LONDON MARKET CLOSE: Stocks End Mixed Amid Losses For TUI And Plus500

LONDON (Alliance News) - The FTSE 100 managed to remain in the green on Tuesday despite a higher ...

Alliance News 12 February, 2019 | 4:55PM
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LONDON (Alliance News) - The FTSE 100 managed to remain in the green on Tuesday despite a higher pound and travel operator TUI weighing after a soft set of first-quarter results.

The FTSE 250, meanwhile, slipped into negative territory amid sharp losses for online trading services provider Plus500 following a profit warning for 2019.

The FTSE 100 index closed up 4.03 points, or 0.1%, at 7,133.14. The blue-chip index had hit an intraday high of 7,168.61 in early dealings.

The FTSE 250 ended down 7.00 points at 18,824.78, and the AIM All-Share closed closed up 2.91 points, or 0.3%, at 908.29.

The Cboe UK 100 ended up 0.1% at 12,121.19, the Cboe UK 250 closed down 0.2% at 16,772.63, and the Cboe Small Companies ended 0.1% higher at 11,154.21.

"Trade optimism as US-Sino trade talks continue and hopes that a second US government shutdown will be avoided, have boosted sentiment across the globe on Tuesday. Yet despite an initial move higher and a positive start on Wall Street, the FTSE was unable to cling onto its morning gains," said Fiona Cincotta, senior market analyst at City Index.

"A rebounding pound, after Theresa May pleaded for more time for her Brexit negotiations, along with TUI dragged the UK index," she said.

The pound was quoted at USD1.2890 at the London equities close Tuesday, up compared to USD1.2864 at the close on Monday.

The UK prime minister on Tuesday set out plans to short circuit parliamentary rules in order to get a Brexit deal ratified in time for the UK to leave the EU on March 29.

The announcement came as May urged MPs to "hold their nerve" and support her efforts to secure a withdrawal deal which will deliver Brexit on time.

In a statement updating the Commons on progress in Brexit talks, May acknowledged she would need "some time" to seek legally-binding changes from the EU to the controversial backstop for the Irish border.

She confirmed that she will table an amendable motion for debate on Thursday, seeking the House's continued support for her to demand "alternative arrangements" to keep the border open after Brexit.

And she pledged to return on February 26 with a further statement triggering another debate and votes the following day if she has not secured a deal by that date.

If a deal is agreed, MPs will have a second "meaningful vote", like the one in January which saw May's original plan rejected by a record-breaking 230 votes.

The February 27 votes are expected to come shortly after May's planned meeting with European Commission President Jean-Claude Juncker, at which changes or additions to the withdrawal agreement could be agreed.

In European equities on Tuesday, the CAC 40 in Paris ended 0.8% higher, while the DAX 30 in Frankfurt rose 1.0%.

The euro stood at USD1.1314 at the European equities close Tuesday, against USD1.1283 at the same time on Monday.

Stocks in New York were higher at the London equities close, with the DJIA up 1.2%, the S&P 500 index up 1.2%, and the Nasdaq Composite 1.4% higher.

US media reported that a group of Republican and Democratic senators said Monday they had reached an agreement in principle on funding the government ahead of a looming deadline that threatens a second partial government shutdown.

Lawmakers face a February 15 deadline to fund the government but negotiations have stalled over President Donald Trump's demand for USD5.7 billion to build a wall along the border with Mexico, which Democrats have rejected.

In commodities on Tuesday, Brent oil was quoted at USD62.48 a barrel at the London equities close from USD61.26 late Monday.

Gold was quoted at USD1,309.81 an ounce at the London equities close Tuesday against USD1,308.89 at the close on Monday.

London's FTSE 100 just about managed to rack up some gains on Tuesday despite travel operator TUI weighing, closing down 6.2% as its first-quarter loss widened.

The German travel firm's pretax loss for the three months to December stood at EUR135.0 million, versus EUR84.3 million loss the same period a year prior. Revenue did increase, however, by 4.4% year-on-year to EUR3.70 billion.

"The main reasons for the decline in earnings included the unusually long and hot summer in Northern Europe," said TUI.

