Miners support FTSE as Admiral Group hits stormy seas

Britain’s top share index rose for the third day on the trot on Wednesday, boosted by gains among mining firms, though car insurer Admiral Group plummeted after reporting half-year results.

The blue chip FTSE 100 (FTSE) index was up 0.6 percent at 7,428.27 points by 0903 GMT, giving up some gains after sterling was boosted by stronger than expected UK earnings growth. Mid caps (FTMC) also advanced 0.6 percent.

“It is worth noting that, even after yesterday’s decline in the UK CPI rate and today’s surprise uplift for wage growth, the squeeze on the consumer remains, although not as tight as it once was,” said Kathleen Brooks, research director at City Index.

“So far, this data hasn’t had any impact on UK consumer discretionary stocks like M&S or Next. We may need to get confirmation of decent July retail sales figures before these stocks make a move.”

Admiral Group (L:ADML) slumped 6.7 percent, on course for its worst day since November 2011, after posting a weaker loss ratio for the first half.

“We see underlying margin deterioration in the core UK motor division as the key negative in the result. In addition, pricing increases appear weaker than peers at headline level,” analysts at UBS said in a note.

Admiral’s shares had rallied more than 21 percent ahead of the results, suggesting there might also have been an element of profit-taking behind Wednesday’s move.

A rise among mining firms supported the index, with the sector adding more than 10 points to gains.

Glencore (L:GLEN), Anglo American (L:AAL), Rio Tinto (L:RIO) and Antofagasta (L:ANTO) all rose between 1.8 and 2.3 percent, boosted by firmer copper prices. [MET/L]

Among smaller companies, shares in Balfour Beatty (L:BALF) led the mid caps with a jump of 7.4 percent after the construction firm saw its half-year profit rise nearly 70 percent thanks to a rebound in its UK construction business.

“Construction is all about margins and bidding too aggressively for work cost Balfour dearly for a couple of loss-making years in which it delivered seven profit warnings,” said Neil Wilson, senior market analyst at ETX Capital.

“Now it’s a lot more selective and as a result says it’s on course to achieve industry-standard profit margins by the second half of 2018.”

Silver miner Hochschild Mining (L:HOCM) slumped 15 percent after reporting first-half profit down by more than a third.

Fed-fuelled banking stumble cuts short FTSE winning streak

Banks wilting on the prospect of slower U.S. rate hikes dented Britain’s major share index on Thursday, and Kingfisher also weighed after a weaker quarterly sales performance.

The FTSE 100 (FTSE) fell 0.6 percent, breaking a three-day winning streak in the wake of European indexes, which edged back after a set of cautious minutes from the U.S. Federal Reserve.

Banks RBS (L:RBS), Standard Chartered (L:STAN), and Barclays (L:BARC) were among the biggest fallers. They helped financials take 21 points off the index overall after several Fed members called for halting interest rate hikes following recent weak inflation.

Banks benefit from higher interest rates that bolster their margins, and the prospect of slower rate hikes dented the sector globally. The FTSE 350 banking index (FTNMX8350), which had outperformed the FTSE 100 recently, fell back 1.6 percent.

Index levels were little changed after retail sales data that showed a slowdown in July after a strong second quarter.

“We are going through a slight bit of the summer doldrums, and you’re seeing some evidence of a slowdown in things like the housing market,” said Paul Mumford, UK fund manager at Cavendish Asset Management.

Europe’s largest home improvement retailer Kingfisher (L:KGF) led losers, down 4 percent after it reported another decline in quarterly sales, weighed by its B&Q business in the UK and weak sales in French chains Castorama and Brico Depot.

“As feared, the impact of the UK housing slowdown is now more clearly apparent, with B&Q second quarter like-for-like sales undershooting expectations at -4.7 percent,” Jefferies analysts said in a note.

The retailer’s “discount” valuation would likely persist for now, they added, as the mid-term potential for improvement in its French segment was diluted by short-term risks at B&Q.

Cavendish’s Mumford said that while Kingfisher’s results indicated a slowdown, the market was slightly mixed, as evidenced by paving stone retailer Marshalls’ (L:MSLH) positive update that boosted its shares 4 percent.

Gains from gold miners Randgold (L:RRS) and Fresnillo (L:FRES), up 1.8 to 3.8 percent, capped losses for the index as gold prices edged up, benefiting from a weaker U.S. dollar.

Admiral (L:ADML) stumbled again, down 2.3 percent after Wednesday’s sharp results-driven losses.

Meanwhile mid-caps (FTMC) fell 0.4 percent, weighed by Hikma (L:HIK).

The drugmaker fell 10.5 percent after cutting its revenue guidance for the year, saying increased competition in its generics business hit prices and volumes for its first half.

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Drop in airlines dampens FTSE 100 after Spain attack

FTSE 100 came under pressure from falls among consumer giants, financials and airline stocks, caught up in a broader risk-off move following the attack in Spain.

