|CATEGORY: MARKET REPORT - MIDDAY
Wed 16 May 2018
LONDON (SHARECAST) - (Sharecast News) - London stocks had flattened out by midday on Wednesday as investors weighed up solid updates from the likes of Burberry and Micro Focus and deal news for Paddy Power against geopolitical concerns.
The FTSE 100 was steady at 7,725.54, giving back earlier small gains as sentiment was undermined by news that North Korea has suspended talks with South Korea over the continuation of military drills with the US, calling them a "provocative military racket", and threatened to pull out of a planned summit with the US if it continues to pressure it to unilaterally abandon its nuclear weapons programme.
Mike van Dulken at Accendo Markets pondered whether this was merely game-playing for Kim, "taken straight from Trump's negotiation playbook".
Meanwhile, sterling was up 0.2% against the euro at 1.1432 and 0.2% lower versus the dollar at 1.3472.
In UK corporate news, luxury fashion brand Burberry rallied as it presented a smart but not swanky first set of full-year results under new chief executive Marco Gobbetti, beating City forecasts despite a 1% fall in revenues. The group also announced a new £150m share buyback.
Richard Hunter, head of markets at Interactive Investor, said: "Whilst these are not results which shoot the lights out, Burberry will be pleased with its progress given the fact that it is in the early stages of its planned transformation.
"Less positively, the numbers are shy of some of Burberry's high end fashion peers, and revenues are in line with expectations although for the most part flat. Its home market in the UK is still finding it difficult to make a strong contribution, whilst the overall transformation strategy comes with implementation risks attached as the rest of the sector continues to focus on established and well-worn successes. Even so, given the disruptive backdrop, these numbers show meaningful progress."
Paddy Power Betfair was in the black after it confirmed it is in talks over a potential merger of its US business and US-based FanDuel to target the market that will open up following the Supreme Court's overturning of a federal ban on sports betting.
"Just when investors began fearing the future for bookmakers in the UK, we are seeing great excitement over the prospect of a US revival in sports betting," said Joshua Mahony, market analyst at IG, with the UK government's decision looming on gambling machine betting limits.
"The impact of government restrictions on fixed odds betting terminals is no doubt going to be hugely significant, with warnings of a potential 20,000 jobs being lost as the maximum stake is slashed from £100 to £2. However, today's rise for Paddy Power comes as investors hope that the firm can realign its interests towards the US and away from a shrinking UK market."
Software group Micro Focus International surged after it said that a new $40m licensing deal will help to boost its first-half revenue, which is now expected to be better than the guidance of -9% to -12% at constant currency.
Paper products maker Mondi edged higher after saying it expects first-quarter underlying operating profit to be 15% higher year-on-year at €295m and 6% up on the fourth quarter of 2017.
Food and beverage outlets operator SSP was on the rise after it posted a jump in first-half profit and revenue as it reaped the benefits of growing air passenger numbers, new contract openings across the world and its ongoing programme of operational improvements.
Brewin Dolphin ticked up as the wealth manager posted a rise in first-half funds under management and profit.
On the downside, Crest Nicholson was sharply lower as the housebuilder cut its margin forecast on the back of pricing pressure, while Cineworld lost ground despite saying it was on track to deliver a full-year performance in line with its current expectations.
Transport operator National Express slipped despite reporting 6.2% growth in first-quarter revenue thanks to a solid performance from its North American business.
Pub operator Mitchells & Butlers tumbled after posting a drop in half-year profit, while peer Marston's was also in the red after its interim numbers.
JD Sports dropped on news that Odey Asset Management has declared an 8.2% stake in Finish Line, prompting fears that it's trying to block JD's proposed acquisition of the US sportswear company.
Playtech declined as it said in an AGM trading statement that revenues at its B2B gaming division in Asia were lower than in the same period a year ago.
Thomas Cook was lifted by an upgrade to 'buy' at Panmure Gordon, while Tullow Oil gushed higher after an upgrade to 'overweight' at Morgan Stanley. Homeserve was higher after an upgrade to 'buy' at UBS.
Evraz was cut by both Goldman and Citi, while Centrica was downgraded to 'underweight' by Morgan Stanley and Zoopla and PrimeLocation owner ZPG was curt to 'hold' at Shore Capital. Computacenter was hit by a downgrade to 'sell' at UBS.
FTSE 100 (UKX) 7,725.54 0.03%
FTSE 250 (MCX) 20,800.72 0.08%
techMARK (TASX) 3,488.03 0.27%
FTSE 100 - Risers
Micro Focus International (MCRO) 1,380.00p 8.75%
Paddy Power Betfair (PPB) 8,195.00p 5.61%
Anglo American (AAL) 1,874.40p 3.98%
Mondi (MNDI) 2,057.67p 2.99%
Glencore (GLEN) 388.60p 2.45%
Burberry Group (BRBY) 1,842.00p 2.13%
Rio Tinto (RIO) 4,318.50p 2.10%
Antofagasta (ANTO) 1,071.00p 1.85%
NMC Health (NMC) 3,600.00p 1.69%
BHP Billiton (BLT) 1,736.00p 1.39%
FTSE 100 - Fallers
Centrica (CNA) 141.75p -4.48%
Smurfit Kappa Group (SKG) 2,992.00p -3.73%
BT Group (BT.A) 202.95p -1.86%
Compass Group (CPG) 1,533.55p -1.63%
Royal Mail (RMG) 599.80p -1.51%
Persimmon (PSN) 2,780.00p -1.31%
Barratt Developments (BDEV) 560.80p -1.30%
Associated British Foods (ABF) 2,691.00p -1.25%
Mediclinic International (MDC) 676.80p -1.17%
Vodafone Group (VOD) 196.32p -1.04%
FTSE 250 - Risers
Homeserve (HSV) 816.50p 7.72%
Vedanta Resources (VED) 824.00p 5.29%
Sanne Group (SNN) 655.00p 3.48%
Tullow Oil (TLW) 254.20p 3.33%
BTG (BTG) 609.50p 3.22%
Wood Group (John) (WG.) 696.00p 2.96%
National Express Group (NEX) 417.80p 2.86%
Hunting (HTG) 907.00p 2.66%
Electrocomponents (ECM) 634.40p 2.65%
Kaz Minerals (KAZ) 1,043.00p 2.61%
FTSE 250 - Fallers
Crest Nicholson Holdings (CRST) 441.60p -10.57%
Marston's (MARS) 104.60p -6.61%
Mitchells & Butlers (MAB) 260.00p -5.52%
JD Sports Fashion (JD.) 372.10p -4.59%
Computacenter (CCC) 1,289.35p -4.21%
Countryside Properties (CSP) 371.40p -3.28%
Playtech (PTEC) 794.00p -3.22%
Cineworld Group (CINE) 264.11p -2.97%
Provident Financial (PFG) 635.00p -2.96%
On The Beach Group (OTB) 539.00p -2.88%