London close: Stocks higher at quarter-end, buoyed by deal news
Deal news helped London's top flight index finish higher on Wednesday, after a technology-led selloff on Wall Street during the previous session sparked early losses.
By the end of trading, the FTSE 100 was up 0.64% to 7,044.74, while the pound was edging higher by 0.14% against the euro to 1.1430 bnut off by 0.34% versus the dollar at 1.4112.
The FTSE 250 on the other hand ended 0.17% lower at 19,356.59, although it too was well off its lows of the session.
Trading in the States had gotten off to a wobbly start amid sharp falls in shares of Amazon.com and Tesla, as investors continued to book profits on the already heavily-sold technology space.
Nevertheless, overall Wall Street's main indices were holding their ground ahead of the end of the first quarter.
Shares tend to find a bid towards the end of each quarter as fund managers go about 'window-dressing' their results.
Commenting on the recent sell-off in the US tech sector, analysts at UniCredit said that in reality the underlying cause was "extremely stretched valuation metrics that have generated a sizeable misalignment with fundamentals, mostly for the big technology stocks.
"With sector price to earnings and price to book ratios trading significantly above their long-term averages, it should not come as a surprise that some negative news would precipitate a sell-off. We see this continuing, either with US tech stocks underperforming a rising equity market or weakening materially if risk aversion remains high. In the last few weeks we have recommended a rotation towards defensive sectors, which are more attractive at this stage in the cycle and are more insulated in the event that trade conflicts escalate."
On the UK data front, the latest survey from the CBI showed that retailers sustained a fall in sales over a snow-affected February. The reported sales balance fell to -8 in March, from +8 in February, well below the consensus forecast for a +7 gain.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Heavy snow in late February and early March is largely to blame for the big drop in the reported sales balance in March. The survey was conducted during the period of bad weather and up to March 14, so it won’t have captured any catch-up spending that might have occurred in late March. Nonetheless, the underlying trend in real sales looks weak too."
On the corporate front, M&A news injected some life into proceedings, with Shire shares sharply higher after Japanese rival Takeda Pharmaceutical said it was considering a buyout of the company.
Diploma, the life sciences, seals and controls supplier, was on the front foot after reporting "robust" trading in the first half of the year, as sales growth has slowed slightly in the second quarter.
Outside of the FTSE 350, DFS Furniture racked up strong gains as it posted an expected drop in half-year profit and revenue but struck a confident tone on its outlook, bucking the downcast retail trend of late.
Paddy Power Betfair was on the back foot after saying it has recruited Jonathan Hill from Saga to be the bookmaker’s next chief financial officer. Hill, who will stay at the over-50s company until September, has been Saga’s CFO since 2015.
Miners were dented as the swing in the dollar hurt metals prices, with Antofagasta, Glencore, BHP, Anglo American and Rio Tinto among the big fallers.
Ahead of the acceptance deadline for the deal on Thursday, turnaround specialist Melrose Industries set out details of binding commitments for its proposed hostile takeover of GKN and launched a final effort to assert its credentials as a company committed to the wider UK economy. Shares in both companies were lower.
Insurer Aviva traded lower but finished off its worst levels of the session as the Financial Conduct Authority said it was considering whether to launch a formal investigation into its decision to ditch plans to cancel its preference shares.
Primark owner Associated British Foods gained as it was upgraded to 'overweight' at Morgan Stanley. Luxury fashion brand Burberry was in the black as Goldman Sachs lifted it to 'buy' and added the stock to its conviction list, while G4S rallied after an upgrade to 'hold' at HSBC. Hunting retreated after a downgrade to 'neutral' by Macquarie.
Market Movers
FTSE 100 (UKX) 7,044.74 0.64%
FTSE 250 (MCX) 19,356.59 -0.17%
techMARK (TASX) 3,259.68 1.84%
FTSE 100 - Risers
Shire Plc (SHP) 3,500.00p 14.01%
United Utilities Group (UU.) 724.00p 8.32%
Severn Trent (SVT) 1,848.00p 6.08%
National Grid (NG.) 805.30p 5.47%
Unilever (ULVR) 3,915.50p 4.72%
British American Tobacco (BATS) 4,055.50p 3.50%
GlaxoSmithKline (GSK) 1,397.40p 3.43%
Associated British Foods (ABF) 2,502.00p 3.26%
Micro Focus International (MCRO) 981.00p 3.09%
Centrica (CNA) 141.45p 2.95%
FTSE 100 - Fallers
Evraz (EVR) 423.40p -6.05%
Antofagasta (ANTO) 910.80p -3.90%
Anglo American (AAL) 1,613.80p -3.82%
Scottish Mortgage Inv Trust (SMT) 439.40p -3.43%
Glencore (GLEN) 351.90p -2.85%
easyJet (EZJ) 1,566.00p -2.25%
Rio Tinto (RIO) 3,523.00p -2.13%
Old Mutual (OML) 237.10p -2.11%
Smurfit Kappa Group (SKG) 2,900.00p -2.07%
BHP Billiton (BLT) 1,377.00p -1.85%
FTSE 250 - Risers
Nex Group (NXG) 972.00p 9.77%
TI Fluid Systems (TIFS) 262.00p 8.26%
Pennon Group (PNN) 630.20p 6.68%
Ted Baker (TED) 2,614.00p 4.56%
Diploma (DPLM) 1,168.00p 4.38%
Barr (A.G.) (BAG) 650.00p 3.83%
FirstGroup (FGP) 80.50p 3.27%
Euromoney Institutional Investor (ERM) 1,238.00p 2.99%
LondonMetric Property (LMP) 178.60p 2.82%
Tate & Lyle (TATE) 540.00p 2.66%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 843.40p -5.47%
Sophos Group (SOPH) 443.60p -5.36%
Polar Capital Technology Trust (PCT) 1,062.00p -4.50%
Vedanta Resources (VED) 694.60p -3.77%
Tullow Oil (TLW) 188.85p -3.45%
Moneysupermarket.com Group (MONY) 282.30p -3.15%
Baillie Gifford Japan Trust (BGFD) 800.00p -3.15%
Great Portland Estates (GPOR) 665.00p -3.06%
888 Holdings (888) 271.60p -2.87%
Fidelity China Special Situations (FCSS) 236.00p -2.48%