26th Nov 2019 16:59
(Alliance News) - After a solid start to the week, stocks in London were subdued on Tuesday as the Thanksgiving holiday approaches in the US, with the FTSE 100 just about ending the session in the green.
Meanwhile, the pound declined after a poll showed a narrowed lead for the Conservative party over Labour ahead of December's general election in the UK.
The FTSE 100 index closed up 6.85 points, or 0.1%, at 7,403.14 on Tuesday. This followed a 1.0% rise on Monday.
The FTSE 250 ended up 161.75 points, or 0.8%, at 20,864.92 on Tuesday, and the AIM All-Share closed up 6.21 points, or 0.7%, at 915.63.
The Cboe UK 100 ended up 0.2% at 12,558.84, the Cboe UK 250 closed up 0.8% at 18,724.03, and the Cboe Small Companies edged up 0.1% to 11,313.94.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.1%, while the DAX 30 in Frankfurt closed down 0.1%.
Stocks in New York were slightly higher at the London equities close, with the Dow Jones and the S&P 500 index both up 0.1%, while the Nasdaq Composite rose 0.2%.
Looking at the broadly flat day in Europe and lacklustre start to trade on Wall Street on Tuesday, Craig Erlam at Oanda pointed to the US market holiday later in the week.
"What more should we expect from Thanksgiving week when it seems the trade war is all anyone is now concerned about. Of course, there are other domestic issues with Hong Kong enjoying some peace for now and the UK heading for the polls, but broadly speaking it's all about trade deal, phase one," he said.
With attention fixated on voting intention polls in the UK ahead of December's general election, the pound slipped on Tuesday.
The latest poll to grab attention was the ICM survey of 2,004 people online between Friday and Monday, which showed support for the Conservatives fell one point to 41% while Labour was up two points to 34%.
The pound was quoted at USD1.2845 at the London equities close Tuesday, lower compared to USD1.2906 at the close on Monday.
Lloyds Banking said focus for sterling is likely to lie on a YouGov MRP - multiple-level regression and post-stratification - poll to be released on Wednesday, which forecast a hung parliament in 2017.
In other currencies, the euro stood at USD1.1015 at the European equities close Tuesday, against USD1.1008 at the same time on Monday.
Against the yen, the dollar was trading at JPY109.05, up compared to JPY108.91 late Monday.
Helping to keep the FTSE 100 in the green on Tuesday was insurer Hiscox, closing up 3.6% after HSBC raised the stock to Buy from Hold.
Irish building materials firm CRH ended the session 3.2% higher as it reported a strong performance in the year thus far.
Revenue in the nine months to September climbed by 9% on the year before to EUR21.8 billion, with CRH delivering like-for-like growth of 4%. Earnings before interest, taxes, depreciation, and amortisation rose 27%, and 7% like-for-like, to EUR3.2 billion.
CRH has guided for Ebitda for 2019 to be above EUR4.15 billion, which would mean at least 23% growth year-on-year.
The Dublin-based company credited "positive momentum" in all divisions, contributions from acquisitions, the impact of a new accounting treatment of leases, and currency tailwinds.
Shares in the London Stock Exchange Group closed up 2.3% after shareholders overwhelmingly approved the company's USD27 billion purchase of market-data firm Refinitiv.
LSEG said shareholder approval is an "important" milestone, and the deal still requires clearance from regulators. It is buying Refinitiv from Thomson Reuters and a consortium including investment funds affiliated with Blackstone Group.
The deal is still on track to close during the second half of 2020.
This all helped London's blue-chip index shake off a poor day for Compass, shares shedding 7.1% amid caution over its outlook for Europe.
The contract caterer said revenue growth in the year to September was 8.8% to GBP24.88 billion, with organic revenue growth "strong" at 6.4% and above Compass's target of 4% to 6% growth. The market had expected organic revenue growth of 6%, according to company-compiled consensus figures.
Looking ahead, however, Chief Executive Dominic Blakemore said expectations for Compass's new financial year are positive, though it does remain "cautious" on conditions in Europe.
Broker Liberum commented: "While company's geographic and divisional diversification and general trend towards outsourcing cushions it, it does not make it immune to the macro environment."
Among FTSE 250 stocks, Pets at Home shares surged 15% after posting a sharp increase in profit and guiding to an annual outturn near the top end of market forecasts.
The firm's pretax profit for the 28 weeks ended October 10 was GBP34.0 million, more than four times its GBP8.0 million profit a year prior. This was due to a GBP16.2 million impairment loss on receivables the year before, which fell to only USD295,000 in financial 2019.
Another major contributor to the profit rise was a 9.4% increase in Pets at Home's revenue to GBP546.3 million from GBP499.3 million. This included an 8.1% rise in Retail revenue to GBP479.8 million from GBP443.7 million. Vet Group revenue, meanwhile, increased 20% to GBP66.5 million from GBP55.6 million.
The firm is confident in its second half, expecting underlying profit growth and underlying pretax profit pre-IFRS16 to be near the top end of market consensus.
Elsewhere in London, shares in banknote printer De La Rue tumbled 24% as the group warned on its debt pile and axed its dividend.
De La Rue will not be returning any cash to shareholders for the six months to September 28, having paid out 8.3 pence per share the year before. Net debt at the end of the period was GBP170.5 million, far higher than GBP107.5 million six months earlier. De La Rue blamed the rise on adverse working capital movements, prior dividend payments, pension contributions, and capital expenditure.
This net debt exceeds De La Rue's market capitalisation of GBP139.3 million, based on its closing share price on Tuesday of 134p.
The company said its debt position, and the ratio of net debt to earnings before interest, taxes, depreciation, and amortisation, was significantly higher than expected, though it will remain within banking covenants. However, De La Rue warned further deterioration in trading, further costs, and lower-than-expected margins could put this at risk.
In commodities, Brent oil was quoted at USD63.77 a barrel at the London equities close Tuesday up from USD63.26 late Monday.
Gold was quoted at USD1,460.48 an ounce at the London equities close Tuesday against USD1,457.22 at the close on Monday.
In the economic calendar on Wednesday, the British Retail Consortium's shop price index is out at 0001 GMT, followed by German import prices at 0700 GMT and US personal consumption expenditures, alongside an estimate of third quarter gross domestic product, at 1330 GMT.
In the UK company calendar, there is a trading statement from Lucky Strike cigarette maker British American Tobacco, annual results from soft drinks maker Britvic and pub owner Marston's, and first quarter results from IT infrastructure firm Softcat.
By Lucy Heming; [email protected]
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De La RueCRHCompass GroupHiscoxPets at home