21st Oct 2015 11:11
LONDON (Alliance News) - Stocks in the UK's main equities indices drifted higher on Wednesday, with little in the economic calendar to drive sentiment but with a flurry of individual company news from the likes of ARM, Pearson and Sky to capture attention.
Meanwhile, Wall Street was revving up for the debut of Ferrari shares.
At midday, the FTSE 100 index was up 0.5% at 6,375.11 points, the FTSE 250 was up 0.5% at 17,065.91, while the AIM All-Share index was down 0.1% at 744.33.
In Europe, the CAC 40 in Paris was up 0.7% and the DAX 30 in Frankfurt was up 0.9%.
In the US, futures pointed to a higher open, with the S&P 500 and Nasdaq 100 both up 0.5% and the DJIA up 0.4%. The US earnings season continues in full-swing, with results expected from Coca-Cola, Boeing, General Motors, eBay and America Express.
Ferrari will be completing its initial public offering in New York and is due to accelerate off the starting grid at USD52 a share, valuing the sports car maker at USD10 billion.
ARM Holdings was the biggest gainer in the FTSE 100, up 7.7% after it said it expects to meet market expectations for 2015 dollar revenue, and reported an increase in pretax profit for its third quarter.
In the quarter to end-September the computer chip designer reported a pretax profit of GBP102.9 million, up from GBP79.2 million a year before, as revenue rose to GBP243.1 million, up from GBP195.5 million.
This brings 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.
Augustin Eden, research analyst at Accendo Markets said that, following a poor set of results from IBM on Monday, ARM's 27% rise in pre-tax profits in the third quarter will have caused traders and investors alike to breath a cash-tinged sigh of relief.
Pearson was the worst performer in the FTSE 100, down 18%, after the publisher cut its earnings per share expectations for 2015 following its sale of its PowerSchool business, the FT Group and its stake in The Economist Group, as well as continued challenging market conditions and currency movements.
The education and publishing company had previously guided for earnings per share of between 75p and 80 pence, however, following these sales, as well as movements in exchange rates, this range is reduced by around 5p to between 70p to 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 this range, assuming current exchange rates, no further acquisitions or sales, a tax rate of 15% and an interest charge of around GBP70 million.
Merlin Entertainments traded up 4.6% 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.
Sky also was performing strongly, up 2.9%. The broadcaster said it has made a "strong start" to its current financial year, as it reported a 10% rise in operating profit for its first quarter.
For the quarter to end-September, Sky reported an operating profit of GBP375 million, up from GBP347 million a year before, on revenue of GBP2.79 billion, up from GBP2.74 billion.
In the FTSE 250, Home Retail Group shares plunged 16% after it reported a rise 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 was the best midcap performer up 6.6%. 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 one of the few economic releases of the day, UK public sector net borrowing in September decreased more-than-expected from a year ago, figures from the Office for National Statistics showed Wednesday.
The PSNB, excluding public sector banks, dropped to GBP9.4 billion from GBP11 billion in the same month last year. The figure was below the GBP10.1 billion which economists had forecast.
Still ahead in the economic calendar are Energy Information Administration crude oil stocks at 1530 BST, while Bank of England Governor Mark Carney will be speaking at Oxford at 1800 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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