"In addition, strong bookings to Turkey and North Africa caused overcapacity in other destinations such as the Canary Islands, which went hand in hand with lower margins in the tour operating business. At the same time, the British pound remained weak as a result of the Brexit decision."

On Wednesday last week, TUI said "extraordinarily" hot weather during the summer of 2018 means earnings for its year ending September 2019 will be flat year-on-year.

Among the risers was fashion house Burberry, ending up 1.5% in a positive read-across from luxury goods firm Kering.

The owner of Gucci and Balenciaga said it saw an "excellent" year in 2018 with comparable revenue up 29% to EUR13.7 billion, including a 34% rise in Asia-Pacific sales.

Energy provider SSE closed up 1.6% while British Gas parent Centrica rose 1.4% as EDF became the second of the 'Big Six' firms to push up prices following an announcement by Ofgem last week that there would be an increase to the energy price cap.

On Monday, E.ON announced an average 10.3% price increase from April 1 for around 1.8 million customers on its standard variable gas and electricity tariff, meaning bills will rise by around GBP117 to GBP1,254.

Last week, Ofgem said it will increase the price cap for default and standard variable gas and electricity tariffs by GBP117 to GBP1,254 a year from April 1 due to hikes in wholesale costs.

London's index of mid-caps, the FTSE 250, declined amid a 29% drop for contracts-for-difference provider Plus500.

For 2018, Plus500 nearly doubled its pretax profit to USD503.0 million from USD253.4 million in 2017. The company's revenue jumped 65% to USD720.4 million from USD437.2 million.

However, Plus500 said 2019 revenue is expected to be lower than current market expectations following its latest assessment of European Securities & Markets Authority regulatory measures.

The company also lowered its profit guidance due to the lower revenue and planned higher marketing spend, saying 2019 profit will be "materially lower than current market expectations".

The update knocked peer IG Group in a negative read-across, the fellow mid-cap constituent shedding 4.1%.

London Southend Airport owner Stobart Group closed down 2.0% after HSBC started the infrastructure and support business with a Reduce rating.

Also knocked by a broker rating downgrade was soft drinks maker Britvic, sliding 2.9% after Morgan Stanley lowered its rating on the stock to Equal Weight from Overweight.

Elsewhere on the Main Market, shares in struggling department store Debenhams soared 30% as it agreed a funding lifeline.

The retailer has secured an extension to its credit facilities and inked a sourcing partnership with Li & Fung, a Hong Kong-based supply chain manager primarily for US and EU retail chains.

Debenhams has agreed a new GBP40 million credit facility for 12 months with its existing lenders, it said. The new loan fully utilises permissions within the terms of the company's current revolving credit facility and loan notes.

Despite Tuesday's share price rise, Hargreaves Lansdown was wary on the firm's prospects.

"Debenhams' longer term prospects are still in the balance, and recent data showing a deterioration in the UK economy isn't exactly going to help matters," said Hargreaves Lansdown analyst Laith Khalaf.

"For now, Debenhams has kicked the can down the road, but will have to come back for some tough negotiations with quite a lot of internal dissent amongst its stakeholders. Sounds eerily familiar," Khalaf commented.

The UK corporate calendar on Wednesday has full-year results from paper and packaging firm Smurfit Kappa, as well as annual results from Tullow Oil, while there are half-year results from housebuilder Galliford Try and home furnishings retailer Dunelm.

In the economic calendar on Wednesday is UK consumer price inflation at 0930 GMT with producer prices due at the same time. At 1000 GMT is industrial production from the eurozone followed by the US consumer price index at 1330 GMT.

In the evening on Wednesday, at 2350 GMT, is Japanese gross domestic product.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
Stobart Group Ltd 147.80 GBX -0.14 -
Debenhams PLC 3.27 GBX -2.33 -
Burberry Group PLC 1,959.00 GBX 0.31
Britvic PLC 897.00 GBX -0.06 -
Centrica PLC 137.45 GBX -0.07
SSE PLC 1,205.22 GBX 0.56
TUI AG 829.60 GBX 2.55 -
Plus500 Ltd 860.94 GBX -6.57 -
IG Group Holdings PLC 598.00 GBX 0.34 -
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