ADVFN Morning London Market Report: Wednesday 16 May 2018

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London open: Stocks edge up despite geopolitical concerns as Micro Focus, Burberry gain


London stocks edged higher in early trade on Wednesday, with solid updates from the likes of Micro Focus and Burberry and deal news for Paddy Power helping to offset geopolitical worries.

At 0845 BST, the FTSE 100 was up 0.2% to 7,734.27, while the pound was down 0.1% against the euro and the dollar at 1.1398 and 1.3490, respectively.

Investors were digesting news that North Korea has suspended talks with South Korea over the continuation of military drills with the US, and threatened to pull out of a planned summit with the US if it continues to pressure it to unilaterally abandon its nuclear weapons programme.

Mike van Dulken at Accendo Markets pondered whether this was merely game-playing for Kim, “taken straight from Trump’s negotiation playbook”.

In UK corporate news, luxury fashion brand Burberry rallied as it presented a smart but not swanky first set of full-year results under new chief executive Marco Gobbetti, beating City forecasts despite a 1% fall in revenues. The group also announced a new £150m share buyback.

Paddy Power Betfair was in the black after it confirmed it is in talks over a potential merger of its US business and US-based FanDuel to target the market that will open up following the Supreme Court’s overturning of a federal ban on sports betting.

Neil Wilson, chief market analyst at, said: “A FanDuel tie-up would give PPB the ability to rollout ops more quickly and scale up. It would also remove some potential local competition. After some pretty murky numbers in the PPB Q1 update, it’s clear that this particular bookmaker-friendly result has come at the right time for the share price. Investors will need of course to be cautious about the scale of investment needed to roll out operations and the speed with which states open up their markets.

“There is also a risk that incumbents like FanDuel are able to plant their flag in the new market before the Europeans can land, which is why it would appear to make sense for PPB to go down this route.”

Paper products maker Mondi edged higher after saying it expects first-quarter underlying operating profit to be 15% higher year-on-year at €295m and 6% up on the fourth quarter of 2017.

Software group Micro Focus International surged after it said that a new $40m licensing deal will help to boost its first-half revenue, which is now expected to be better than the guidance of -9% to -12% at constant currency.

Food and beverage outlets operator SSP was on the rise after it posted a jump in first-half profit and revenue as it reaped the benefits of growing air passenger numbers, new contract openings across the world and its ongoing programme of operational improvements.

Brewin Dolphin ticked up as the wealth manager posted a rise in first-half funds under management and profit.

National Express advanced after the transport operator reported 6.2% growth in first-quarter revenue thanks to a solid performance from its North American business.

On the downside, Crest Nicholson was sharply lower as the housebuilder cut its margin forecast on the back of pricing pressure, while Cineworld lost ground despite saying it was on track to deliver a full-year performance in line with its current expectations.

Pub operator Mitchells & Butlers tumbled after posting a drop in half-year profit, while peer Marston’s was also in the red after its interim numbers.

Playtech declined as it said in an AGM trading statement that revenues at the B2B gaming division in Asia were lower than in the same period a year ago.

Thomas Cook was lifted by an upgrade to ‘buy’ at Panmure Gordon, while Tullow Oil gushed higher after an upgrade to ‘overweight’ at Morgan Stanley.

Evraz was downgraded by both Goldman and Citi, while Centrica was downgraded to ‘underweight’ by Morgan Stanley and Zoopla and PrimeLocation owner ZPG was cut to ‘hold’ at Shore Capital.

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