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LONDON MARKET CLOSE: Gold Miners And Coca-Cola HBC Buoy FTSE 100

[ 14 Feb 2018 17:21 ]

LONDON (Alliance News) - Stocks in London ended higher on Wednesday supported by gains from Coca-Cola HBC and gold miners, while the dollar was sold off following the release of US inflation data.

The FTSE 100 index closed up 0.6%, or 45.96 points at 7,213.97. The FTSE 250 ended up 0.7%, or 128.30 points, at 19,448.38, and the AIM All-Share closed up 0.5%, or 4.92 points, at 1,021.76.

The BATS UK 100 ended up 0.7% at 12,263.29, the BATS 250 closed up 0.7% at 17,672.65, and the BATS Small Companies ended 0.1% higher at 12,148.

"Stock markets had a volatile day as respectable gains were racked up in the morning, and then we saw sharp decline, and subsequent bounce back after lunchtime. The positive momentum in London has sent the FTSE 100 to a level not seen for five trading session - which bodes well for the recovery," said David Madden, market analyst at CMC Markets.

On the London Stock Exchange, Coca-Cola HBC ended the trading session as the best blue chip performer, up 6.0%.

The soft drinks bottler substantially hiked its dividend and said it has made significant progress towards its strategic objectives in 2017, with higher profit and strong revenue growth. The group reported pretax profit of EUR564.9 million in 2017, up from EUR457.8 million the year before, helped by a further reduction in finance costs to EUR36.7 million from EUR62.3 million.

Comparable earnings before interest and tax beat market consensus expectations at EUR621.0 million, up 20% from EUR517.5 million in 2016, with a rising EBIT margin of 9.5% from 8.3%. Net sales revenue was up 4.9% at EUR6.52 billion from EUR6.22 billion the prior year, and rose by 5.9% in constant currencies.

Coca-Cola HBC declared a full-year dividend of EUR0.54 per share, up 23% from the year before.

Gold miners Randgold Resources and Fresnillo also ended among the gainers closing up 4.9% and 4.2% respectively, tracking spot gold prices higher which rose in the wake of US inflation data. The precious metal was quoted at USD1,348.10 an ounce at the London equities close against USD1,327.60 at the London equities close Tuesday.

The pound was higher quoted at USD1.3968 at the London equities close, compared to USD1.3896 at the London equities close Tuesday. However, sterling briefly took a knock falling to an intraday low USD1.3799 immediately following the release of US inflation data.

"GBP/USD is higher today on account of the dice in the US dollar. Sterling sold off against the US dollar on the back the CPI and retail sales data from the US, but since turned around. There were no economic indicators announced from the UK today, so the pound was nudged higher by the US dollar," noted Madden.

GKN closed up 1.6% after the engineer promised to payout GBP2.5 billion to shareholders under its 'Project Boost' improvement programme over the next three years, in a bid to fend off a hostile takeover approach from Melrose Industries. Shares in Melrose Industries closed up 4.4%.

GKN said a "significant" part of this will come from divestments over the first 12 to 18 months of the plan, including a sale of its Powder Metallurgy division.

In response, the midcap turnaround specialist Melrose rebuked the 'Project Boost' announcement as it said it was a stark admission of GKN's underperformance in recent years.

Melrose said it will immediately return GBP1.40 billion in cash to GKN shareholders in a takeover, and further cash payments would be made "in the medium term" once the Powder Metallurgy business has been improved and then sold. The offer, Melrose noted, has already added around GBP1.20 billion in value to GKN shareholders, and it said GKN's share price would be considerably lower without its offer on the table.

Sky closed up 2.0% after the pay TV company secured the broadcast rights for the bulk of Premier League football games for the 2019 to 2022 seasons. Sky won four of the five packages, which cover the three seasons, with the other going to BT Group. Shares in BT closed down 0.2%.

BT avoided having to turn to what Chief Executive Gavin Patterson recently described as "Plan B" regarding its BT Sport content after it secured a broadcasting rights for 32 Premier League games late Tuesday despite the price per game rising significantly.

BT won rights to show 32 Premier League games per season over the three seasons from 2019 to 2022 for GBP885 million. This is lower than the GBP960 million it spent on rights to 42 games per season in 2015. However, on a per game basis BT's costs rose to GBP9.2 million from GBP7.6 million at the previous auction.

Nonetheless, the auction result suggests the rapid inflation in Premier League rights costs has slowed. Combined with Sky's GBP3.58 billion bid for 128 games, the lion's share of rights sold for GBP4.46 billion compared to GBP5.14 billion in the previous auction.

Elsewhere, Shire closed up 0.1% after the Irish drugmaker said product sales rose ahead of expectations in 2017, driven by its acquisition of Baxalta, but warned earnings per American depositary share in 2018 could be lower due to "intensifying" genericization.

Product sales in 2017 rose 33% to USD14.45 billion, with total revenue rising 33% to USD15.16 billion, benefiting from the 2016 purchase of Baxalta. Shire was expected to post product sales of USD14.34 billion for 2017, with revenue of USD14.99 billion.

