LONDON MARKET OPEN: Mixed Open; Ashtead Leads Gainers, Worldpay Losers

Wed, 07th Sep 2016 07:33

LONDON (Alliance News) - Stocks in London were mixed after the open on Wednesday, with Ashtead Group leading the blue-chip gainers after a well-received update, while Worldpay Group was the worst performer after private equity firms sold more shares than planned in the payments company.

The FTSE 100 index was down 1.08 points at 6,824.97. The FTSE 250 was down 0.2% at 17,965.33 and the AIM All-Share was up 0.2% at 799.26.

Ashtead rose 5.3%. The equipment rental company said the weakness of sterling following the UK's European Union membership vote will mean its full-year results are likely outpace its current expectations, as it said first quarter profit and revenue grew.

Ashtead, which makes most of its money in the US in dollars but reports its results in sterling, said pretax profit for the quarter to the end of July grew to GBP177.9 million, from GBP155.4 million a year earlier, while revenue increased to GBP707.1 million from GBP618.6 million.

Fellow FTSE 100 constituent Barratt Developments was up 1.8%. The housebuilder said its sales trend since the end of June had been encouraging and underpinned a "business-as-usual" stance following the Brexit decision, as it reported a 21% rise in pretax profit for its financial year.

Barratt hiked its final dividend to 12.30 pence per share up from 10.3p per share. This, together with a 12.40p per share special dividend and the interim dividend, meant the full-year dividend offered was 30.70p per share, up from 25.10p per share the prior year.

Gold miners Randgold Resources and Fresnillo were up 1.8% and 1.6%, respectively, tracking the precious metal's price higher. Gold was quoted at USD1,350.52 an ounce after the open, compared to USD1,339.59 an ounce at the European equities close on Tuesday.

A decline in the dollar on Tuesday against other major currencies following weak services data from the US boosted the oil price overnight, with Brent crude quoted at USD47.67 a barrel against USD46.81 on Tuesday.

Shares in Worldpay Group were down 3.8%, the worst blue-chip performer, after private equity firms Advent International and Bain Capital sold a larger-than-planned stake in the payments company. The transaction was first announced just after the London close on Tuesday, when BofA Merrill Lynch said the two investors were planning to sell 300.0 million Worldpay shares, or around a 15% stake, which eventually ended being 350.0 million shares.

Fund supermarket Hargreaves Lansdown said its chief executive will step down by the end of September 2017, as it reported growth in profit, net revenue and assets under administration in its financial year to the end of June. The stock was down 1.4%.

Hargreaves also said pretax profit for the year to June 30 grew 10% year-on-year to GBP218.9 million from GBP199.0 million a year prior. It will pay a second interim dividend of 16.30 pence per share, taking its total payout for the year to 34.00p, up 3.0% from the 33.0p payout a year before.

In the FTSE 250, Vectura Group was the biggest mid-cap performer, up 6.7%. The company, which primarily focuses on treatments for inhaled airways disease, raised its revenue expectations for the nine months to end December 31, thanks to its current strong trading performance.

At the other end of the index, CMC Markets was down 12%. The online retail trading firm said it has continued to make progress in its current financial year so far but said a lack of volatility in markets will hit its net operating income in the first half.

Investors will keep an eye this morning on UK manufacturing and industrial production data and Bank of England Governor Mark Carney's testimony to the Treasury Select Committee of Parliament.

Lloyds Bank analyst Nikesh Sawjani expects UK industrial production to show a 0.2% rise in July versus the 0.1% growth seen in June, while he expects manufacturing production to rise 0.5% from the 0.3% decline a month ago. The data are scheduled for 0930 BST.

At 1000 BST, Carney will lead testimony to the Treasury Select Committee, which is holding hearings on the August 4 Quarterly Inflation Report.

The BoE drastically downgraded its growth projections at the Inflation Report as the Leave vote in the EU referendum heightened uncertainty, and the sharp depreciation in sterling triggered an upward revision to the inflation forecast. In addition, UK interest rates were cut by 25 basis points to 0.25%, the first rate cut since 2009, amid other easing measures to reassure investor's confidence.

"Despite signs that the UK economy may be holding up well, we expect Carney and other Monetary Policy Committee colleagues to remain circumspect in their appearance before the Treasury Select Committee," said Sawjani.

"Although the initial impact of the EU referendum has been less negative than had been feared, policymakers are likely to defend the forecasts in the August Inflation Report, which pointed to expectations of a marked slowdown in economic growth in the second half of the year. As such, officials will keep open the possibility of a further reduction in Bank Rate, with November as the earliest likely opportunity," noted the analyst.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were both up 0.1%.

In Asia on Wednesday, the Japanese Nikkei 225 index ended down 0.4%. In China, the Shanghai Composite rose 0.1%, while the Hang Seng index in Hong Kong continues down 0.2%.

Elsewhere in the economic calendar, UK Halifax house prices are at 0930 BST. In the US, the Redbook index is at 1355 BST, while JOLTS job openings are at 1500 BST. The Fed's Beige Book is at 1900 BST, while API weekly crude oil stock data are at 2130 BST.

By Daniel Ruiz; danielruiz@alliancenews.com