London midday: Stocks in the black amid data deluge; D-day for GKN

With the long Easter weekend just hours away, you might have been forgiven for assuming that Thursday’s session would be a little limp.

This was very much not the case, however, with a raft of data releases, M&A news and a fair number of analysts opinions keeping things interesting.

By midday, the FTSE 100 was up 0.4% to 7,072.32, while the pound was down 0.2% against the dollar and the euro at 1.4054 and 1.1415, respectively.

A deluge of UK data confirmed economic growth slowed at the end of last year, though more timely figures on the services sector, consumer spending and borrowing suggested the first quarter could see a pick-up.

UK gross domestic product grew 0.4% in the fourth quarter of 2017 compared to the third, the Office for National Statistics said in its final reading on the measure, in line with its second estimate a month ago. GDP growth slowed to 1.4% compared to the same quarter a year before from 1.8% in the third quarter, also as expected.

Figures from the Bank of England showed that consumers and businesses borrowed at a faster rate in February, suggesting a firming of confidence in the economy after a shaky few months.

Consumer credit rose by £1.6bn, up from £1.3bn in January and more than the £1.5bn six-month average. Net lending to non-financial companies showed a sharp jump, rising by £1.7bn after virtually flatlining in January. February’s figure was more than three times the six-month average of £500m. The annual rate of growth picked up to 3.2% from 3%.

Ian Stewart, chief economist at Deloitte, said: "Household spending power has been flatlining for the last two years. That has forced consumers to run down savings and borrow more just to sustain sluggish growth in spending.

"2018 should offer some relief, with falling inflation and stronger wage growth helping boost consumer spending power."

Earlier, the latest survey from Gfk revealed that the UK consumer is feeling slightly more confident about personal finances and the general economic situation as recent improvements in wage growth and inflation boost spirits.

The long-running consumer confidence index from GfK climbed three points over the month of March but still remained negative at -7, worse than at this stage last year. However, all five of the constituent measures improved in March compared to February and January.

Meanwhile, mortgage lender Nationwide’s survey for March showed that house price growth unexpectedly slowed.

Prices were up 2.1% on the year, slowing down from a 2.2% increase in February and below the 2.6% gain expected by economists. On the month, house prices fell 0.2% and although this was better than the 0.4% decline seen the month before, analysts had been expecting a 0.2% increase.

London was the worst-performing region again, with average house prices down 1% compared with a year ago.

In corporate news, NEX Group remained up 8% for the week and 46% for the month as it agreed to be taken over by Chicago's CME Group for £3.9bn in cash and shares. CME will pay 500p in cash and 0.0444 new shares for each NEX share, which values NEX 1000p per share, a high-ball bid that analysts suggested could be big enough to deter rivals such as LSE or ICE from gatecrashing.

Nex shares had surged late on Wednesday amid reports of a deal.

Meanwhile, after months of tit-for-tat exchanges, investors were likely looking forward to the end of the GKN/Melrose Industries soap opera, as the engineer’s shareholders have until 1300 BST to decide whether to support or reject a hostile £8.1bn takeover bid from the turnaround specialist.

Lee Wild, head of equity strategy at Interactive Investor, said: “GKN has used everything in its arsenal to fight off turnaround specialist Melrose, but it’s still far from clear whether it will be enough. What is certain is that this will go to the wire. It may even be that the result is not publicly announced until after the market close, forcing investors to wait over the Easter holiday before being able to act on the outcome. A GKN victory is widely tipped to trigger selling of its shares, as Melrose backers bet that benefits take far longer to feed through than they would have done had the bidder won.”

Shire was in the red after saying it has gained regulatory acceptances from the EU and Canada for its lanadelumab treatment for hereditary angioedema. Shares in the company rallied sharply earlier in the week as it emerged that Japan’s Takeda was considering making an offer for the group.

Elsewhere, Compass Group was on the back foot as French peer Sodexo cut its full-year sales guidance.

Moneysupermarket gained ground as it agreed to buy home communications and mobile phone comparison business Decision Tech for £40m.