The FTSE 100 (FTSE) index ended the session down 0.9 percent at 7,323.98 points, extending the previous session’s losses after three days of gains. It still managed to end the week with a small gain, however.

A suspected Islamist militant drove a van into crowds in Barcelona on Thursday, killing 13 people and injuring more than 100.

Shares in International Consolidated Airlines (L:ICAG), which operates British Airways, and easyJet (L:EZJ) fell 2 percent and 0.8 percent, recovering earlier losses slightly as the broader European travel & leisure sector (SXTP) dropped 1.5 percent.

“The entire airline and leisure industry is down today purely from the attacks,” said John Moore, trader at Berkeley Capital.

“People in the forthcoming months, we believe, will be less likely to take trips abroad,” he said, adding that he expected the airline stocks to recover.

Randgold Resources (L:RRS) led the 10 or so risers, up 1.2 percent as investors sought safety in assets such as precious metals miners and the price of gold rose for the third day straight on the back of political turmoil in the United States.

Falls among large consumer staples firms such as British American Tobacco (L:BATS) and Diageo (L:DGE) were the biggest weights on the FTSE 100, while financials also added pressure with HSBC (L:HSBA), Lloyds (L:LLOY) and Barclays (L:BARC) edging lower.

Energy stocks took 6.6 points off the index, with BP (L:BP) declining 0.7 percent as the price of oil fell. [O/R]

British mid caps (FTMC) were also 0.7 percent lower, with Hikma (L:HIK) among the biggest fallers, extending losses into a second day after trimming its sales forecasts on Thursday.

The health care firm has fallen around 15.5 percent over the past two sessions, and broker HSBC cut its target price on the stock.

“Management also repeatedly stated that pricing is cyclical, the industry has been here before and that it will recover. We disagree,” analysts at HSBC said in a note, adding that they expect U.S. drug pricing to remain under increasing pressure through the second half of 2017 and onwards.

Help to Buy report hits housebuilder shares

Housebuilders were the biggest fallers on the 100 share index throughout Friday after a report raised the prospect of the government’s Help to Buy scheme being wound down early.

The scheme – which aims to help first-time buyers – is to be reviewed, according to a report in Property Week.

Among the housebuilders on the FTSE 100, Barratt fell almost 5% and Persimmon and Taylor Wimpey about 4%.

The FTSE 100 index closed up 36.94 at 7,547.63 points.

Shares in Merlin Entertainments were the best riser, closing up 6%, despite the firm – which owns the London Eye. Legoland and Madame Tussauds – saying recent terror attacks had led to fewer visitors to its city centre sites.

The company reported half-year profits of £50m, unchanged from a year earlier, although it said full-year profits were still set to meet expectations.

RBS shares rose 2% after the bank reported its first half-year profits for three years.

It made a profit of £939m in the first six months of the year, a big turnaround from the £2bn loss in the same period of 2016.

On the currency markets, the pound reversed gear against the dollar after the US jobs report came in stronger than expected, it ended in London down 0.78% at $1.3037.

After flirting with new nine-month lows against the euro around 1 euro 10, it ended up 0.26% at 1.1097 euros.

FTSE 100 dips as Rio Tinto sags

Rio Tinto was among the fallers, down 2.8% after it updated the market on its performance. It said profits had almost doubled to $3.3bn for the six months to 30 June.

The benchmark FTSE 100 ended the day down 0.16% at 7,411.43.

In the FTSE 250, shares in William Hill bookmaker rose 6.1%, despite an 11% drop in first-half pre-tax profit.

The firm, which named a new chief executive and a finance chief in March, said profit before interest and tax for the 26 weeks to 27 June fell to £109m from £122m a year earlier.

Other big winners in the FTSE 100 included ITV, Paddy Power Betfair, Kingfisher and Babcock International.

Other big fallers included Standard Chartered, Rolls-Royce, Micro Focus International and BAE Systems.

On the currency markets, the pound was up 0.2% against the dollar at $1.3230 and 0.3% down against the euro at 1.1156 euros.

 

FTSE 100 lifted by Rolls-Royce and Direct Line

Shares in aerospace giant Rolls-Royce led the FTSE higher, jumping 10.25% after its profits beat expectations.

The company reported a 12% rise in revenues to £7.57bn for the first six months of the year, helped by a 27% increase in large engine deliveries.

Rolls also said cost savings were ahead of schedule and it was on target to hit profit forecasts.

The company reported a first-half pre-tax profit of £1.94bn, compared with a £2.15bn loss a year earlier.

Underlying profits more than doubled to £287m, comfortably beating analysts’ forecasts.

At the close, Rolls-Royce was the biggest riser on the FTSE 100, with the index up 51.66 points at 7,423.66.

Intertek Group was another big riser, up more than 9%, after the product testing company said its half-year profits rose more than 20% to £210.3m.

Shares in Direct Line were up more than 5% after the insurer reported a 9.5% increase in operating profits to £354.2m.

On the currency markets, the pound was down a fraction against the dollar at $1.3208 and 0.34% higher against the euro at 1.1196 euros.