Weak pound aids UK markets despite profit warnings
Profit warnings were rife in all UK trading markets, but a 0.8% slump in the pound helped the FTSE 100 stay in the black.The pound fell after a surprising 2.8% rally yesterday following Theresa May’s confirmation of ‘hard Brexit’ negotiations.
While the market initially took the news well, the weaker pound suggests less confidence in the UK’s future strength outside the EU once investors digested the news. West Texas Intermediate and Brent crude oil fell by at least 1.3% to $51.73 and $54.75 per barrel, respectively andGold fell 0.2% to $1,209 per ounce and copper was stable at $5,776 per tonne.
UK unemployment dropped by 52,000 to 1.6 million in the three months to November, according to the Office for National Statistics.
The S&P and Dow Jones indicies in the US closed 0.3% lower as the market geared up for Trump’s inauguration on Friday.
In Asia, Japan’s Nikkei 225, Hong Kong’s Hang Seng and Shanghai’s SSE Composite closed in positive territory.
FTSE 100 RISERS AND FALLERS
Publishing company Pearson (PSON) warned its performance was worse than expected in the North American higher education market. It said the dividend will be cut, but it may issue a special dividend if it can sell its 47% stake in Penguin Random House. Investors were shocked, leading to a 30% crash in its share price.
Shares in credit score checker Experian (EXPN) slumped as organic revenue for its UK Consumer Services declined in the three months to 31 December.
FTSE 250 RISERS AND FALLERS
Mitie (MTO) issued its third profit warning since September 2016 after suffering contract delays and an underperforming cleaning division. The company reported that finance director Suzanne Baxter will be replaced by former Balfour Beatty (BBY) finance director Sandip Mahajan. Broker Liberum slashed Mitie’s earnings per share forecasts by 49% for 2017.
Investors were relieved that betting firm Ladbrokes Coral (LCL) managed to hit full year operating profit expectations despite a rubbish December for sporting results.
Budget-friendly pub chain Wetherspoon (JDW) said like-for-like sales rose by 2.3% in the three months to 15 January, but expects significantly higher costs in the second half of its financial year.
SMALL CAP RISERS AND FALLERS
Trading profit was 10% lower than expected for the owner of the Mr Kipling brand Premier Foods (PFD). It blamed weak sales and a struggle to deal with high input by tweaking promotions and charging customers more for its products.
Aerial platform provider Lavendon (LVD) was still stuck in the middle of a bidding war. Loxam increased its bid again with an offer of 270p per share. A jump in Lavendon’s share price suggested the market is expecting its other suitor, TVH, to raise its bid.
Fashion specialist Burberry (BRBY) reported a decent three months to 31 December 2016. Retail revenue was up 4% to £735m on an underlying basis which excluded the effects of currency movements. The reported figure showed 22% growth when translating overseas earnings back into sterling.
British construction firm Henry Boot (BHY) announced 2016 pre-tax profit will be slightly ahead of market expectations. December was busy for completions front, which allowed it to profit more than expected on a conference centre project in Scotland.
It doesn’t look like Central Asia Metals (CAML) will develop the Copper Bay metals project in Chile, despite extensive studies on the asset over the past few years. Work was put on hold due to an uncertain outlook for the copper price.
Unfortunately, it was clear from a new study the asset is not economically sound enough to warrant bringing into production as it will cost $88.5m to build. The net present value was only $34.1m.
Computer games chain store Game Digital (GMD) failed to level up as sales over its peak Christmas trading fell by 1.6%. Its shares nudged 3.3% lower to 58p.
Sleep tracker developer Fitbug (FITB) soared by 160% to 0.43p as investors toasted a one-year deal with an undisclosed Asian financial services group with 14,000 employees.
The lithium bug continued to spread across the AIM market with Blenheim Natural Resources (BNR) the latest contender. Its shares catapulted by 74% to 0.72p after being granted an option to buy a 30% stake in a lithium exploration project.
Conference call specialist LoopUp (LOOP) says trading is ahead of market expectations, helped by winning contracts in the legal and finance sectors, causing the stock to trade 9.3% higher.
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