Pets at home Share News (PETS)

LONDON (Alliance News) - It was a roller coaster afternoon for UK equities on Thursday, after better-than-expected US durable goods data heightened expectations for a US interest rate increase in June, prompting a volatile end to the day as the FTSE 100 eventually closed slightly higher.

The Commerce Department said durable goods orders shot up by 3.4% in April after climbing by an upwardly revised 1.9% in March. Economists had expected orders to rise by just 0.3% compared to the 0.8% increase that had been reported for the previous month.

The beat for durable goods orders was principally due to the sharp jump in orders for commercial aircraft and parts, which soared by 64.9%.

However, analysts said the commercial aircraft component is notoriously volatile and not indicative of underlying strength.

Excluding orders for transportation equipment, durable goods orders rose by a more modest 0.4% in April after inching up by 0.1% in March. The increase matched economist estimates.

Joshua Mahony, market analyst at IG, said the strong improvement in durable goods will be something the US Federal Reserve will be looking for to be able to act in June. "This doesn't mean [the Fed] will act in June, but certainly things like this certainly makes it more likely," said Mahony.

Following the data, the FTSE 100 sharply receded but the dollar was less moved. At the close of the London equity trading session the euro traded the dollar at USD1.1181 versus USD1.1161 at the close on Wednesday.

The pound was lower against the dollar at USD1.4680 at the close Thursday versus USD1.4711 at same time on Wednesday, as it was hit poor UK Gross Domestic Product and investment data earlier in the day.

The second estimate of first quarter UK GDP came in below the initial estimate, according to data from the Office for National Statistics. On a yearly basis, GDP climbed 2.0% in the first three months of 2016, below the 2.1% previously estimated.

Quarter-on-quarter GDP grew 0.4%, unrevised from the estimate published on April 27. The sequential growth was slower than the 0.6% expansion posted in the fourth quarter of 2015.

Another report by the ONS showed UK business investment decreased 0.5% quarter-on-quarter in the first quarter, coming below expectations for a 0.1% rise. However, the preliminary figure was an improvement on the 2.0% contraction seen in the fourth quarter of 2015.

The FTSE 100 closed up 2.80 points, at 6,265.65. Before the durable goods data, the blue-chip index was posting modestly higher gains, supported by stronger oil prices after Brent surpassed the USD50 a barrel mark. However, oil prices fell back below that threshold in the afternoon and by the London close, Brent traded at USD49.81 a barrel, still higher than the USD49.17 seen at the close on Wednesday.

The price of gold also fell, trading at USD1,222.30 an ounce at the London stock market close, versus USD1,222.95 on Wednesday.

The FTSE 250 ended down 0.2%, or 39.81 points, at 17,192.83 and the AIM All-Share closed up 0.1%, or 0.88 point, at 734.38.

European stocks outperformed London with the CAC 40 in Paris and the DAX 30 in Frankfurt both rising 0.7%.

At the London close on Wall Street, the Dow 30 was down 0.1%, while the S&P 500 and Nasdaq Composite were both flat.

On the London Stock Exchange, United Utilities Group said profit fell in line with its expectations in its recent financial year, but revenue grew and the water group said it is well positioned for the current regulatory period.

The FTSE 100 utility said its operating profit for the year to the end of March was GBP567.9 million, down 13% from GBP653.3 million. United Utilities will pay a total dividend for the year of 38.45 pence, compared to 37.70p a year earlier.

Underlying operating profit was GBP604.1 million, down 9.1% from GBP664.3 million and in line with the company's expectations amid new regulated price controls imposed on the water industry. The stock ended down 1.1%.

Life insurers were amongst the heaviest fallers in the FTSE 100 after the UK Financial Conduct Authority tabled plans to cap early-exit charges for consumers exiting pension plans at 1.0% of the value of their pot, while banning such charges entirely for new pension contracts.

The City regulator said the cap will apply to existing contract-based personal pensions, including workplace personal pensions. Firms will not be able to apply any exit charge for personal pensions contracts entered after the proposed rules come into force.

Prudential ended down 1.2% and Aviva down 0.9%.

Ibstock was the worst performer in the FTSE 250, down 8.5%. The bricks manufacturer said it has seen good trading momentum in the first four months of 2016, but its UK clay business made a slower start to the year than expected.

UK brick sales to the new residential sector grew, Ibstock said, but the UK clay business was hit by destocking in the builders' merchant supply chain, itself driven by softness in the repair, maintenance and improvement market. This has improved, Ibstock said, but a shift in its sales mix in the first four months will mean overall average pricing will take a hit.

On the other side of the index, Pets at Home Group reported growth in profit in its recently ended financial year as revenue grew in both the merchandise and services divisions, and it said trading is in line with expectations in the first quarter of the new year.

The retailer for pets and veterinary services operator said its pretax profit in the year ended March 31 grew to GBP92.1 million from GBP87.0 million the year before, as revenue rose to GBP793.1 million from GBP729.1 million.

Pets at Home Group will pay a total dividend for the year of 7.5 pence, a 39% increase on the prior year. The stock closed as the best performer in the FTSE 250, up 4.9%.

The main events in the economic calendar Friday will be from the US. The second reading of first quarter US GDP is at 1330 BST, at the same time as personal consumption expenditure. The Reuters/Michigan consumer sentiment index is at 1500 BST. Federal Reserve Chair Janet Yellen's speech at 1530 BST will be of key interest for investors as they look for more hints for when the next US interest rate hike will be.

The UK corporate calendar is considerably thinner than recent days. Specialty chemicals company Bodycote issues a trading statement, as does regional commercial property investor Regional REIT. There are also full-year results from car dealer Caffyns, telecommunications company KCOM Group and port reception facilities and waste treatment company Nature Group.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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