10th Sep 2019 08:44
(Alliance News) - Stock prices in London opened mixed on Tuesday, with Galliford Try leading the FTSE 250 risers after resuming talks with Bovis Homes regarding a combination of their respective housebuilding businesses.
The internationally exposed FTSE 100 was down 27.13 points, or 0.4%, at 7,208.68, amid a stable pound despite political drama overnight.
The FTSE 250 was up 17.09 points, or 0.1%, at 19,695.54. The AIM All-Share was flat at 877.63.
The Cboe UK 100 index was down 0.3% at 12,223.30. The Cboe UK 250 was flat at 17,531.89. The Cboe UK Small Companies was flat at 10,851.12.
In European equities, the CAC 40 index in Paris and the DAX 30 in Frankfurt both were down 0.2%.
"We're seeing a mildly negative start to European trade on Tuesday, as attention in Europe switches from Brexit to the European Central Bank [monetary policy meeting], amid high expectation of an aggressive pending stimulus package," said OANDA analyst Craig Erlam.
On the London Stock Exchange, JD Sports Fashion was the best blue-chip performer, up 3.5% after the sportswear retailer said it saw a period of significant progress amid well-documented challenges for the UK retail sector.
For the 26 weeks to August 3, revenue rose 47% to GBP2.72 billion from GBP1.84 billion last year, and pretax profit increased 6.6% to GBP129.9 million from GBP121.9 million. The retailer reported like-for-like sales growth in global Sports Fashion stores of 12% including "highly encouraging" growth of over 10% in its core UK and Ireland region.
JD Sports raised its interim dividend 3.7% to 28.00 pence from 27.00p.
At the other end of the large cap index, Tesco was the worst performer, down 2.5% after HSBC downgraded the UK's largest supermarket chain to Hold from Buy.
Ashtead Group was down 1.1% despite the equipment rental firm saying it delivered a strong first quarter with revenue and profit rising. The stock is up 38% so far in 2019.
For the quarter ended July 31, revenue rose 17% to GBP1.28 billion from GBP1.04 billion in the first quarter last year, and pretax profit rose 8% to GBP304.7 million from GBP274.4 million. The company's US Sunbelt unit generated revenue of USD1.38 billion, up from USD1.17 billion a year ago.
Ashtead Chief Executive Brendan Horgan said: "We expect business performance in line with our expectations and the board continues to look to the medium term with confidence."
In the FTSE 250, Galliford Try was the standout performer, up 15% after Bovis Homes resumed its effort to merge with Galliford's housebuilding units.
In a joint statement early Tuesday, Bovis Homes and Galliford Try said their talks are solely related to Galliford Try's housebuilding arm and not Galliford Try itself. Bovis said Galliford Try would be a "well-capitalised, standalone construction-focused group".
Back in May, Galliford rejected a GBP1.05 billion bid by Bovis for Galliford's Linden Homes and Partnerships & Regeneration businesses.
Bovis said on Tuesday the potential deal would value the housebuilding businesses at GBP1.08 billion. Under potential terms, the issue to Galliford Try shareholders would be 0.57406 Bovis Homes shares per Galliford Try share.
This would equate to 63.7 million Bovis Homes shares, valued at GBP675 million, based on Bovis Homes' closing share price on Monday of 1,059.00p. Galiford as a whole has a market capitalisation of just GBP682.9 million. Bovis has a market cap of GBP1.36 billion.
Bovis Homes was down 3.5%, among the worst performers in the FTSE 250. Separately, Bovis reported a 20% increase in half-year pretax profit to GBP72.4 million. It declared an interim dividend of 20.5 pence, up 8% from 19.0p a year ago.
The pound was quoted at USD1.2366 early Tuesday, flat from USD1.2369 at the London equities close Monday,
UK Prime Minister Boris Johnson suffered another humiliating Commons defeat after his second bid for a snap general election was rejected by MPs.
MPs voted 293 to 46, short of the 434 needed - marking the new PM's sixth Commons defeat.
The prorogation, passed in the early hours of Tuesday, makes a general election extremely unlikely until at least mid-November.
"I struggle to see any real progress between the UK and the EU before the European Council meeting in the middle of October, unless Johnson can miraculously provide detailed plans of the alternative arrangements that have long been touted as an alternative to the backstop. I don't think anyone is holding their breath there so instead, we'll probably just be treated to a five week no-deal, people vs parliament, PR offensive. It will be interesting to see if the pound falls victim to it or holds firm on the belief that no-deal won't happen," Erlam added.
The Japanese Nikkei 225 index closed up 0.4%. In China, the Shanghai Composite closed down 0.1%, while the Hang Seng index in Hong Kong is up 0.1%.
The prices Chinese firms pay factories for their goods fell last month at the fastest pace in three years, official data showed Tuesday, as slackening demand and the bruising US trade war drag on the economy.
Consumer prices also were broadly subdued and only supported by a surge of almost 50% in the price of pork caused by African swine fever that has ravaged the country's pig industry.
The producer price index - an important barometer of the industrial sector that measures the cost of goods at the factory gate - dropped 0.8% in August on a year before, following a 0.3% drop in July.
However, consumer price index, a gauge of retail inflation, rose 2.8% on year last month, stabilising from July and beating forecasts.
The economic events calendar on Tuesday has UK unemployment data at 0930 BST.
Related Shares:
Bovis HomesGalliford TryAshtead GroupJD Sports