ADVFN Morning London Market Report: Monday 16 April 2018

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London open: Stocks nudge down as investors mull Syria airstrikes; Whitbread surges

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London stocks nudged a touch lower in early trade on Monday as investors assessed the impact of US-led airstrikes in Syria at the weekend, though Whitbread and Shire bright spots.

At 0830 BST, the FTSE 100 was down 0.1% to 7,259.95, while the pound was flat against the euro at 1.1550 and 0.1% firmer against the dollar at 1.4247.

Rebecca O’Keeffe, head of investment at Interactive Investor, said: “Even though investors have moved past the Syria missile strikes and are working on the basis that there will be no extended conflict or market-adverse retaliation, equity markets are struggling for direction. This lack of positive reaction is a potential concern and is an indication that investors are wary.

“Until early this year, global market sentiment was strong enough to keep pushing markets higher unless there was a reason to go down. As Trump policy has shifted from being supportive of equity markets to being distinctly negative, and early hints of the next potential slowdown in growth begin to materialise, we are now in a situation where markets are looking for reasons to justify current valuations. Hence, good news does not have much longevity since investors are a little bit more cautious in the current climate.”

UK Prime Minister Theresa May was expected to tell MPs on Monday that the airstrikes over the weekend were aimed at preventing human suffering and were in the Britain’s national interest.

She is expected to say: “Let me be absolutely clear: we have acted because it is in our national interest to do so. It is in our national interest to prevent the further use of chemical weapons in Syria and to uphold and defend the global consensus that these weapons should not be used.

“We have done it because we believed it was the right thing to do. And we are not alone. There is broad-based international support for the action we have taken.”

On the corporate front, advertising giant WPP fell on the weekend’s news that Sir Martin Sorrell has stepped down as chief executive officer with immediate effect, with chairman Roberto Quarta becoming executive chairman until the appointment of a new CEO. Sorrell, whose exit follows an internal investigation into allegations of personal misconduct, will be treated as having retired from the company, meaning he will be entitled to up to 1.65m shares under long-term award plans dependent on WPP’s performance.

Vedanta Resources dropped as it announced the appointment of AngloGold Ashanti CEO Srinivasan Venkatakrishnan as its new chief executive officer.

Galliford Try slipped after confirming it has raised £144.2m as 91.5% of its discounted rights issue of new shares was accepted by shareholders, backing management’s plans to invest in growth.

On the upside, Premier Inn and Costa owner Whitbread surged as Elliott Advisers became its biggest shareholder, amid reports the activist investor is piling pressure on the company to break up the business and spin off Costa.

Shire, for whom the boss of Japanese drug maker Takeda is reportedly readying a £35bn bid, was in the black after agreeing to sell its oncology business to Servier for $2.4bn in cash.

Smurfit Kappa gained following a Times report that some of its largest investors have started to pressure the company to negotiate with International Paper if the US rival comes back with another takeover bid of more than €40 per share.

Speciality chemicals group Johnson Matthey was higher after announcing the appointment of Patrick Thomas as chairman, succeeding Tim Stevenson. Thomas has been CEO and chairman of the board at polymers business Covestro since 2015.

Listed infrastructure investment company HICL Infrastructure edged higher after announcing an investment in the biology, pharmacy and chemistry department of the Paris-Sud University PPP Project, taking an 85% ownership interest in the project alongside Bouygues Energies & Services and Bouygues Bâtiment Grand Ouest.

In broker note action, Barclays was upgraded to ‘buy’ at Jefferies, while Tesco was raised to ‘hold’ at Societe Generale. Kaz Minerals and Vedanta Resources were cut to ‘neutral’ from ‘buy’ at Goldman Sachs.

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