LONDON (Alliance News) - UK stocks are trading higher mid-morning Wednesday, following better-than-expected Purchasing Managers' Index scores from the eurozone and the UK.
The FTSE 100 is up 0.4% at 6,955.62, the FTSE 250 is up 0.1% at 17,465.84, and the FTSE AIM All-Share index is up 0.1% at 752.72.
In Europe, the French CAC 40 is trading up 0.5% and the German DAX 30 is up 0.7%.
The Eurozone Markit composite and services PMIs were higher than the flash estimates that were released in April. The composite PMI, which looks at manufacturing and service companies in the private sector, fell to 53.9 in April from 54.0 in March, but was above the flash estimate of 53.5. It also remained above the 50.0 mark which indicates an expansion.
The services PMI came in at 54.1 in April, slipping slightly from March's 54.2 reading but ahead of the flash estimate of 53.7.
The UK services sector grew at its fastest pace in eight months in April, led by marked gains in new business, survey results from Markit Economics revealed.
The seasonally adjusted Markit/CIPS UK Services Purchasing Managers' Index for the services sector rose to 59.5 from 58.9 in March. Economists had expected a score of 58.5.
The latest reading was the highest since August last year and the British services sector has now expanded for 28 months in a row, which is the longest sequence of growth in seven years.
"Fears of the economy slumping amid election jitters are allayed as an upturn in service sector activity has helped offset sharp slowdowns in both manufacturing and construction. The PMI surveys suggest the economy is showing robust growth momentum, expanding at a rate of 0.8% at the start of the second quarter," says Chris Williamson, chief economist at Markit.
"As such, it looks like the economy has rebounded from the weakness seen at the start of the year. But there are warning lights flashing about the sustainability of growth, and any new government is faced with the challenge of boosting business confidence and reviving investment in particular," Williamson adds on the eve of Thursday's General Election in the UK.
The pound rose following the PMI data, coming off session lows against the dollar. It currently trades at USD1.51770.
On the London stock exchange, J Sainsbury is the worst performer in the FTSE 100, trading down 2.7%. The supermarket chain swung to a pretax loss in the year to March 14, as it joined bigger rival Tesco PLC in reporting huge property writedowns due to its curtailed expansion plans and as it invested in price cuts as the sector continued to respond to the challenge of the German discounters.
The UK's third-largest supermarket by market share reported a pretax loss of GBP72 million for the year, compared with a pretax profit of GBP898 million the year before. Its underlying profit before tax fell 15% to GBP681 million from GBP798 million, while underlying group sales fell 0.9% to GBP26.1 billion from GBP26.4 billion.
However, the latest data on UK grocery market share from Kantar Worldpanel showed Sainsbury's to be the strongest performer of the big four supermarkets. Sainsbury's sales fell 0.2% in the 12 weeks to April 26 to GBP4.20 billion from GBP4.21 billion a year earlier. Its market share was slightly lower year-on-year, down to 16.5% from 16.6%. The sector as a whole continues to face accelerating price deflation, Kantar said.
Sage Group, up 4.2%, is the best performer in the FTSE 100. The software and services company said it remains on track to meet its financial targets for its current financial year, as revenue rose 6.5% in its first half. The company is targeting 6% organic revenue growth and 28% operating margin in its current year.
Imperial Tobacco Group is the second best performer in the index, trading up 2.5%. The company reported lower operating profit for the first half of its financial year as total tobacco volume declined, partly due to reduced sales in Iraq, but its results improved excluding the impact of a stock optimisation programme it undertook last year, partly thanks to price increases and growth for its key brands.
The maker of brands including Davidoff, Gauloises and L&B reported an operating profit of GBP959 million for the six months to the end of March, down from GBP978 million a year earlier, as revenue declined to GBP12.13 billion from GBP12.63 billion on the back of a 1% decline in total tobacco volume to 138.2 billion. Its adjusted operating profit rose to GBP1.37 billion from GBP1.35 billion, and adjusted earnings per share rose to 93.3 pence, from 89.6p.
Aerospace engineer GKN said sales rose 1% in the first quarter of 2015, as a benefit from the strengthening of the US dollar against sterling was largely offset by disposals, and its trading margin was also up thanks to the exchange rate movement boost.
It said its main markets performed in line with expectations in the three months to end-March, with its automotive business continuing to outperform, its aerospace unit meeting the company's hopes, while its Land Systems business continued to face challenging agricultural markets in North America. The company trades up 1.7%.
Legal & General Group trades up 1.4% after it said its first-quarter cash generation increased, driven by growth in its stock of assets. The group said that net cash generation was GBP326 million in the three months ended March 31, compared with GBP301 million in the corresponding quarter of the prior year.
In the FTSE 250, SuperGroup is the best performing stock, up 6.8%. The fashion retailer reported growth in sales for the fourth quarter of its financial year and in the full year as a whole and said it expects its underlying profit for the year to meet previous guidance. It reported revenue for the 15 weeks to April 25 of GBP134.8 million, up from GBP113.8 million in the same period the year before, while revenue for the full financial year grew 12.5% to GBP484.7 million from GBP430.9 million.
JD Wetherspoon is up 5.2% after it said its like-for like sales in the 13 weeks to April 26 increased by 1.7%, while total sales were up by 5.8%, but its operating margin fell from the corresponding period last year. The pub chain said that its operating margin in the 13 weeks to April 26 was 7.5%, compared with 8.0% in the corresponding period of the prior year. It expects its operating margin to be in the region of 7.3% to 7.7% for the full-year ending in July.
Oil prices continue to push to new 2015 highs, driven by continued fears of supply disruptions in Libya. Brent oil trades at USD68.97 a barrel, and West Texas Intermediate is at USD61.81 a barrel.
Still ahead, US ADP employment change data is due at 1315 BST and EIA crude oil stocks data at 1530 BST. GlaxoSmithKline reports first quarter results at 1200 BST.
US stock futures point to a higher open, with the DJIA and S&P 500 both pointed up 0.3%, and the Nasdaq 100 up 0.1%.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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4 Sep 2015 05:22
