LONDON MARKET OPEN: Ferguson Leads FTSE 100 After Strong Results

Tue, 01st Oct 2019 08:46

(Alliance News) - Stock prices in London opened slightly higher on Tuesday, with the FTSE 100 buoyed by Ferguson, while investors look ahead to a UK manufacturing PMI print at 0930 BST.

The FTSE 100 was up 23.97 points or 0.3% at 7,432.18. The FTSE 250 was up 47.36 points, or 0.2%, at 19,984.03. The AIM All-Share was flat at 872.90.

The Cboe UK 100 index was up 0.1% at 12,606.64. The Cboe UK 250 was up 0.2% at 17,863.53. The Cboe UK Small Companies was flat at 10,892.18.

In European equities, the CAC 40 index in Paris was up 0.1% and the DAX 30 in Frankfurt was up 0.3%.

In London, Ferguson was the best large-cap performer, up 3.0% after the plumbing and heating products supplier raised its dividend and reported consensus-beating annual results.

For the financial year that ended July 31, revenue rose 6.1% to USD22.01 billion from USD20.75 billion the year before. The figure beat the market consensus estimate of USD21.87 billion.

In addition, pretax profit grew 11% to USD1.32 billion from USD1.19 billion last year, while trading profit came in at USD1.60 billion, higher than the consensus estimate of USD1.58 billion.

In the US, revenue rose 10% to USD18.36 billion from USD16.67 billion last year, while in the UK revenue decline 6.0% to USD2.22 billion from USD2.47 billion. Ferguson raised its total dividend by 10% to 208.2 US cents from 189.3 cents the year before.

Ferguson raised its total dividend by 10% to 208.2 US cents from 189.3 cents the year before.

In addition, Ferguson - which generates the bulk of its revenue in the US - said the demerger of its UK operations was "progressing well".

International Consolidated Airlines Group was up 1.7% after Bank of America Merrill Lynch resumed coverage on the British Airways parent with a Buy rating.

At the other end of the large cap index, Mexican gold miner Fresnillo was the worst performer, down 1.3%, tracking spot gold prices lower.

The precious metal was quoted at USD1,462.71 an ounce Tuesday morning, down from USD1,470.11 late Monday.

JD Sports Fashion was down 0.5% after the UK Competition & Markets Authority referred the sportswear retailer's acquisition of smaller peer Footasylum for a Phase 2 investigation.

JD Sports said it had informed the CMA that it does not consider there to be any appropriate remedies for competition concerns that the CMA had raised last month, triggering the CMA's referral to a Phase 2 probe on Tuesday.

The CMA issued an initial enforcement order on the GBP90 million deal in May and subsequently in July it commenced a probe into the deal. An initial enforcement order - also known as a "hold separate" order - stops firms from undertaking any integration of the two businesses.

JD said it would continue to co-operate fully with the CMA in a effort to find a solution but insisted it sees no evidence the acquisition would result in a substantial lessening of competition in the clothing and footwear retail markets in which the two companies operate.

In the FTSE 250, Wizz Air Holdings was up 2.1% after Merrill Lynch restarted the central and eastern Europe-focused airline with a Buy rating. easyJet was up 0.9% after being reinitiated at Neutral by the bank.

The pound was quoted at USD1.2295 Tuesday morning, flat against USD1.2297 at the London equities close Monday.

On the economic front, annual house price growth in the UK nearly "ground to a halt" in September, remaining below 1% for the tenth month in a row, according to an index.

Property values increased by 0.2% annually, taking the average UK house price in September to GBP215,352, Nationwide Building Society said. House prices fell by 0.2% month on month, following a 0% monthly change in August.

Robert Gardner, Nationwide's chief economist, said: "UK annual house price growth almost ground to a halt in September, at just 0.2%.

"This marks the 10th month in a row in which annual price growth has been below 1%."

The Japanese Nikkei 225 index closed up 0.6%. Financial markets in Hong Kong and China were closed for the National Day holiday. The Shanghai market will be closed over the next week to commemorate 'Golden Week', but the Hong Kong market will reopen on Wednesday.

The economic events calendar on Tuesday has manufacturing PMI readings from Italy, France, Germany, eurozone and US at 0845 BST, 0850 BST, 0855 BST, 0900 BST and 1445 BST respectively.

Already out, Irish manufacturing remained in contraction in September, for the fourth month running, as a "solid" decline in new orders saw output fall.

The seasonally adjusted purchasing managers index increased slightly in September but remained below 50.0. Any reading below 50 represents contraction as opposed to expansion in the sector.

The AIB manufacturing PMI read 48.7 in September, up marginally from 48.6 in August. AIB noted September's readout marks the fourth monthly deterioration in businesses conditions in the Irish manufacturing sector.

Japan's manufacturing sector remained "under pressure" in September, with firms cutting production due to "weak demand" at home and abroad.

The headline Jibun Bank Japan manufacturing purchasing managers index fell to 48.9 in September from 49.3 in August. September's reading is the lowest mark since February.

Any reading below 50 represents contraction as opposed to expansion in the sector.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com