21st Oct 2015 16:02
LONDON (Alliance News) - Stocks in the UK fluctuated between gains and losses Wednesday and ended higher even with mining stocks falling after a weak performance in Shanghai earlier in the day, while education and publishing company Pearson closed by far the worst blue-chip performer.
The FTSE 100 index closed up 0.1% at 6,348.42, the FTSE 250 ended up 0.3% at 17,036.68 and the AIM All-Share index closed flat at 744.88. In Europe, the French CAC 40 rose 0.5% and the German DAX 30 closed up 0.9%.
At the London close the pound traded the dollar at 1.5469 and the euro traded the greenback at USD1.1350.
On Wall Street, the DJIA was up 0.3%, the S&P 500 was up 0.1% and the Nasdaq Composite was flat. Ferrari began trade in New York at USD60 a share, racing ahead of the USD52 per share pricing under its initial public offering.
On the London Stock Exchange, shares in Pearson closed the day down 17% at 991.16 pence. During the day's trading session the stock had hit its lowest price since the beginning of 2011 at 975.00p. The company cut its earnings expectations following of a series of asset disposals, compounded by "challenging" market conditions and currency movements, igniting concerns that the worst is not over for the group.
Whilst Pearson had previously guided for earnings per share of between 75p and 80p for calendar 2015, following these sales, as well as movements in exchange rates, it reduced this range by around 5p to between 70p and 75p.
What's more, due to continued challenging market conditions, Pearson said, it now expects adjusted earnings per share to be at the bottom of that range, assuming current exchange rates, no further acquisitions or sales, a tax rate of 15% and an interest charge of around GBP70 million.
Mining stocks made up the majority of the rest of the worst performers in the FTSE 100, with Anglo American down 2.1%, Antofagasta down 2.4% and Glencore down 2.6%. The stocks had been in the red for the majority of the session after a 3.1% fall in the Shanghai Composite.
In commodities, the price of gold traded lower at the London close at USD1,166.40 an ounce while Brent oil was at USD48.14 a barrel. The Energy Information Administration said its crude oil stocks rose by 8.0 million barrels in the week ending October 16, higher than the expected 3.9 million barrels and the previous week's rise of 7.6 million.
"Despite substantial reductions in US rigs and output, this build up is largely related to the current maintenance season, which sees imports rise and domestic surplus going into storage. For this reason, the reaction to such a notable number has been relatively muted," said IG market analyst Joshua Mahony.
At the other end of the FTSE 100 ARM Holdings closed as the best performer, up 6.7%. The microprocessor designer said it expects to meet market expectations for 2015 dollar revenues, as it reported a rise in pretax profit for the third quarter.
In the quarter to end-September the company reported a pretax profit of GBP102.9 million, up from GBP79.2 million a year before, as revenue rose GBP243.1 million, up from GBP195.5 million. This brought ARM's pretax profit for the first nine months of the year to GBP301.0 million, up from GBP225.1 million a year before, on revenue of GBP699.1 million, up from GBP569.3 million. On a dollar basis, revenue for the nine months was USD1.08 billion, up from USD935.0 million.
Merlin Entertainments ended up 3.6% after it set up a joint venture with China Media Capital to develop a LEGOLAND Park in Shanghai as well as various Midway attractions across China. The theme park and attractions operator said the attractions under the Midway brand to be rolled out may include The Dungeons, DreamWorks Tours and others.
Reckitt Benckiser Group reported a fall in group net revenue in the third quarter of 2015, although it grew at constant exchange rates, leading the consumer goods company to raise its full-year revenue forecast on a constant currency basis.
The company, which makes products including cleaning spray Cillit Bang and Nurofen painkillers, said group net revenue fell 1% to GBP2.19 billion in the third quarter, but rose 7% on a like-for-like basis at constant currencies.
Liberum reiterated its Buy rating on Reckitt, saying the consumer goods company's strategic focus on health and hygiene is driving robust growth. Reckitt shares closed up 2.5%.
In the FTSE 250, Home Retail Group shares plunged 17% after it reported an increase in profit in the first half of its financial year, but said full-year benchmark pretax profit will be below the lower end of current guidance due to trading uncertainty and increased investment in its Fast Track collection and delivery service.
The owner of the Argos electronics and general merchandise chain and the Homebase DIY chain said pretax profit in the six months ended August 29 grew to GBP23.4 million from GBP13.5 million in the same period the year before, as it booked lower costs associated with exceptional items than in the prior year half.
Home Retail Chief Executive John Walden said in a statement that the combination of trading uncertainty, an increased level of investment in the launch of Fast Track, and the underlying profit reduction from Argos' challenging first half, means that he expects group full-year benchmark profit before tax to be slightly below the bottom end of the current range of market expectations of GBP115 million to GBP140 million. Benchmark profit excludes amortisation of acquisition intangibles, store impairment and onerous lease charges, exceptional items and various other costs.
Fidessa Group ended as the best midcap performer up 4.8%. The company said it expects to be able to announce a further special dividend with its full-year results in February, as it has continued to see strong cash generation in the second half of 2015.
The trading, investment management and information services provider said it has continued to see customer markets "entering a new phase of recovery as the impact from regulatory and structural changes strengthens".
In the economic calendar Thursday, the focus will be on the European Central Bank which announces its interest rate decision at 1245 BST, with a subsequent press conference at 1330 BST. Elsewhere, UK retail sales are at 0930 BST and US continuing and initial jobless claims are at 1330 BST. At 1500 BST there are US existing home sales and housing price index along with US Conference Board leading indicator and eurozone consumer confidence.
In a busy UK corporate calendar, there are trading statements from London Stock Exchange Group, information publishing company RELX, engineer GKN, builders' merchant and home improvement retailer Travis Perkins, vehicle distributor and retailer Inchcape, bookmaker Ladbrokes, investment and wealth management company Rathbone Brothers, soft drinks company Britvic, estate agency Foxtons Group, closed life funds consolidator Phoenix Group and property investor SEGRO. There are also full-year results from Debenhams and third quarter production results from Anglo American.
By Neil Thakrar; [email protected]; @NeilThakrar1
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PearsonAnglo AmericanRB..LMerlin EntertainmentsFidessa GroupGlencoreARM.LHome Reit