27th Feb 2015 17:00
LONDON (Alliance News) - The FTSE 100 reached another record high Friday, as the UK company reporting season continued full throttle, before giving up all its gains right at the close and ending slightly lower, amid mixed economic data from the US.
The FTSE 100 closed marginally down at 6,946.66 after touching a new record intraday high of 6,967.24 four minutes before the market close, outstripping the previous record of 6,958.89 set on Tuesday. Over the week, London's blue chip index added 0.5%, and put on 2.9% over all of February.
The FTSE 250 ended up 0.1% to 17,273.82, yet another record high close for the mid-cap index. The AIM All-Share index closed 0.2% higher at 714.50.
In Europe, the French CAC 40 closed up 0.7%, and the German DAX 30 ended up 0.6% at 11,401.66, a new record high close for the index. Over the course of the week, the CAC gained 2.5%, while the DAX added 3.2%. In February, the CAC 40 rose 7.5% and the DAX 30 gained 6.6%, amid relief that Greece appeared to have bought more time for its international debt programme.
Wall Street was trading lower at the London close Friday. The DJIA and the Nasdaq Composite were both down 0.2%, and the S&P 500 was slightly lower.
US economic growth slowed by more than previously estimated in the final three months of 2014, according to a revised report released by the Commerce Department on Friday.
The report said US gross domestic product increased by a downwardly revised 2.2% in the fourth quarter, compared to the previously reported 2.6% growth. That rate of economic growth represents a sharp slowdown from the 5.0% jump seen in the third quarter. Despite the downward revision, the pace of GDP growth during the fourth quarter still came in slightly above economist estimates for a 2.1% increase.
The Chicago Purchasing Managers Index hit its lowest level since July 2009, and fell into contraction for the first time since April 2013, according to a report by the MNI Deutche Börse Group. The PMI figure for February fell to 45.8, falling considerably short of the 58.0 consensus and January's figure of 59.4. A reading above 50.0 marks an expansion.
"It's difficult to reconcile the very sharp drop in the Barometer with the recent firm tone of the survey. There’s some evidence to point to special factors such as the port strike and the weather, although we'll need to see the March data to get a better picture of underlying growth," said Philip Uglow, chief economist at MNI Indicators.
However, shares in London were supported by the University of Michigan report showing US consumer sentiment deteriorated by less than previously estimated in the month of February. The index showed a reading of 95.4, falling from 98.1 in January, but surpassing economists expectations of a fall to 94.0, and the preliminary reading of 93.6.
On the UK corporate front, International Consolidated Airlines Group closed as the best performer in the FTSE 100, up 4.0%. The parent company of British Airways reported strong growth in 2014 operating profit as fuel costs fell and its Spanish airline Iberia swung to a profit, and said it expects further strong profit growth in 2015. The company's closely-watched operating profit excluding exceptional items grew to EUR1.39 billion for 2014, up from EUR770 million a year earlier, as revenue rose 8.0% to EUR20.17 billion. Its net profit rose to EUR1.00 billion, from just EUR147 million in 2013.
Associated British Foods was the second best blue-chip performer, up 2.5%, after it was initiated with an Overweight rating by Barclays. The bank said it sees potential for growth in Primark and improved conditions for the company's sugar business.
Intu Properties closed as the biggest faller in the FTSE 100, down 5.1%. The shopping centre and retail space owner and operator reported growth in property valuations and total returns for 2014, although its underlying earnings per share fell due to a drop in like-for-like net rental income. Its adjusted earnings per share declined slightly to 13.3p, from 13.7p in 2013, reflecting a 3.2% drop in like-for-like net rental income.
Barclays also closed as one of the worst performers in the index, down 2.0%. The bank is set to more than double its provision to cover allegations of foreign exchange market manipulation when it reports annual results next week, Sky News reported on Friday. According to the Sky report, Barclays' current GBP500 million provision over the forex rigging scandal will be increased as a settlement with a number of US authorities draws nearer.
In the FTSE 250, Rightmove closed as the second-best performer, up 12%, behind Allied Minds, which rose 16%. The online property portal reported higher pretax profit and revenue in 2014 and said it is shrugging off the challenge of newly-launched portal OnTheMarket. Rightmove said its pretax profit rose to GBP122 million from GBP97 million in 2013, as revenue rose to GBP167 million from GBP139.9 million.
Rentokil Initial was another top mid-cap performer, closing up 4.4%. The business services company said its pretax profit increased in 2014 despite lower revenue as its cost-cutting measures improved its profit margins over the year. Pretax profit for the company rose to GBP163.2 million in 2014, compared with GBP112.2 million in 2013.
Berendsen, down 4.4%, was one of the worst performer in the FTSE 250. The provider of workwear, linen and facility hygiene and cleaning products reported higher profit for 2014 as its offset a currency-related hit on its revenue by cutting costs and improving margins, and said it expects good underlying progress in 2015 although the strength of the pound will continue to weigh on its results.
Its closely-watched adjusted operating profit, which excludes GBP21.5 million amortisation of customer contracts, was flat at GBP158.7 million, although it would have grown 6% if exchange rates had stayed the same. Its adjusted operating margin was up 20 basis points at actual rates, and 40 basis points at constant rates.
Baobab Resources, up 33%, was one of the best performer in the AIM All-Share index. The company said that it agreed terms with major shareholder Redbird Investments for an offer to buy up the remaining shares in Baobab it does not already own for 6.0 pence per share, valuing Baobab at GBP20.5 million. Baobab closed trade at 5.495p.
In the economic calendar Monday, there is the Markit manufacturing Purchasing Managers' Index from France at 0845 GMT, Germany at 0855 GMT, the eurozone at 0900 GMT, the UK at 0930 GMT, and the US at 1445 GMT. European consumer prices and unemployment rate are at 1000 GMT, before US ISM manufacturing PMI at 1500 GMT.
In the corporate schedule, there are full-year results from FTSE 100 inspection and testing services company Intertek Group. In the FTSE 250, full-year results are due from specialty chemicals and materials company Alent, insurer Amlin, manufacturing company HellermannTyton Group, specialist insurer Hiscox, aerospace, defence, and energy engineering company Senior, and Ultra Electronics.
By Neil Thakrar; [email protected]; @NeilThakrar1
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