29th Aug 2019 08:34
(Alliance News) - The FTSE 100 was trading in the green early Thursday despite the share price of constituent Micro Focus International slumping by a third, as the pound continued to suffer from the fallout of UK Prime Minister Boris Johnson's move to suspend Parliament.
The FTSE 100 was up 38.61 points, or 0.5%, at 7,153.32. The FTSE 250 was just 2.06 points higher at 19,205.05 and the AIM All-Share was up 0.1% at 870.36.
The Cboe UK 100 index was up 0.4% at 12,129.04. The Cboe UK 250 was down 0.1% at 17,106.91 and the Cboe UK Small Companies was flat at 10,859.88.
The pound was quoted at USD1.2190 early Thursday, down from USD1.2233 late Wednesday. This in turn was lower than USD1.2290 at the close on Tuesday. The UK currency is back near lows not seen since the start of 2017.
Legal challenges against Johnson's decision are mounting, with separate bids launched in London and Edinburgh courts seeking an emergency injunction to prevent Parliament being suspended. Further, more than one million people have signed a petition against Johnson's move.
Johnson's prorogation plan came just a day after opposition leaders struck a deal to try to block a no-deal Brexit through legislative means.
Meanwhile, Scottish Conservative leader Ruth Davidson is expected to resign on Thursday, in part due to opposition to Johnson's Brexit strategy, although sources say she will cite personal reasons for her decision as well.
In Thursday's economic indicators calendar, there is eurozone consumer confidence at 1000 BST, followed by German inflation at 1300 BST. At 1330 BST, there is US GDP, with personal consumption expenditures due at the same time.
"The second estimate of US Q2 GDP growth may show a marginal downgrade from the annualised 2.1% initial estimate. That is around the likely 'trend' growth rate but is likely to be viewed as 'old news'," said Lloyds Banking.
In mainland Europe early Thursday, the CAC 40 in Paris was down 0.2% as was the DAX 30 in Frankfurt.
In Asia overnight, the Japanese Nikkei 225 index closed down 0.1%. In China, the Shanghai Composite ended down 0.1%, while the Hang Seng index in Hong Kong is 0.4% lower in late trade.
In London, Micro Focus International slumped to the bottom of the FTSE 100, down a whopping 33% after cutting annual guidance.
Recent trading has led the board to conclude that the software firm will not hit its constant-currency revenue guidance of a 4% to 6% year-on-year drop for the financial year to October 31, now expecting a larger fall.
"Weak sales execution has been compounded by a deteriorating macro environment resulting in more conservatism and longer decision making cycles within our customer base," said Micro Focus.
The FTSE 100 constituent now expects revenue to fall around 6% to 8% year-on-year.
Against this backdrop, Micro Focus said it has decided to accelerate a strategic review of its operations.
Stephen Murdoch, chief executive officer, said: "Following the recent disappointing trading performance, we have determined that it is appropriate to accelerate the undertaking of a strategic review of the group's operations with a view to determining where performance can be improved and how the business can be better positioned to optimise shareholder value."
In the FTSE 250, Amigo Holdings slumped 27% as it revised annual guidance due to a "more cautious" approach to lending.
Revenue in the three months to June 30 was up 14% year-on-year to GBP71.5 million, with pretax profit up 33% to GBP22.6 million. The firm's net loan book grew 14% to GBP728.4 million.
In response to "an evolving regulatory and economic environment", Amigo said it will be prioritising new customer lending over re-lending to existing clients, while its credit policy has been "further enhanced and tightened".
Looking ahead, Amigo said loan book growth is expected to be broadly flat, while the firm's impairment to revenue ratio will be in the low to mid 30s and its cost to income ratio in the low 20s.
At its annual release in May, Amigo said it would be targeting "low-teen" net loan book percentage growth.
Hays shares declined 2.7% after reporting a slight dip in annual profit amid "weaker market conditions".
Net fees were up 5% to GBP1.13 billion in the year to June 30, up 6% on a like-for-like basis, while pretax profit slipped 3% to GBP231.2 million. Before exceptional items, however, profit was up 3% to GBP246.3 million.
In Germany, Hays saw record net fees despite weakening market conditions, while the firm noted signs of reduced business confidence in the UK & Ireland in the fourth quarter.
Hays raised its full-year dividend by 4% to 3.97 pence and its special dividend by 9% to 5.43p.
"Looking ahead, despite an increasingly tough global economic backdrop, our market positions, combined with our highly experienced global management teams and strong financial position, means I am confident we will continue to appropriately balance our long-term potential with the more challenging markets we currently face," said Chief Executive Alistair Cox.
At the top of the FTSE 250 was Homeserve, 3.1% higher after UBS raised the home emergency repairs firm to Buy from Neutral.
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