London close: Shire bid battle helps FTSE outperform European peers
19-04-2018 16:32
(WebFG News) - London stocks clung on to small gains on Thursday as investors shrugged off disappointing retail sales data, with Shire given a shot in the arm as potential takeover battle emerged for the drugmaker.
The FTSE 100 closed 11.58 point higher or up 0.2% to 7,328.92, while the pound was flattish against the dollar at 1.4197 but climbed 0.3% over the afternoon versus the euro to regain the 1.15 level lost earlier in the week.
The British blue chip index was outperforming many of its competitors, noted analyst Joshua Mahony at IG, as a downbeat start to US trade saw American indices join the likes of the DAX and Ibex in the red.
"A week of economic data out of the UK has certainly has a noticeable effect for pound, with today's attempted recovery coming despite disappointing retail sales figures across the board for March. There is no doubt that the weather effects will partially account for this decline in retail sales, yet this fall helps contribute to a worrisome wider story of declining consumer activity over the past 16-months."
The Office for National Statistics showed UK retail sales fell more than expected in March as consumers stayed away from shops amid snow and sub-zero temperatures swept in by the 'Beast from the East'. Sales fell 1.2% from a month earlier, led by a 7.4% drop in fuel transactions, versus expectations for a small 0.5% drop. Excluding fuel, sales were still down 0.5%, which was more than the 0.4% the market had expected.
Food store sales fell 0.6% as supermarket sales dropped 1.3%. But sales rose 11.8% at specialist food retailers and 9.5% at off licences as shoppers opted for local stores during the bad weather.
Department stores were the only retail sub-sector where sales rose. The ONS said the 0.8% increase was probably linked to shoppers taking up online offers for Easter and Mother's Day when the weather was bad. Department store online sales rose by a third from a year earlier, which came as Debenhams reported a 85% collapse in first-half profits.
Ben Brettell, senior economist at Hargreaves Lansdown, said: "The weather meant a disappointing retail sales reading for March was all but guaranteed, but the figures were even worse than anticipated."
On the corporate front, Shire initially rallied on rumours of an offer from Takeda before losing ground after confirmation that it had received and rejected an "indicative takeover proposal" at close to $46.50 pounds a share, made up mostly of shares.
Then later in the afternoon, botox-maker Allergan, which is based in the US but like Shire is headquartered in Dublin, confirmed that it was in "the early stages of considering a possible offer". This sent Shire shares shooting back up.
Elsewhere, advertising giant WPP and broadcaster ITV were on the front foot after solid first-quarter results from French peer Publicis.
Rentokil International was another at the top of the leaderboard as revenue in the first quarter jumped 15.7% to £545.9m, even though adverse currency movements could cost between £10-5m. Rentokil acquired 11 pest control businesses in the quarter, so analyst David Madden at CMC Markets said this was an indication that management is bullish about the outlook. "The stock has been in an upward trend since 2011, and while it holds above the 260p area, its outlook is likely to remain positive."
Essentra was on the front foot after the supplier of plastic and fibre products said trading in the financial year-to-date has been in line with the board's expectations, as it announced the departure of its group finance director.
Mining and energy engineer Weir rallied as it launched a rights issue after striking a $1.3bn deal to take over US mining tools manufacturer Esco Corp. First quarter orders were also reported as higher.
On the downside, British American Tobacco and Imperial Brands were getting caught in the down-draft as US rival Philip Morris was smoked on the back of weaker-than-expected third quarter revenues.
Despite a fairly solid set of first-quarter results Unilever was down on reports that the consumer goods giant is struggling with major shareholders over the choice of the Netherlands for its corporate HQ. Also, first-quarter sales were up 3.4% on an underlying basis but down on the preceding quarter and with pricing remained depressed in North America and Europe. Confirmation of 6bn share buyback using proceeds from the sale of the spread business was not enough to lift shareholders' moods.
Broadcaster Sky - which is currently the subject of a bidding war - slipped even as it posted a 5% rise in nine-month like-for-like revenues as core earnings rose 14% and said it remains on track for the full year.
