23rd Jan 2017 12:03
LONDON (Alliance News) - A rising pound weighed on UK stock prices Monday at midday, with the dollar subdued following US President Donald Trump's inauguration last Friday.
The FTSE 100 was down 0.4%, or 30.23 points, at 7,168.21. Earlier in the month the blue-chip index's gains had been driven by weakness in sterling, but a rebound on Monday versus the dollar held back the FTSE 100. At midday in London, the pound traded at USD1.2449 compared with USD1.2329 at the London stock market close on Friday.
"Equities are on the back foot to start the new trading week, sentiment dented by a weak USD derived from Trump's Friday inauguration speech striking a very anti-globalisation tone. This is fuelling concerns about how gung-ho he'll be on certain divisive policies," said Mike van Dulken, head of research at Accendo Markets.
"Reciprocal GBP and EUR strength is pushing FTSE and DAX components lower on account of their goods now being slightly more expensive and international profits worth that little bit less," van Dulken added.
However, the more UK domestic-oriented FTSE 250 was down as well, off 0.2% at 18,113.99, while the AIM All-Share was down 0.1% at 872.86.
The BATS UK 100 index was down 0.4% at 12,113.50, the BATS 250 was down 0.2% at 16,481.74 and the BATS Small Companies was down 0.2% at 10,932.73.
In mainland Europe, the French CAC 40 was down 0.3% and the German DAX 30 was down 0.4%.
Ahead of the open on Wall Street, futures pointed the Dow Jones Industrial Average and S&P 500 both down 0.1% and Nasdaq Composite down 0.2%.
In UK corporate news, Paddy Power Betfair was the worst performer in the FTSE 100, down 3.2%. The bookmaker said it expects to report underlying earnings at around the mid-point of its previously guided range, notwithstanding worse-than-expected gross win margins in November and December.
The group said that revenue rose by 18% in 2016 to GBP1.55 billion from GBP1.32 billion in 2015, or by 11% at constant exchange rates. As a result, Paddy Power Betfair now expects group underlying earnings before interest, tax, depreciation and amortisation to be at the mid-point of its previously guided range of GBP390 million to GBP405 million.
The group's European sportsbooks lost money on football bets in December. Paddy Power Betfair estimates that the hit to revenue from these "customer-friendly results" was around GBP40 million in the fourth quarter of 2016, although lower than expected marketing and staff costs helped mitigate the hit to profit.
SSP Group traded up 5.4% after Jefferies lifted the stock to Buy from Hold. The bank believes the travel concessions operator is set to remain a market leader despite a reduction in dwell times at rail stations and airports, meaning time waiting for trains and planes.
A top investor in Bovis Homes Group is pushing for a GBP5.0 billion merger with a fellow London-listed rival Berkeley Group Holdings after the housebuilder's chief executive resigned following a profit warning, the Sunday Times reported.
Schroders Investment Management, which holds a 6.4% stake in Bovis, making it the second largest shareholder, is understood to have written to Berkeley, a bigger competitor, pushing it to consider an all-share merger, the newspaper said.
Earlier this month, Bovis said Chief Executive David Ritchie had stepped down with immediate effect. Bovis was up 3.3% and Berkeley was up 1.1%.
Components manufacturer Essentra said it expects its adjusted operating profit for 2016 to be at, or "modestly below", the lower end of its previous guidance.
In a trading update, Essentra said its Health & Personal Care Packaging unit saw a significant decline in revenue and profitability in the last two months of 2016.
"As a result, and while the detailed year-end close and audit is ongoing, the board expects adjusted operating profit to be at, or modestly below, the bottom end of the company's previously communicated guidance of GBP137 million to GBP142 million," said Essentra. The stock was down 2.6%.
Braemar Shipping Services was down 15% after it said it forecasts a big drop in underlying operating profit year-on-year, as underperformance in its Technical division continued to hit group results.
The company, which provides services for the shipping, marine, energy, offshore and insurance industries, said it now expects its underlying operating profit before interest, acquisition costs and tax to be between GBP3.0 million and GBP3.5 million for its financial year to the end of February.
In the prior year to the end of February 2016, Braemar reported an underlying operating profit before one-off and acquisition costs of GBP13.8 million.
The remaining release scheduled in the economic calendar is eurozone consumer confidence at 1500 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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Berkeley GroupBovis HomesSSP GroupPaddy Power BetfairBraemar ShippingEssentra