Qinetiq was up as its pre-close trading statement met expectations, while IP Group rallied on the back of its full-year numbers.

Indivior slipped as it said its subsidiary Indivior UK and C4X Discovery Holdings have entered into a license agreement whereby Indivior UK obtained exclusive global rights to develop and commercialize C4X's oral orexin-1 receptor antagonist programme.

JD Wetherspoon was down after supplier Conviviality, a major wholesaler to pubs and off licences, said it plans to call in the administrators.

In broker note action, Morrisons was upgraded to ‘outperform’ at Bernstein, while WH Smith was lifted to ‘buy’ at Stifel. Citi upgraded Cineworld to ‘buy’ and Peel Hunt bumped Electrocomponents up to ‘add’. SIG was raised to ‘equalweight’ at Barclays.

However, Ted Baker was downgraded to ‘hold’ by Jefferies and Provident Financial was hit by a downgrade to ‘sell’ at Berenberg.

InterContinental Hotels, 888 Holdings, Bovis Homes, British Land, CLS Holdings, Prudential, Sanne, Ferrexpo and Softcat were among the companies whose stock went ex-dividend on Thursday.

Market Movers

FTSE 100 (UKX) 7,072.32 0.39%
FTSE 250 (MCX) 19,428.65 0.37%
techMARK (TASX) 3,263.23 0.11%

FTSE 100 - Risers

Mediclinic International (MDC) 601.80p 5.25%
Anglo American (AAL) 1,661.20p 2.75%
Morrison (Wm) Supermarkets (MRW) 214.00p 2.64%
BHP Billiton (BLT) 1,413.00p 2.61%
BT Group (BT.A) 231.15p 2.39%
International Consolidated Airlines Group SA (CDI) (IAG) 610.80p 2.31%
Rio Tinto (RIO) 3,601.00p 2.21%
Sainsbury (J) (SBRY) 239.00p 1.92%
Smith (DS) (SMDS) 473.90p 1.78%
Antofagasta (ANTO) 926.80p 1.76%

FTSE 100 - Fallers

Compass Group (CPG) 1,437.00p -3.23%
Prudential (PRU) 1,804.00p -1.90%
Shire Plc (SHP) 3,442.00p -1.66%
InterContinental Hotels Group (IHG) 4,273.00p -1.63%
Johnson Matthey (JMAT) 3,054.00p -1.23%
Smith & Nephew (SN.) 1,338.33p -0.83%
Paddy Power Betfair (PPB) 7,235.00p -0.69%
AstraZeneca (AZN) 4,915.50p -0.58%
WPP (WPP) 1,132.00p -0.57%
Barclays (BARC) 204.85p -0.56%

FTSE 250 - Risers

IP Group (IPO) 114.60p 6.70%
Electrocomponents (ECM) 598.40p 4.69%
Cineworld Group (CINE) 234.20p 2.99%
Hikma Pharmaceuticals (HIK) 1,194.50p 2.89%
QinetiQ Group (QQ.) 206.00p 2.79%
WH Smith (SMWH) 1,972.00p 2.76%
Go-Ahead Group (GOG) 1,762.00p 2.62%
Lancashire Holdings Limited (LRE) 577.50p 2.58%
Tullow Oil (TLW) 193.80p 2.49%
SIG (SHI) 136.20p 2.48%

FTSE 250 - Fallers

Capita (CPI) 145.25p -3.81%
Bovis Homes Group (BVS) 1,146.50p -3.09%
Ted Baker (TED) 2,534.00p -3.06%
TI Fluid Systems (TIFS) 254.00p -3.05%
Galliford Try (GFRD) 839.50p -3.00%
Inmarsat (ISAT) 362.20p -2.74%
Provident Financial (PFG) 666.60p -2.32%
888 Holdings (888) 265.00p -2.21%
IG Group Holdings (IGG) 795.50p -1.79%
Ferrexpo (FXPO) 247.40p -1.55%