Looking ahead, Shire said it expects non-GAAP diluted earnings per ADS growth to be lower than top line growth in 2018. This is mainly due to costs incurred from the start-up of its new US plasma manufacturing site, intensifying genericization, and lower royalties.

In the FTSE 250, around GBP142 million was wiped off Galliford Try's total market value after the housebuilding and construction group announced a GBP150 million capital raising to help cover the impact of Carillion's liquidation. The stock closed down 17% making it comfortably the worst midcap performer.

The fall of outsourcer Carillion led to Galliford announcing plans to raise GBP150 million to bolster its balance sheet through an underwritten raising from shareholders in the coming weeks. The company is having to raise the funds due to an increase in its total cash commitments to the Aberdeen Western Peripheral Route joint venture originally with Carillion and Balfour Beatty to over GBP150.0 million.

Galliford Try posted pretax profit for the six months to December before exceptional costs of GBP81.3 million, up 29% from GBP63.0 million in the same period the prior year. Galliford likewise posted strong revenue growth of 14% year-on-year, with revenue climbing to GBP1.50 billion from GBP1.31 billion the prior year.

However, including Carillion-related items, Galliford reported pretax profit of GBP56.3 million, down 11% from GBP63.0 million the year before. The company booked an exceptional charge of GBP25.0 million as it takes on funding obligations for the Aberdeen joint venture.

Galliford declared an interim dividend of 28.00p per share, down 13% from 32.0p the year before, as the group brought forward its planned increase in dividend cover to two times earnings per share before one-off costs, effective for its current financial year.

In Paris the CAC 40 ended up 1.1%, while the DAX 30 in Frankfurt ended up 1.2%.

The euro was higher as the dollar depreciated, at USD1.2400 at the European equities close, against USD1.2363 the prior day.

In European economic news, the euro area economy grew at a slightly slower pace in the fourth quarter, flash estimates published by Eurostat showed.

GDP climbed 0.6% in the fourth quarter compared to the third quarter. This contrasts to the third quarter's 0.7% expansion versus the preceding quarter. The rate came in line with the preliminary flash estimate published on January 30.

On a yearly basis, GDP growth eased slightly to 2.7% from 2.8% in the preceding period. The annual rate also matched the previous estimate.

Moreover, the German consumer price index rose 1.6% year-on-year after 1.7% increase in December, while the German economy grew 0.6% in the fourth quarter compared to the previous quarter. This was in line with expectations, but slightly slower than the 0.7% expansion seen in the third quarter, separate reports showed.

Stocks in New York were flat to higher at the London equities close following the rebound seen over the three previous sessions. The DJIA was flat, the S&P 500 index up 0.3% and the Nasdaq Composite up 0.8%.

In US economic news, the closely watched inflation reading for January showed consumer prices in the US increased by more than anticipated, according to a report released by the Labor Department.

The Labor Department said its consumer price index climbed by 0.5% in January after edging up by a revised 0.2% in December. Economists had expected consumer prices to rise by 0.3% compared to the 0.1% uptick originally reported for the previous month.

Compared to the same month a year ago, consumer prices were up by 2.1% in January, while core consumer prices were up by 1.8%.

"While inflation did jump on both the year-on-year and month-on-month figures, they were still in line with last month's and are both down on a year ago (when year-on-year CPI ran at 2.3%). So the figure is still, even now, below the Federal Reserve's target of 2%. It's too early to start pencilling more rate hikes from the new Powell-era Fed," said IG chief market analyst Chris Beauchamp.

However, Senior US Economist at Capital Economics Michael Pearce took an opposing view.

"Once temporary factors drop out of the annual comparison in the spring, core CPI inflation will be close to 2.5% and we expect it to trend higher from there," said Pearce. "We expect that will force the Fed to raise rates a total of four times this year, beginning with a 25 basis points rise in interest rates at the March FOMC meeting".

Moreover, retail sales in the US unexpectedly decreased in the month of January, the Commerce Department revealed.

The Commerce Department said retail sales fell by 0.3% in January compared to economist estimates for a 0.2% uptick in sales. Revised data showed that retail sales were unchanged in December compared to the previously reported 0.4% increase.

The unexpected decrease in retail sales was primarily due a steep drop in sales by motor vehicle and parts dealers, which plunged by 1.3% in January after slipping by 0.1% in the previous month.

Brent oil was higher quoted at USD63.17 a barrel at the London equities close from USD62.29 at the at the London equities close Tuesday.

The economic calendar on Thursday has Spain inflation readings at 0800 GMT and trade data from Italy and the eurozone at 0900 GMT and 1000 GMT respectively. In the afternoon there are US producer prices at 1330 GMT, NAHB housing market index data at 1500 GMT and EIA natural gas storage change readings at 1530 GMT. Stock markets in China are closed for Chinese New Year's Eve.

The UK corporate calendar on Thursday has full year results from Anglo-Dutch information and events company RELX, pharmaceutical company Indivior and insurer Lancashire Holdings. There is also a trading statement from engineering software provider AVEVA Group ahead of its proposed merger with the software business of Schneider Electric, which is set to complete in March.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2018 Alliance News Limited. All Rights Reserved.


LONDON MARKET CLOSE: Gold Miners And Coca-Cola HBC Buoy FTSE 100 - Alliance News

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