FTSE 100 week: Good, bad and some ugly
Following a record-equalling 11 days of gains, the Footsie's sprint came to a halt, but a mixed bag of company results still saw it end the week above 4600.
Footsie action: We round up the week's trading
Over the week, the FTSE 100 index of the UK's top firms gained 1%, or 31.75 points, to close at 4608.36. The index has now gained some than 32% since slumming in its six-year low in March.
Richard Hunter, of Hargreaves Lansdown Stockbrokers, says: 'It's been an interesting week in terms of corporate earnings, it's essentially been a case of the good, the bad and the ugly.'
'In terms of the good news, you have to question where it's come from. Is it a result of cost-cutting measures coming through or due to actual revenue growth? I feel it's more likely because of the former.
'But we seem to have bottomed out in terms of the recession, so the next thing to look out for is signs of actual growth.'
In terms of the good news, it was Pearson, up 14% at 693.5p leading the blue-chips as brokers issued positive comments after solid second-quarter results, with both Cazenove and Goldman Sachs upgrading their ratings for the FT publisher.
Plumbing giant Wolseley jumped 11% to 1,339p after Wickes DIY group Travis Perkins, 15% higher at 814.5p, reported forecast-busting first-half profits, while platinum miner Lonmin rose 11% to 1381p after an upgrade amid gains for commodity stocks.
BT Group cheered 10% to 126.65p, after it posted a better-than-expected 3% fall in first-quarter earnings. The telecoms giant said it was on track to deliver cost reductions after a 'solid' start to the year.
Engineering giant Rolls-Royce was also up 10% to 414.25p, as it reiterated its profits guidance for the financial year and boasted a record £57.5bn order book.
Among the High Street banks, Lloyds Banking Group led the pack with an 9% rise to 85p while Royal Bank of Scotland firmed 7% to 44.84p, HSBC was up 5% to 605.75p but Barclays dropped 4% to 302.3p. For its part Asian focused bank, Standard Chartered firmed 4% to 1421p.
BSkyB was another riser, up 5% to 546p thanks to news of a 4% rise in underlying annual earnings and continued improvement in net customer additions, up 35% year-on-year to 124,000 in the fourth quarter, while fund manager Schroders enjoyed a 7% hike to 977.5p after a broker upgrade.
Cadbury saw gains after it reported underlying half year pre-tax profits of £262m, up 11% at constant currency rates on a year earlier. Shares rose 4% to 591p after the confectioner said UK consumers had helped it offset difficult conditions elsewhere.
Life insurer Friends Provident meanwhile fell 1% to 70.15p after shunning another approach from investment firm Resolution and consumer goods group Reckitt Benckiser, 1% better at 2,876p, increased its earnings growth target after announcing a 40% rise in pre-tax profits to £816m for the six months to 30 June.
On Friday, British Airways, up 4% to 142.4p, revealed it had made its first quarterly loss since privatisation in 1987. The national-carrier reported pre-tax losses of £148m in the second quarter of this year and underlined that it would have to continue with drastic cost cutting. In contrast, lower fuel costs helped low-cost airline Ryanair, down 8% to €3.12, build profits of €136.5m between April and June – up €115.5m on the same period last year.
Publisher Reed Elsevier felt the brunt of sellers, enduring the steepest fall within the Footsie, after shedding 12% to 423.25p over the trading week, following news that it had succumbed to a £824m share issue to help tackle its £5bn debt pile.
In addition miners, Randgold Resources and Harmony Gold Mining slipped back by 10% to 3,635p and 6% to 534.5p respectively. BP's second-quarter profits of £1.9bn beat expectations but were still less than half what it made in the same quarter last year, over the week it is down 3% to 497.2p. Shares in BG Group dropped 9% to 999p after the gas producer posted a 31% fall in second-quarter net profit while Royal Dutch Shell, down 1% at 1,572p, results gave some good news on cost-cutting as it posted a 70% fall in its second-quarter net profit.
In the FTSE 250, Paragon, lifted 20% to 104p, the buy-to-let lender said record low interest rates and a lack of competition was helping it weather the housing market slump. Its index peer and global electronics firm Laird firmed 18% to 174.25p. While small-cap, Motive Television recorded the biggest weekly rise after rocketing by a massive 169% to 0.70p, after it signed a global distribution rights deal for a new type of digital box.
THE WEEK AHEAD
City eyes will be on banking and financials next week as a plethora of results and statements arrive. On Monday, Barclays and HBSC issue interim statements while on Tuesday interims results arrive from life insurer Legal & General as well as from Standard Chartered. Lloyds Banking Group, Old Mutual and Standard Life all deliver interim results statements on Wednesday and on Thursday Aviva, Thomson Reuters and Unilever unveil second quarter results while Cobham, Inmarsat, ITV, RSA Insurance and Schroders, all post interim results.
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