LONDON (Alliance News) - Stock trading in London remained "in consolidation mode" midday Friday, failing to make any meaningful progress in either direction ahead of a speech by US Federal Reserve Chair Janet Yellen and a long holiday weekend.
Mike van Dulken, head of research at Accendo Markets, said equities are digesting recent gains after making advances on Tuesday and Wednesday.
"Markets have held up extremely well, finely balanced over the last two sessions following a sharp run-up. A healthy undercurrent of bullish desire must surely be present to have kept us here (and the Bears at bay) or else we would have given up some of those gains," van Dulken commented.
IG's senior market analyst Chris Beauchamp said the flatness in the FTSE 100 on Friday can be explained by the "continued unwillingness to chase Tuesday's big move, a long weekend for the UK and US, and a Janet Yellen appearance after the London close."
Yellen will be speaking at Harvard University at 1815 BST. While some of her policy-setting colleagues have taken a more hawkish tone of late, analysts don't expect the Fed chief to shed any light into the Federal Open Market Committee's thinking ahead of its policy decision on June 15.
"Fed Chair Yellen will be honoured at Harvard, with a conversation on her achievements at the ceremony. However, little emphasis on the monetary policy outlook is expected at this event. The appearance to look forward to will be the chair's speech in Philadelphia on June 6, the Monday following the May employment report and a day before entering the blackout period for the upcoming FOMC meeting," said analysts at Societe Generale.
At the midday stage Friday, the FTSE 100 was up 0.1%, or 3.10 points to 6,268.75, the FTSE 250 also was up 0.1% at 17,204.59 and the AIM All-Share was up 0.2% at 735.57.
In Europe, the French CAC 40 and the German DAX 30 indices were both flat.
Ahead of the open on Wall Street, the Dow Jones Industrial Average and S&P 500 index both were pointed down 0.1% and the Nasdaq 100 slightly lower.
There will be a light flurry of US economic data to add some excitement to an otherwise lacklustre day of trading. The second estimate of first quarter US GDP is due at 1330 BST and, according to FXStreet, economists expect annualised GDP to grow 0.9%, which would be an improvement on the 0.5% increase in the first reading.
Also in the calendar is preliminary US personal consumption expenditure at 1330 BST and the Reuters/Michigan consumer sentiment index at 1500 BST.
In corporate news, shareholders in Irish drugmaker Shire approved the company's USD32.0 billion acquisition of US-based Baxalta.
Shire said 94% of its shareholders voted in favour of the deal at a meeting Friday, paving the way for the deal to complete on June 3.
"We are pleased to take this important step toward completing our combination with Baxalta, and are grateful that our shareholders have voiced their support by approving this transaction," said Shire Chief Executive Flemming Ornskov.
Shire shares traded down 1.1%.
Phoenix Group Holdings was the top performer in the FTSE 250, up 4.9%. The closed-life fund consolidator said it has agreed a GBP375.0 million deal to acquire the pensions and protection business of AXA Wealth, the wealth management arm of French insurer AXA.
Phoenix will pay the consideration in cash, and the deal will add around GBP12.3 billion in assets under management to its books, along with more than 910,000 policies.
The businesses acquired trade under the Embassy and SunLife brands. The deal will be funded by a share placing, through which Phoenix will seek to raise around GBP190.0 million, along with a new debt facility with a consortium of banks.
Bodycote shares were down 1.5%. The industrial company maintained its expectations for 2016, as revenue fell in the first four months of the year.
The FTSE 250 company, which supplies heat treatment, metal joining, hot isostatic pressing and coatings services, said group revenue for the four months to the end of April was GBP192.4 million, down 4.9% year-on-year, or 9.1% at constant currencies.
After taking into account Bodycote's exit from its business in Brazil and the restructuring actions it announced in 2015, like-for-like revenue fell 2.7%, it said, and 7.0% at constant currencies.
In the AIM All-Share, Circle Oil traded up 15% after it said International Finance Corp has agreed to extend the suspension of the December 2015 redetermination and any repayments due under its reserve-based lending facility.
Circle Oil produces gas and condensate in Egypt which is sold to state-owned Egyptian General Petroleum Corp, but Circle Oil has been working on the commercial terms of those payments since last year and has failed to strike a deal as of yet.
IFC provided Circle Oil with another extension on Friday, giving Circle Oil until June 24 to repay the amounts due under the reserve-based lending facility. There is a good chance further extensions will be granted if the company remains in trouble, as the lender has said it is willing to consider future waivers, Circle Oil said.
Port reception facilities and waste treatment company Nature Group said its annual pretax loss widened due to writedowns its booked, though revenue edged up and the group was confident on its prospects.
Nature said its pretax loss in 2015 was GBP2.4 million, compared to a GBP1.4 million loss in 2014. The loss was driven by writedowns that the company booked on its Norway and Gibraltar businesses, plus share-based payments which were not made the year earlier.
Revenue, however, grew to GBP16.3 million from GBP14.3 million, with Nature's maritime division benefiting from good growth in waste collection work in the US, while volumes at its operations in Rotterdam in the Netherlands were boosted by one-off projects.
The stock was one of the worst performers in the AIM All-Share, down 22%.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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19 Jun 2015 13:02