LONDON MARKET MIDDAY: FTSE Perks Up After Sluggish Start; Pound Steady

LONDON (Alliance News) - The FTSE 100 strayed into the green on Thursday despite a slow start to ...

Alliance News 14 March, 2019 | 12:06PM
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LONDON (Alliance News) - The FTSE 100 strayed into the green on Thursday despite a slow start to the session following some weak Chinese data overnight.

Stocks initially opened lower after data showed China's industrial production grew at the slowest pace in nearly two decades in the first two months of 2019.

In London, travel operator TUI was leading the blue chip risers on the back of a broker upgrade, while ex-dividend stocks were capping gains for the flagship index.

Meanwhile, the pound continued to trade higher ahead of yet another parliamentary vote on the direction of Brexit this evening.

The FTSE 100 index was 44.19 points higher, or 0.6%, at 7,203.38 Thursday midday. The FTSE 250 was up 150.23 points, or 0.8%, at 19,330.32, though the AIM All-Share index was up 0.2% at 911.02.

The Cboe UK 100 index was up 0.8% at 12,231.99. The Cboe UK 250 was up 1.0% at 17,321.99, and the Cboe UK Small Companies up 0.1% at 11,128.09.

In mainland Europe on Thursday, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.5% and down 0.1% respectively at midday.

"European equity markets are higher this morning after MPs voted in favour of not pursuing a no deal Brexit, and they even ruled it out as a potential political card to play. Westminster have made it clear they don't want a no deal Brexit and investors are snapping up stocks on the back of that," said CMC Markets analyst David Madden.

The pound was quoted at USD1.3250 at midday, versus USD1.3215 late Wednesday.

Members of Parliament are set to vote on whether to keep Britain in the EU longer than planned after UK Prime Minister Theresa May's authority over Brexit sustained another major blow.

The vote on extending Article 50 comes after MPs defied the UK government and dramatically decided to rule out a no-deal withdrawal from the EU in scenes some Tory Brexiteers described as "chaotic".

"The fact MPs voted to take no deal off the table may not have legal force, but the pound is certainly taking it as making that outcome less likely, consolidating overnight gains," commented Russ Mould, investment director at AJ Bell.

"Having struggled for direction early on, the FTSE 100 traded slightly higher as investors digested the news," he added.

Meanwhile, European Council President Donald Tusk will appeal to EU capitals to consider a long delay to Britain's departure from the EU, "if the UK finds it necessary", a week before leaders are due to discuss the issue in Brussels.

"During my consultations ahead of [the EU summit], I will appeal to the EU27 to be open to a long extension if the UK finds it necessary to rethink its Brexit strategy and build consensus around it," Tusk tweeted.

EU leaders are expected to reach a decision on any UK extension request at their summit on March 21-22, if such a request is forthcoming following a vote in Parliament on Thursday.

On Wall Street, the Dow Jones, S&P 500 and Nasdaq are all pointed to open 0.2% lower.

In the US economic calendar are import and export prices at 1230 GMT, followed by new home sales at 1200 GMT and EIS natural gas storage at 1430 GMT.

At the top of London's FTSE 100 was TUI, up 6.1% after Morgan Stanley upgraded the travel operator to Overweight from Equal Weight.

Ex-dividend stocks were at the bottom of the blue-chip index, with miner Anglo American down 3.5% and building materials firm CRH shedding 1.4%.

Cineworld was the stand-out gainer in the FTSE 250, rising 7.0% as its acquisition of US cinema chain Regal Entertainment boosted its annual results.

For 2018, the cinema operator reported annual profit of USD349.0 million, up from USD155.1 million a year ago. Revenue jumped to USD4.12 billion from USD1.15 billion a year prior as admissions rose to 272.6 million from 103.8 million.

Cineworld completed its acquisition of Regal Entertainment in February 2018.

On a proforma basis, reflecting the company's US performance if Regal been consolidated for the whole of 2018 and 2017, revenue increased 7.2%.

"2018 was a transformative year for Cineworld Group. The acquisition of Regal in February made us into a global operator and the second largest cinema chain in the world. By the end of 2018, the group was operating 9,518 screens in 790 sites across 10 countries. This significant achievement would have been difficult to imagine when we began operations in 1996," Chair Anthony Bloom said.

AJ Bell's Mould said; "In terms of getting bums on seats, the remainder of this year has plenty of big blockbusters with the latest instalments in the Toy Story, Avengers and Star Wars film series coming to the big screen."

Capita reversed some early losses to trade 4.4% higher at midday after reporting profit was "slightly ahead" of expectations as it completed the first year of its five-year transformation programme.

In 2018, the FTSE 250-listed outsourcer swung to a GBP272.6 million pretax profit from a GBP513.1 million loss the year prior. This was despite revenue falling 7.3% to GBP3.92 billion from GBP4.23 billion the year before.

In 2017, profit had been significantly impacted by a number of exceptional one-off charges. These were primarily due to a series of impairments, including a GBP551.6 million impairment of goodwill.

Adjusted pretax profit - excluding one-off costs - fell 26% to GBP282.1 million from GBP383.1 million the year before. This was, Capita explained, "slightly ahead" of its guidance.

At the other end of the midcap index, Just Group tumbled 11% as the retirement financial services firm swung to an annual loss and set out plans to conduct a placing and scrap its 2018 dividend.

Just Group is looking to conduct an underwritten placing to institutional investors of 94.0 million shares via an accelerated bookbuild in order to strengthen its capital base to "support its new business franchise and maintain its focus on growing profits".

Additionally, Just Group will launch an underwritten benchmark debt offering, with a minimum of GBP300 million.

Just Group said, assuming a debt offering of GBP300 million and an equity placing raising GBP80 million, the company's solvency ratio will increase to 160% from 136% at December 31.

Turning to results for 2018, Just Group's net premium revenue rose to GBP2.71 billion from GBP2.43 billion, but the company sank to a pretax loss of GBP85.5 million from a GBP181.3 profit million the year before.

The FTSE 250 constituent added that it has considered it "appropriate" not to pay a dividend for 2018, and will look to recommence payouts in 2019 at a "rebased" level of approximately one third of the 3.72p paid out in 2017.

Estate agent Savills fell 3.8% after revealing an annual fall in profit and an cautious outlook for 2019.

Savills posted a pretax profit of GBP109.4 million for the year, down 2.7% from GBP112.4 million. The company incurred a one-off charge relating to its pension plan of GBP3.1 million versus no such charge in 2017, which hurt profit.

Underlying profit, which is adjusted for exceptional items and non-operational items, was up 2.3% at GBP143.7 million from GBP140.5 million.

"We have made a solid start to 2019; however, the year ahead is overshadowed by macro-economic and political uncertainties across the world. It is difficult accurately to predict the impact of these issues on corporate expansionary activity and investor demand for real estate," said Chief Executive Mark Ridley.

"At this stage, we expect to see declines in transaction volumes in a number of markets and growth in our less transactional business lines; accordingly we retain our expectations for the group's performance in 2019," he added.

In domestic economic news, prolonged Brexit uncertainty is damaging confidence in the UK housing market and overshadowing other pressing issues, as the number of properties for sale sits at record low levels, surveyors have warned.

A net balance of 28% of surveyors reported house prices falling rather than rising in February, showing the weakest price momentum since May 2011, according to the Royal Institution of Chartered Surveyors

By Lucy Heming;

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Just Group PLC 57.05 -
TUI AG 740.20 -
Cineworld Group PLC 304.70 -
Savills PLC 833.00 -
CRH PLC 2,498.00
Capita PLC 106.00 -
Anglo American PLC 1,901.00
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