Proactive Investors - Run By Investors For Investors
Markets

UK shares rise as a session of superlatives grips the City

London blue-chip shares closed Wednesday at a more than one-year high, AIM paper had its best level in over two years, and mid-caps briefly beat pre-Brexit levels
1-6120166723_3bb0a8d607_o.jpg
Glaxo delivers some welcome news

London blue-chip shares closed Wednesday at a more than one-year high, AIM paper had its best level in over two years, and mid-caps briefly beat pre-Brexit levels.

The session of superlatives came as domestically-focused stocks posted solid results, GlaxoSmithKline (LON:GSK) announced investment in the UK and growth data was strong. Glaxo shares closed up 1.7% at 1,964.92p.

Among those stocks reporting robust results were housebuilder Taylor Wimpey (LON:TW. up 6.8% to 154.77p, online property search Rightmove (LON:RMV) up 7.2% to 4,063.87p and broadcaster ITV PLC (LON:ITV) up 5.9% to 195.71p.

Meanwhile, GlaxoSmithKline announced £275mln of investment in the UK.

The FTSE 100 index closed up 0.4% at 6,750. Intraday it scaled 6,780 – ensuring blue-chips delivered their highest level since July 21 2015.

The FTSE 250 index of mid-caps closed up 1.2% at 17,265. Intraday, the ticker hit 17,362 – meaning it beat the level of 17,333 it scaled at the close on June 23 – the day of Britain’s European Union referendum.

But Laith Khalaf, a senior analyst at broker Hargreaves Lansdown, cautioned that a lot of the data was historical.

“All today’s figures look back to a period predominantly before the referendum, and as such they give us little indication of what the vote actually means for the economy, or the companies exposed to it. They do at least tell us the economy has some momentum going into the implementation of Brexit, and may yet give the Bank of England pause for thought when they decide whether to cut interest rates next week,” he said.

The FTSE AIM 100 Index closed up 0.98% at 3,595 – enjoying its best performance since May 30, 2014 – while the FTSE AIM All-Share Index closed up 0.7% at 751

London gainers represented 40% of the market – one of their best proportions this year – while losers were just 20% and unchanged 40%.

The top gainer was Lead All (LON:LEAL), up 62.2% to 1.5p. On Tuesday, it was also the biggest faller, dropping by 32.7% to 0.925p.

The main faller on Wednesday was Energiser (LON:ENGI), down 27.3% to 2p.


Midsession

A strong performance by drug giant GlaxoSmithKline PLC (LON:GSK) gave a shot in the arm to London shares on Wednesday.

Shares in GSK rose 25p, or 1.5%, to 1692p after it reported a 4% rise in group sales to £6.5bn.

It reported growth in all three of its key businesses of pharmaceuticals, vaccines and consumer healthcare, with vaccines doing particularly well, up 11% to £960mln.

GSK also on Wednesday appeared to give a vote of confidence in the UK economy despite the EU referendum vote, pledging to invest £275mln in three sites.

But Nigel Driffield at Warwick Business School said: “While £275mln is a large amount of money, to a company with turnover approaching £25bn, an investment of this size, spread over a number of years, is not much more than keeping things ticking over.”

The FTSE 100 Index rose 44.5 points to 6768.52 as second quarter GDP growth rose to 0.6% quarter-on-quarter from 0.4% in the first quarter, above the 0.5% consensus.

Experts said the figures were of limited significance, having mostly covered the period before the UK's EU referendum on June 23.

Nick Dixon, investment director at Aegon said: “The bigger post-Brexit picture will be of more interest to investors than today’s figures.

“The latest GDP captures a mere week of activity following the vote.

"While global financial markets may be more resilient than feared before the referendum vote, bearish data from the recent PMI and CBI surveys indicate that the UK economy itself may be weaker.”

Talk of fiscal stimulus in Japan and mostly positive earnings from the likes of Apple Inc (NASDAQ:AAPL) offset jitters about the Federal Reserve's rate decision later, although no change is expected.

The FTSE AIM 100 rose 20.45 points to 3580.88 and the FTSE AIM All-Share gained 3.06 points to 749.33.

Kimberly Enterprises NV (LON:KBE) brightened 38.1% 1.45p on receiving from the Municipality of Belgrade a unilateral termination of the lease agreement over the Marina Dorcol Project in Belgrade, Serbia.

“Kimberly is still in negotiations with the municipality in order to determine the level and timing of the compensation as a result of the above termination,” it added.

W Resources PLC (LON:WRES) blasted ahead 6.85% to 0.39p after the tungsten, copper and gold explorer focused on Spain and Portugal started hard rock mining at its La Parrilla tungsten project in Spain.

Shares in Berkeley Energia Ltd (LON:BKY) ticked up 7.1% to 49p as the Spanish uranium mine developer considered options to fully fund its Salamanca mine, where initial infrastructure work has now started.

But Flybe PLC (LON:FLYB) flew 7% lower to 39p as the troubled UK regional airline faced slowing demand after the EU referendum and disruption from air traffic control strikes on the continent.

Connemara Mining Company plc (LON:CON) lost its twinkle by 7.6% to 2.425p after it found gold at its licence areas in Donegal in the Irish Republic.

It said the mineralisation was still not well understood and it was an early stage project with further results to come.

Cenkos Securities PLC (LON:CNKS) dropped 7.5% to 117.5p after the stockbroker confirmed speculation that it was facing a Financial Conduct Authority probe.

The investigation was reportedly focusing on its work advising Quindell plc, now known as Watchstone Group plc (LON:WTG) on its planned move to the LSE’s main market in 2014.

Back in the top flight, investors switched on to shares in ITV PLC (LON:ITV) by 9.6% to 202.6p after the free-to-air broadcaster reported higher revenue and profit despite uncertainty from the EU referendum result.

But Fresnillo (LON:FRES) retreated 0.27% to 1,862p. Brexit jitters continued after the precious metals miner ramped up gold production last week.

________________________________________

Preview at 6.59am

London’s blue chips are set to rise in early dealings after markets in Asia rallied late.

Financial spread bet firms see FTSE 100 adding around twenty points from the 6,724 close yesterday, itself up thirteen points.

US markets were dominated by the reporting season with tech giants Apple and Twitter both issuing updates.

IPhone maker Apple produced slightly better than expected numbers even sales of the iconic mobile phone slowed for a second quarter running.

Revenue declined 15% to $42.4bn from $49.6bn a year earlier. Earning also fell but markets were reassured by a forecast of revenue for the fiscal fourth quarter of $45.5bn to $47.5bn.

Twitter, meanwhile, posted a 20% hike in revenues to US$602mln, but guidance for the next quarter was lower than expected sending the shares tumbling in after-hours trading.

The Dow Jones Industrial Average closed 19 points lower at 18,473, though the two other major indices posted modest gains.

Asian markets were mixed though strong gains in Tokyo offset losses in Shanghai and Hong Kong, with the mood seeming to improve as the day wore on.

In the UK today, it is also a big results day with ITV PLC (LON:ITV), drug group GlaxoSmithKline PLC (LON:GSK), house-builder Taylor Wimpey PLC (LON:TW.) and oil explorer Tullow Oil plc (LON:TLW) all reporting.


© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use