LONDON (Alliance News) - Stocks in London gapped sharply higher in early trade on Wednesday in the wake of a split Congress following US midterm elections whose results were mostly as expected.Marks & Spencer was the biggest faller in the FTSE 100 as both the retailer's divisions posted interim like-for-like sales falls, while Sophos slumped in the FTSE 250 as it now only expects a "modest" second half billings improvement.Despite M&S, the FTSE 100 was up 1.0%, or 67.97 points, at 7,108.65 - having closed down 0.9% on Tuesday amid pre-midterm jitters. The FTSE 250 was up 0.4%, or 75.05 points, at 19,118.70. The AIM All-Share was up 0.3% at 990.42.The Cboe UK 100 was up 0.9% at 12,058.49, while the Cboe UK 250 was 0.2% higher at 17,286.58. The Cboe UK Small Companies rose 0.1% to 11,645.77.In mainland Europe, the CAC 40 stock index in Paris and DAX 30 in Frankfurt were 0.8% higher and up 0.6%, respectively. The higher open in Europe comes as US "electoral mania" passes, said Michael van Dulken, head of research at Accendo Markets.The House of Representatives will flip to the control of the centre-left Democrats while US President Donald Trump's Republicans are expected to retain control over the Senate, broadcasters CNN, Fox News and ABC said.The projections are largely in line with polling ahead of election day Tuesday, which had predicted a split Congress.The election result would fit historic patterns that the president generally faces losses in midterms as voters check his power, though the victory in the House seemed to fall short of the "blue wave" Democrats were hoping for."Legislative gridlock could mean more equity market volatility while the Fed keeps hiking and the president faces even more of a fight to make permanent his supportive stimulus measures," commented van Dulken.In Asia on Wednesday, the Japanese Nikkei 225 index ended down 0.3%. In China, the Shanghai Composite closed 0.7% lower, while the Hang Seng index in Hong Kong managed to post a small gain, closing up 0.1%.In the FTSE 100, Marks & Spencer was down 3.6% after reporting a rise in profit over the first half of its financial year despite revenue slipping.Revenue in the half year to September 29 fell 3.1% to GBP4.97 billion from GBP5.13 billion a year before, but pretax profit rose 7.1% to GBP126.7 million from GBP118.3 million. The clothing, homeware and food retailer held its interim dividend at 6.8p.Clothing & Home like-for-like sales declined 1.1% in the half, while Food comparable sales fell 2.9% due to "tough trading" and fewer promotions.Trading conditions remain challenging, M&S said, with headwinds from the growth of online competition and "the march of the discounters". M&S said it expects "little improvement" in sales trajectory as it sets out on the "difficult early stages" of its turnaround. ITV was another faller, shares declining 3.5% as trading in the first nine months of the year was in line with expectations, though it has seen softer ITV Family net advertising revenue in the fourth quarter. Over the nine months to the end of September, ITV saw 6% growth in external revenue and total advertising up 2%. This was driven by a 43% surge in online revenue and 10% growth in ITV Studios revenue."Online advertising continues to deliver strong double digit revenue growth. We are seeing some softening in ITV Family NAR in Q4 due to the increasingly uncertain economic environment and as a result we expect total advertising to be down around 3% in Q4 and broadly flat over the full year," commented Chief Executive Carolyn McCall.Slumped in the FTSE 250 was Sophos, shares diving 23% despite swinging to an interim profit as it now expects just a "modest" billings improvement in the second half.The security software firm said it saw a 3% increase in first half billings to USD353 million - up 2% in constant currency - and now only expects a "modest" improvement in constant currency growth during the second half.Previously, the company had said it had expected to return to "mid-teens" billings growth in the second half. Sophos swung to an interim pretax profit of USD26 million for the half to September 30 from a USD35.5 million loss a year before. Revenue rose to USD349.5 million from USD296.8 million."For [financial year 2020], we enter the year with strong growth in our subscription renewals base, and hence, assuming a stable renewal rate, we would anticipate a significant improvement in the rate of overall constant currency year-on-year billings growth," said Sophos.JPMorgan cut its rating on Sophos to Neutral from Overweight. Wizz Air shares tumbled 6.0% after revenue grew in the recently ended half year though profit dipped, and the budget airline lowered its annual profit guidance.Revenue grew 20% to EUR1.38 billion from EUR1.15 billion, though pretax profit dipped to EUR295.5 million from EUR300.7 million.While Wizz Air said its "disciplined" cost attitude should help to offset an estimated EUR80 million full-year headwind from fuel costs and disruption, the firm lowered its annual net profit guidance to a range of EUR270 million to EUR300 million, previously seen between EUR310 million to EUR340 million.JD Wetherspoon was 5.4% lower after the pub chain said like-for-like sales rose in its first quarter from a year before, though the FTSE 250 constituent now expects to achieve an annual result "slightly below" that of last year.Comparable sales rose 5.5% over the 13 weeks to October 28, while total sales were up 6.2%."As has been widely reported, unemployment is at a record low, putting upward pressure on wages. As a result, Wetherspoon is increasing pay of our staff starting from this week. Having had several recent years of record profits, we are not immediately seeking to recoup these increased costs through higher pricing or 'mitigation', but will review that during the year," said Chairman Tim Martin, who is working part time from home over the next few weeks as he recovers from an operation.He continued: "It is difficult to be too precise at this early stage of the current financial year, but we now expect a trading outcome slightly below that achieved in the previous financial year. We will provide further updates on our trading as we progress through the year."In Wednesday's economic calendar, Irish retail sales are at 0900 GMT followed by eurozone retail sales at 1000 GMT.
10 Feb 2016 08:34
