred on London’s foreign exchange desks with the pound under pressure once more – and languishing at US$1.2438 - amid heightened worries over a No Deal Brexit pushing it down to US$1.2428.
“Sterling is on the back foot again as traders worry about the way Boris Johnson has started,” said Neil Wilson at Markets.com.
“Specifically, comments from the Irish leader and Michel Barnier suggest little room for wiggle.
“Barnier is simply restating that the deal is the deal and cannot be changed. The sides are now very much at odds.
“The rhetoric has shifted and Boris seems intent on forcing their hand by using the date to his advantage. No-deal risks raised for sure – therefore likely that an election is required.”
Looking at the individual market movements, Pearson (LON:PSON) led the way, rising 7% after a solid set of interims which revealed the publisher’s digital revolution was gaining traction.
Pearson’s rise eclipsed that of Vodafone (LON:VOD), which was up 5% after a trading statement in which it said it could list its towers business.
On the flipside, the miners were on offer with Anglo American (LON:AAL) leading the fallers. Traders learned on Thursday that steel tycoon Anil Agarwal was unwinding a complicated transaction that made him Anglo’s biggest shareholder.
Scheduled for release on Friday, so far we’ve seen neither hide nor hair.
6.30am: FTSE 100 set for day of limited movements
Another day of limited movement looks in store for the Footsie despite the sharp falls posted on Wall Street yesterday.
Spread betting quotes point to the FTSE 100 opening a couple of points higher at 7,491 after the index shed 12 points yesterday to close at 7,489.
US stocks finished largely in the red, including online retail giant and tax specialist Amazon.com, which missed operating profit expectations by 16.7%.
“For most companies, missing profit expectations by 16%+ would be a major blow, but Amazon’s always taken a fairly laissez-faire approach to the bottom line. CEO Jeff Bezos is far more interested in growth, cash generation and investment opportunities,” said Nicholas Hyett at Hargreaves Lansdown.
“On those fronts, things continue to look pretty healthy. Operating cash is up 22.4% year-on-year, and technology and marketing expenses are attracting an increasing share of revenues.
“Amazon’s profit problem seems to stem from the fact growth is no longer creating the operating leverage it once did, and very unflattering profit projections for next quarter suggest that’s a problem which is here to stay for the time being at least,” he added.
The Dow Jones industrial average finished the day 129 points in the hole at 27,141 and the S&P 500 shed 16 points to finish at 3,004.
Asian markets this morning have also largely been on the run. Tokyo’s Nikkei 225 was down 127 points at 21,630 and Hong Kong’s Hang Seng was 143 points lower at 28,451.
The group is reporting soon after receiving the green light for its massive acquisition of European cable assets from Liberty Global and not long after its dramatic dividend cut.
Swiss bank UBS expects the first quarter to see an improvement in Italy, weaker South Africa, Spain softer but close to bottoming out, while the UK and Germany see broadly si milar trends to the prior quarter.
Property website Rightmove PLC (LON:RMW) has been grappling with a slowdown in the housing market but is still expected to post stronger revenue for the first half.
UBS estimates revenue of £142mln for the first six months of the fiscal year 2019, up 8% on the previous year, with average revenue per agent up 8.8% to £1,073. The investment bank predicts a 9.7% rise in diluted earnings per share to 9.5p.
However, the number of advertisers are expected to fall by 1% to 20,252 as homeowners delay selling amid Brexit uncertainty.
Around the markets
- Sterling: US$1.2444, -0.11 cents
- 10-year gilt: yielding 0.711%, down 3.01 basis points
- Gold: US$1,415.30 an ounce, +0.60 cents
- Brent crude: US$63.36 a barrel, up 10 cents
- Bitcoin: US$9,728.83, down US$143.92
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