Defence company Ultra Electronics was under the cosh as the Serious Fraud Office said it has opened a criminal investigation into suspected corruption in the conduct of its business in Algeria.
Acacia Mining lost its shine after it posted a 33% drop in first-quarter revenue as it took a hit from export ban in Tanzania.
In broker note action, Hammerson was in focus after abandoning its bid for Intu Properties the previous day. Peel Hunt upgraded the stock to buy', while Jefferies lifted it to 'hold', but Goldman Sachs cut Hammerson to 'neutral'. Intu meanwhile was downgraded to 'underweight' by Barclays.
Elsewhere, HSBC was upgraded by Credit Suisse, Peel Hunt upgraded Bellway to 'buy', while National Express was cut to 'hold' at Liberum, Croda was cut to 'neutral' at JPMorgan, while Polymetal was upgraded to 'neutral'.
The main FTSE indices were battling a considerable weight from the mass of large stocks going ex-dividend, including Aggreko, BAE Systems, Balfour Beatty, Barratt Developments, Bodycote, Capital & Counties Properties, Croda, Drax, Greggs, Informa, Inmarsat, Intu Properties, Lloyds Banking, Polypipe, RPS Group, Rathbone Brothers, Standard Life Aberdeen and UBM.
Market Movers
FTSE 100 (UKX) 7,328.92 0.16%
FTSE 250 (MCX) 20,147.16 0.68%
techMARK (TASX) 3,410.92 0.60%
FTSE 100 - Risers
Shire Plc (SHP) 3,975.00p 5.89%
Rentokil Initial (RTO) 285.10p 4.47%
WPP (WPP) 1,156.00p 3.58%
Ferguson (FERG) 5,572.00p 2.88%
NMC Health (NMC) 3,596.00p 2.74%
Standard Chartered (STAN) 745.30p 2.11%
HSBC Holdings (HSBA) 690.70p 2.10%
ITV (ITV) 145.30p 2.00%
Royal Dutch Shell 'B' (RDSB) 2,535.00p 1.89%
Smiths Group (SMIN) 1,575.00p 1.78%
FTSE 100 - Fallers
British American Tobacco (BATS) 3,650.00p -5.43%
Standard Life Aberdeen (SLA) 367.90p -3.39%
Imperial Brands (IMB) 2,360.50p -2.66%
Lloyds Banking Group (LLOY) 66.11p -2.23%
Unilever (ULVR) 3,861.00p -2.17%
National Grid (NG.) 810.20p -1.91%
Informa (INF) 729.40p -1.57%
Ashtead Group (AHT) 2,072.00p -1.43%
Randgold Resources Ltd. (RRS) 5,760.00p -1.40%
Croda International (CRDA) 4,570.00p -1.40%
FTSE 250 - Risers
Weir Group (WEIR) 2,238.00p 5.67%
Sanne Group (SNN) 624.00p 4.87%
Paragon Banking Group (PAG) 514.50p 4.83%
Mitchells & Butlers (MAB) 278.20p 4.27%
Cairn Energy (CNE) 223.60p 4.19%
Aveva Group (AVV) 2,136.00p 3.69%
Tullow Oil (TLW) 231.20p 3.58%
Hochschild Mining (HOC) 225.50p 3.49%
BGEO Group (BGEO) 3,634.00p 3.41%
Renewi (RWI) 77.10p 3.21%
FTSE 250 - Fallers
Ultra Electronics Holdings (ULE) 1,323.00p -4.68%
Drax Group (DRX) 298.20p -3.93%
Intu Properties (INTU) 193.45p -3.23%
Bodycote (BOY) 908.50p -3.04%
Greggs (GRG) 1,224.00p -3.01%
Wizz Air Holdings (WIZZ) 3,296.00p -2.60%
Pets at Home Group (PETS) 154.10p -2.41%
John Laing Group (JLG) 279.40p -2.31%
National Express Group (NEX) 404.00p -2.08%
Vietnam Enterprise Investments (DI) (VEIL) 470.00p -2.08%
