LONDON (SHARECAST) - It is only a week ago that the Footsie was below 4,000 but after rising six days in succession the blue-chip index is now closer to the 5,000 level than it is the 4,000 mark.
Sentiment was boosted by a note from Morgan Stanley strategist Teun Draaisma who opined that “the severe part of the bear market is over, that there is value, but probably no hurry.” Draaisma abandoned his previously bearish stance after four main market indicators - valuation, capitulation, risk, and fundamentals - all came up as "buy" signals.
Mining stocks shook off earlier lethargy to close mostly higher, led by Kazakhmys, ENRC, Lonmin and Xstrata. Antofagasta edged higher after reporting third quarter copper production was up 3.9%, mainly due to higher ore grades at Los Pelambres.
Oilfield services firms were once again in favour, with John Wood Group and Amec sharply higher as confidence returns to the sector on the back of stronger oil prices.
Marks & Spencer had a good day even though it said half-year profit before tax, property disposals and exceptional items plunged 34% to £297.8m on sales up 0.8% at £4.2bn. The figures were ahead of broker forecasts. Investors were further cheered by the interim dividend, which has been maintained at 8.3p per share.
Hovis and Branston Pickle group Premier Foods surged as investors decided results from Marks & Spencer and Associated British Foods were good for the group. M&S said like for like sales food sales fell 5.3% during the first half, but continues to see an opportunity to grow market share over the longer term. Premier is a big supplier of own label products to Marks.
Royal Bank of Scotland (RBS) ended the day little changed in an otherwise buoyant banking sector. RBS warned that the economic slowdown, continuing dislocation in financial markets and measures to reduce risk will hit its fourth quarter and full year results as it launched a £19.7bn rescue fundraising. If no-one takes up the offer the UK government will own over 60%.
Elsewhere in the sector prospective bed-fellows Lloyds TSB and HBOS were wanted, after Credit Suisse raised its verdict on the sector to “overweight”. Credit Suisse believes most of the bad news in the sector is now probably out in the opening.
Associated British Foods reported a 3% rise in full-year pre-tax profit thanks to strong sales at budget fashion retailer Primark and its grocery and agriculture divisions.
Bus and train company Stagecoach was the worst performing blue-chip on fears that rising unemployment will hit income from commuter services.
Anglo-Dutch publisher Reed Elsevier has announced the appointment of Ian Smith to succeed Sir Crispin Davis as chief executive.
BG Group expects to report an annual increase of over 2bn barrels of oil equivalent (bboe), or 60%, to its 2P reserves this year and about 3 bboe to the total reserves and resources base, up 30%.
Pub group JD Wetherspoon's like-for-like sales increased by 1.5% in the first quarter, a slight improvement on the 1.1% increase in the first 5 weeks of the period. Total sales in the 13 weeks ending 26 October increased by 6%, with that growth broadly consistent across food and bar sales.
Elsewhere in the sector Punch Taverns fell sharply after losses in the year to August came in at £80.2m, against a profit of £304.7m, after an exceptional charge of £295m. Sales fell from £1.7bn to £1.56bn. Underlying profits were £262m (2007: £282m) in line with market expectations and reflected a 7% reduction in the average size of the estate. Despite today’s share price fall, the shares are still up more than 50% on the week.
Construction firm Balfour Beatty said trading and cash generation has continued to be strong since the half-year. “We continue to expect 2008 to be a year of strong progress for the group,” it said.
IT staffing group Parity expects pre-tax profit before exceptionals will be lower than current market expectations.
Logistics software supplier Kewill was another sounding a note of caution, as it warned full year revenue will be slightly lower than planned as large projects were not repeated. The group made the comments as it revealed pre-tax profits for the six months to September slide to £372,000 from £726,000 on revenue that was slightly above flat at £24.5m.
A couple of big orders have jacked up sales revenue at product development software specialist Sopheon in the second half of the year. Broker Seymour Pierce was unimpressed and downgraded the stock to “hold” from “out-perform”.
FTSE 100 - Risers
Kazakhmys (KAZ) 397.25p +17.62%
John Wood Group (WG.) 282.00p +17.38%
London Stock Exchange Group (LSE) 656.00p +16.93%
Eurasian Natural Resources (ENRC) 408.00p +16.82%
Prudential (PRU) 393.00p +16.27%
Lonmin (LMI) 1,273.00p +14.89%
Fresnillo (FRES) 131.80p +12.65%
Xstrata (XTA) 1,304.00p +12.03%
International Power (IPR) 263.75p +12.00%
Amec (AMEC) 590.50p +11.73%
FTSE 100 - Fallers
Stagecoach Group (SGC) 184.20p -5.64%
Associated British Foods (ABF) 698.00p -1.34%
Cadbury (CBRY) 573.00p -0.69%
Sage Group (SGE) 177.80p -0.61%
Morrison (Wm) Supermarkets (MRW) 265.50p -0.56%
Diageo (DGE) 984.00p -0.30%
GlaxoSmithKline (GSK) 1,246.00p -0.28%
Inmarsat (ISAT) 425.75p -0.18%
Royal Bank of Scotland Group (RBS) 65.20p 0.00%
Severn Trent (SVT) 1,378.00p +0.07%
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