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ADVFN Morning London Market Report: Friday 27 July 2018

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London open: Stocks rise as Reckitt, Pearson, BT impress

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London stocks rose in early trade on Friday as investors cheered solid earnings from the likes of Reckitt, Pearson and BT.

At 0835 BST, the FTSE 100 was up 0.4% to 7,693.66, while the pound was flat against the dollar at 1.3113 and 0.1% lower versus the euro at 1.1252, showing resilience in the face of news that the European Commission’s chief Brexit negotiator, Michel Barnier, has ruled out a key part of Prime Minister Theresa May’s customs plan.

Barnier said the EU could not agree to let another country collect European customs duties on its behalf.

Miners provided a lot of the upside, with BHP Billiton, Anglo, Antofagasta and Glencore all firmly in the green.

Meanwhile, following a veritable avalanche of earnings on Thursday, the UK corporate front was a lot quieter to finish off the week, but the news was mostly good.

Reckitt Benckiser surged after the consumer goods company upgraded its revenue guidance following a solid first half.

Education publisher Pearson gained ground as its flat interim adjusted operating profit came in ahead of expectations and the company said it remains on track to return to underlying profit growth.

BT Group rallied as it posted a jump in first-quarter pre-tax profit and backed its profit guidance for the year and Equiniti rocketed after saying it expects full-year earnings to be towards the top end of market expectations.

On the downside, BP fell as the oil giant said it had agreed to buy BHP’s US shale assets for $10.5bn.

Rightmove was in the red despite reporting a rise in first-half revenue and operating profit, lifting its interim dividend and expressing confidence in delivering on its full-year expectations.

Greencoat UK Wind slipped despite saying that first-half pre-tax profit nearly doubled and CLS Holdings was on the back foot as it said chief financial officer John Whiteley will step down at the end of next March.

In broker note action, William Hill was lifted to ‘hold’ by Peel Hunt. Howden Joinery was cut to ‘hold’ at Canaccord, Inchcape was downgraded to ‘hold’ at HSBC and SSE was reduced to ‘hold’ at HSBC.

There are no major UK data releases due but second-quarter US GDP figures are at 1330 BST.

London Capital Group analyst Jasper Lawler said a strong GDP figure will support expectations that the Fed will look to raise rates four times across the year.

“Whilst there rates hikes are fully priced in, investors remain unsure about the fourth which is only 65% priced in.

“A solid GDP print, boosting rate hike hopes could see the dollar extend gains from the previous session and push towards $95.50. Meanwhile, a surprise to the downside could see the dollar target $93.80.”

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