LONDON MARKET CLOSE: Quiet Start To Week; IWG Surges On Unit Sale

LONDON (Alliance News) - Stock prices in London closed mixed on Monday in an unenergetic start to ...

Alliance News 15 April, 2019 | 4:47PM
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LONDON (Alliance News) - Stock prices in London closed mixed on Monday in an unenergetic start to the week, despite FTSE 250-listed IWG surging a fifth on the sale of its Japanese unit.

The FTSE 100 index closed up marginally lower at 7,436.87. The mid-cap FTSE 250 index closed up 0.5% at 19,807.09, and the AIM All-Share index closed 0.6% higher at 947.36.

The Cboe UK 100 closed up 0.1% at 12,614.34, the Cboe UK 250 up 0.7% at 17,746.51, and the Cboe UK Small Companies up 0.5% at 11,376.21.

The pound was quoted at USD1.3109 at the London close, flat from USD1.3108 late Friday.

UK markets started the week "unenthused" amid an "absence of major macroeconomic news", CMC Markets Market Analyst David Madden said.

With the UK Parliament also having headed on its Easter break, the market also appeared settled on relative Brexit quiet despite ongoing cross-party talks behind the scenes.

"With parliament now in recess until April 23 we may see a lull in Brexit news," Lloyds Bank Senior Economist Rhys Herbert said. "However, cross-party talks between the Conservatives and Labour are continuing."

Herbert added: "In an interview over the weekend, David Lidington, frequently described as Prime Minister May's de facto deputy, said both sides were testing out each other's ideas as they try and resolve the deadlock. The plan is for them to 'take stock' in 10 days."

"Lidington claimed the two parties were not far apart but that a deal would require 'movement on both sides'," Herbet continued.

"However, other media reports stress PM May and Labour leader Corbyn both face pressures from their respective parties that give them only limited room to budge."

Towards the top of the FTSE 100, advertising firm WPP closed up 1.5% after getting a boost from well-received first quarter results from French peer Publicis Groupe.

Publicis, which owns the Saatchi & Saatchi, Leo Burnett Worldwide and Sapient brands, reported net revenue grew 1.7% to EUR2.12 billion, down 1.8% on an organic basis. Yet its key "game changers" businesses surged 27% higher in the quarter.

The news also followed, late Friday, a report in Reuters which suggested "at least" five of the biggest private equity firms were lining up bids for a majority stake in the Kantar unit of WPP.

At the other end of the blue chips, catering firm Compass Group ended 2.2% lower, the worst performer on the index, after Barclays trimmed its recommendation to Equal Weight from its long-held Overweight rating amid concerns about profit margins and valuation.

BHP was 1.7% lower after announcing it will invest a further USD302 million in its Resolution copper project located in the US state of Arizona.

The miner explained the investment will fund additional drilling, ore-body studies, infrastructure improvements and permitting activities. Rio Tinto is currently looking to progress the project to the final stage of the permitting phase for the project.

When fully operational, the project will have the potential to supply 25% of copper demand in the US.

Mining peers in London were also under pressure amid caution ahead of important Chinese data coming up overnight.

"Mining stocks on the FTSE will no doubt be sensitive to the most recent batch of Chinese data, with GDP, industrial production and retail sales all due out overnight on Tuesday," XTB Chief Market Analyst David Cheetham said.

"There's a feeling the Chinese economy has bounced back in recent months, aided no doubt by a surge in credit, and investors will be hoping for some confirmation of this from hard data."

Anglo American closed 2.0% lower, Rio Tinto down 1.5%, and Fresnillo down 1.4%.

Leading the midcaps higher was co-working office rental space firm IWG, up 21%. This was after the Regus-owner agreed to sell its 130-office Japanese operations to TKP in a GBP320 million all-cash deal.

Under the deal, the company also agreed an exclusive master franchise agreement with TKP for the country and expects it to close in May on regulatory approval.

In contrast, Acacia Mining sank to the bottom of the FTSE 250, down 13%. This was as the gold miner reported first quarter gold production sunk 15% on the year prior to 104,899 ounces of gold.

Production was impact by production issues at its North Mara mine in Tanzania as well as problems at some of its other operations.

In mainland Europe, in Paris the CAC 40 equities index ended down marginally, while the DAX 30 in Frankfurt ended up 0.1%.

The euro was quoted at USD1.1301, lower compared to USD1.1317 late Friday.

On Wall Street, the Dow Jones was trading 0.2% lower, the S&P 500 down 0.3%, and the Nasdaq was also down 0.3%.

In the US, the earnings season continued with banking giants Goldman Sachs and Citigroup both reporting first quarter results.

Goldman saw net earnings fall 20% to USD2.18 billion from USD2.74 billion, whilst revenue fell 13% to USD8.81 billion. In contrast, Citigroup saw earnings rise 1.9% to USD4.71 billion from USD4.62 billion despite revenue declining by 1.5% to USD18.58 billion.

Gold was quoted at USD1,287.83 an ounce at the London equities close, lower versus USD1,292.15 Friday.

Brent oil was quoted at USD71.09 a barrel at the London equities close, lower than USD71.50 at the close Friday.

In the economic calendar on Tuesday, UK unemployment figures are released at 0930 BST alongside average earnings data.

In Europe, German and eurozone economic sentiment figures are released at 1000 BST with eurozone construction output data printed at the same time. In the US, Redbook Index figures are released at 1355 BST, industrial production at 1415 BST, and API weekly crude oil stock figures at 2130 BST.

In UK corporate events on Tuesday, BHP will deliver its third quarter operations results at 2330 BST.

Meanwhile, full year results are due from clothes retailer JD Sports Fashion, card retailer Card Factory, internet of things enablement firm Telit Communications, and microfinance group ASA International.

Third quarter results are due from recruitment firm Hays and investment manager City of London Investment Group. A trading statement is also expected from asset manager Ashmore Group.

By Ahren Lester; ahrenlester@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
WPP PLC 973.80 GBX 1.40
Fresnillo PLC 825.80 GBX -1.67 -
IWG PLC 347.00 GBX 2.81 -
Acacia Mining PLC 170.50 GBX 0.24 -
Rio Tinto PLC 4,773.00 GBX 0.06
Anglo American PLC 2,108.50 GBX -0.09
BHP Group PLC 1,917.20 GBX 0.38
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