LONDON MARKET COMMENT: Stocks Mixed As 3i Group Leads Large Caps

Thu, 14th May 2015 09:38

LONDON (Alliance News) - Shares prices are mixed in London mid-morning Thursday as a turbulent bond market continues to unnerve investors, while a flurry of individual UK stock news sees 3i Group lead the blue-chip gainers.

The FTSE 100 is reading down 0.1% at 6,942.54 points, while the FTSE 250 is up 0.1% at 17,883.80 and the AIM All-Share is flat at 760.13.

The CAC 40 in Paris is up 0.2%, as is the DAX 30 in Frankfurt.

Private equity company 3i Group is the biggest FTSE 100 gainer, up 3.4%, after it reported a double-digit total return in its last financial year. It said its total return of GBP659 million, equivalent to a profit on opening shareholders' funds of 19.9%, in the year ended March 31, compared with GBP478 million or 16.3% in the prior year.

However, Chairman Adrian Montague issued a note of caution on the high valuations seen across "many financial markets" and currency volatility.

Hikma Pharmaceuticals is the second biggest gainer in the FTSE 100, up 1.8% after the company reiterated its guidance for 2015, saying it had made a good start to the year, and expressed confidence for growth over the longer-term.

Hikma continues to expect revenue growth of around 6% at constant currency for the full year, although it also continues to expect the strong dollar to hit revenue and therefore at actual exchange rates expects growth of 2%.

ITV shares trade down 1.4%. ITV said it expects its net advertising revenue to fall in the next few months. The broadcaster said ITV Family net advertising revenue was up 5% in April, but is forecast to be down 5% in May and down by between 5% and 7% in June, as in the previous year results were boosted by the World Cup. As a result, ITV is guiding for 5% growth for its first half.

Furthermore, ITV Family's share of viewing fell three percentage points in the first four months to 20.9%, ITV said, and improving this remains a key focus for the full year. However, its digital channels saw improving audience share, up three percentage points in the period compared to the previous year, and ITV said it is focused on its main channel, where it expects a boost in the second half from the Rugby World Cup.

Ex-dividend stocks also are weighing on the FTSE 100, with J Sainsbury down 2.3%, GlaxoSmithKline down 2.1% and Kingfisher down 2.0%. Glaxo also was downgraded to Neutral from Buy by UBS.

In the FTSE 250, TalkTalk Telecom Group trades up 5.5%, the best performer. The group upgraded its compound annual revenue growth target through the financial year 2017, expecting to grow revenue by at least 5% per year to 2017 and beyond, as it posted a rise in pretax profit for its recently ended financial year.

For the year to end-March, TalkTalk posted a pretax profit of GBP32 million, up from GBP31 million a year before, as a rise in revenue to GBP1.80 billion from GBP1.72 billion offset exceptional costs of GBP63 million.

Restaurant Group, down 4.4%, is the biggest faller in the midcap index. The group reported growth in sales for the 19 weeks to May 10, as it continues to expand its property portfolio, and said it is on track for continued good performance throughout the remainder of the year. It said sales were up 8.5% in the 19 weeks, with like-for-like sales up 2% on the same period a year earlier. However, in the same period last year sales grew 11% on the year, while like-for-like sales were up 4%.

Keller Group trades down 3.2% after it said profit and revenue fell in the first four months of 2015 due to the completion of a project in Australia, delays on major projects and the impact of adverse weather conditions in North America. The ground engineering company said profit and revenue in the first four months has fallen as expected, due to the end of the Wheatstone project in Australia, delays on major projects and the heavy snowfall in North America at the end of February and in early March.

The bond market continues to keep investors on their toes, as does a surge in the euro, which reached its highest level against the dollar since mid-to-late February at USD1.1435.

"Rising bond yields, partly due to the resurgence in oil prices are helping to erase appetite for riskier assets. The resultant strength in the pound and the euro is also helping to damp any buoyancy in equity indices," says Brenda Kelly, head analyst at London Capital Group.

The pound hit its highest level against the dollar since the beginning of December at USD1.5811.

Still ahead in the economic calendar is US producer price index at 1330 BST, along with initial and continuing jobless claims. US EIA natural gas stocks are at 1530 BST.

Futures indicate Wall Street for a higher open, with the DJIA and S&P 500 both pointed up 0.4%, and the Nasdaq 100 up 0.5%.

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