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FTSE 100 closes higher on day and week as market mood turns positive

Footsie finished around 60 points higher as traders got over yesterday's mixed ECB update

Cityscape
European shares also gained and Wall Street stocks were higher at the time of writing
  • 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.

Car dealer Inchcape PLC (LON:INCH) lead the index higher, clawing back some of the losses suffered yesterday in the wake of its results.

Inchcape advanced 4.2% at 623.5p, despite JP Morgan trimming its target price to 620p from 627p.

Leisurewear retailer Sports Direct International PLC (LON:SPD) was down 1.3% at 422.3p as investors wait for the company’s delayed results, which were supposed to be released today.

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.

Demand for the housebuilders came despite Rightmove PLC (LON:RMV) falling back 0.2% to 510.4p following its results.

“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.

READ Remote Monitored Systems pleasantly surprised by uses for GyroMetric's products

10.30am: Languid advance continues

Vodafone Group PLC (LON:VOD) and Pearson PLC (LON:PSON) coaxed the Footsie higher in the first half of the morning session.

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%.

READ Pearson encouraged by stabilising sales as digital shift accelerates

“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,

Optimists assuming that things could not get any worse for Mothercare PLC (LON:MTC), the retailer focused on mother and toddler products, received a rude awakening on Friday.

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.

No doubting the big talking point in the Square Mile – the prelims from Sports Direct (LON:SPD), or the lack of them.

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.

READ Vodafone and Rightmove to dominate on Friday

Although London’s index of leading shares looks like it may be set for a languid session, an update from mobile phones networks operator Vodafone Group PLC (LON:VOD) may shake things up a bit.

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

Business headlines

The Times

Cobham takeover doubts as biggest investor Silchester rebels: Cobham’s biggest shareholder told the board that the agreed offer is not good enough and it should think again.

Profits rise at Google parent Alphabet but Amazon record ends: Strong growth in advertising led to better than expected results at Google’s parent company Alphabet

Jaguar Land Rover’s woes deepen as sales fall and losses mount: Britain’s largest automotive group has plunged deeper into the red

Investors revolt over executive pay at De La Rue: De La Rue suffered a revolt yesterday, with almost half of voting shareholders rebelling over directors’ pay.

High street decline is worst for eight years: A survey by the CBI employers’ group found that retail sales fell for the third month running in July

The Guardian

US government to pay farmers hurt by China trade war US$16bn: As trade talks are set to resume after a two-month halt, an aid package will see producers paid up to $150 per acre

ECB signals it will move to boost growth amid fears of low inflation: Outgoing president says outlook is worsening and inflation is well below target

Nissan to axe 12,500 jobs worldwide but Sunderland appears safe: Firm refuses to say where cuts will fall but unions are hopeful for UK’s largest car plant

Facebook to pay $5bn fine as regulator settles Cambridge Analytica complaint: Penalty by US government reflects scale of breach, first reported by the Observer

Low-carbon energy makes majority of UK electricity for first time: Rapid rise in renewables combined with nuclear generated 53% in 2018

Daily Telegraph

Cobham's £4bn US private equity takeover faces scrutiny over national security fears

Mothercare poised to sell struggling UK stores

Billionaire Anil Agarwal to sell 20% stake in miner Anglo American

O2 chief signals readiness to invest in full fibre

ECB hints at September rate cut


 

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