London close: FTSE flops as mixed earnings and housebuilders weigh
After hitting a fresh all-time high in the morning, London's FTSE 100 ended Monday in the red after another retail profit warning and disappointing numbers from Micro Focus on revenues and from Halifax on house prices.
The UK benchmark index finished the session down 27.71 points or 0.36% at 7,696.51, having earlier hit a new intraday high of 7,733.39. The pound was up 0.4% against the euro at 1.1325 and 0.1% lower versus the dollar at 1.3561.
London stocks missed out on an up-day for most European bourses as the barnstorming start to 2018 continued with the MSCI World index having gained 2.5% in the first five trading sessions of the year to lay down its best start in five years. But over in Wall Street, the Dow Jones began the day on the back foot, which often sours the mood in London.
"The day has gone from bad to worse for euro bulls, as the greenback continues to enjoy a resurgence following Friday’s job numbers," said analyst Chris Beauchamp at IG. "Also worth noting was the upgrade to US Q4 GDP forecasts by the New York Fed, which has further emboldened dollar bulls. Everyone now has their eyes squarely on earnings season, with the upcoming barrage of numbers from the US likely to slow the soaraway rally to a crawl."
Adding a weight on the UK index were falls for major housebuilders Taylor Wimpey, Persimmon and Barratt Developments as data from lender Halifax that showed house prices in the UK fell in December for the first time since June last year. Persimmon is due to put out a trading statement on Tuesday, one of the first of the sector in the new year.
House prices across the UK fell 0.6% last month following 0.3% gains in November and October and missing expectations for a 0.2% increase, Halifax said. Prices in the last three months of 2017 were up 2.7%, slowing down from a 3.9% jump in November and falling short of expectations for a 3.3% increase.
Russell Galley, Halifax's managing director, said: “As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat. This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy."
Nevertheless, Halifax, which saw its index rise 3.6% between June and November, still expects house prices to rise this year.
Elsewhere, software group Micro Focus tumbled to its lowest since August as it warned that revenues for the year to the end of October 2018 would fall by 2% to 4% from 2017's $4.2bn. Overall the group posted a rise in pre-tax profits to $145.7m after the acquisition of Hewlett Packard Enterprise's software unit helped to increase revenue, but stripping out the HPE merger meant revenue was lower.
With a reshuffle of the boardroom seeing CFO Mike Phillips moving to a new position as director of mergers and acquisitions, analyst Mike van Dulken at Accendo Markets said the healthy numbers did “nothing to offset guidance being considered below par. Which is a worry when the CFO has moved to a more M&A focused role, suggesting more purchases, acquisition risk and integration of slower growth”.
Drug developer Shire was down after confirming that it is going to split itself into two but that while it was dividing itself into two divisions, it was holding off from confirming a spin-off of its neuroscience unit. While chief executive Flemming Ornskov said the ADHD arm was not ready for a spin-out of the right now, he said the split was setting the foundation for the "next stage".
Inter-dealer broker TP Icap edged down as it acquired US-based energy and commodities broker SCS Commodities based for an undisclosed cash sum and further performance-related amounts over five years.
Babcock gave up its initial gains made on saying it will lead a bespoke team of industry partners in a bid for the UK Ministry of Defence's new £1.25bn Type 31e general purpose light frigate programme.
G4S was lifted by an upgrade from UBS as was Standard Life by Jefferies, respectively, while Thomas Cook was boosted by an upgrade to ‘overweight’ by Morgan Stanley, and BBA Aviation was up after an upgrade to ‘buy’ at Citi.
Ladbrokes Coral and Paddy Power were hit by downgrades from Morgan Stanley.
Outside of the FTSE 350, parenting retailer Mothercare nosedived after it warned over profits after sales fell over the Christmas period. It was the first retail sector update in a week that will see results and statements from the likes of Morrisons and Joules on Tuesday, Sainsbury’s, Marks & Spencer, Tesco, and Boohoo.
Market Movers
FTSE 100 (UKX) 7,696.51 -0.36%
FTSE 250 (MCX) 20,856.56 -0.36%
techMARK (TASX) 3,526.38 -1.52%
FTSE 100 - Risers
G4S (GFS) 286.30p 4.03%
Tesco (TSCO) 214.30p 2.19%
Mediclinic International (MDC) 638.40p 1.98%
Rio Tinto (RIO) 4,037.50p 1.97%
Informa (INF) 736.00p 1.94%
Glencore (GLEN) 395.05p 1.66%
Next (NXT) 4,932.00p 1.61%
BHP Billiton (BLT) 1,585.60p 1.54%
Anglo American (AAL) 1,627.00p 1.47%
Land Securities Group (LAND) 998.70p 1.33%
FTSE 100 - Fallers
Micro Focus International (MCRO) 2,145.00p -16.92%
Shire Plc (SHP) 3,664.50p -5.43%
3i Group (III) 920.20p -2.50%
Barratt Developments (BDEV) 647.40p -1.58%
Smurfit Kappa Group (SKG) 2,426.00p -1.54%
Compass Group (CPG) 1,546.50p -1.37%
Smiths Group (SMIN) 1,525.00p -1.29%
Taylor Wimpey (TW.) 208.60p -1.23%
Hargreaves Lansdown (HL.) 1,802.00p -1.21%
BT Group (BT.A) 267.95p -1.13%
FTSE 250 - Risers
FDM Group (Holdings) (FDM) 965.00p 4.44%
BBA Aviation (BBA) 358.40p 4.13%
Vietnam Enterprise Investments (DI) (VEIL) 477.00p 3.70%
Sophos Group (SOPH) 634.50p 3.34%
Jardine Lloyd Thompson Group (JLT) 1,448.00p 3.13%
Provident Financial (PFG) 944.40p 2.65%
Serco Group (SRP) 102.00p 2.36%
Fisher (James) & Sons (FSJ) 1,640.00p 2.13%
Victrex plc (VCT) 2,730.00p 1.79%
Cairn Energy (CNE) 228.60p 1.69%
FTSE 250 - Fallers
Hikma Pharmaceuticals (HIK) 1,079.00p -4.43%
Capita (CPI) 408.30p -3.57%
TalkTalk Telecom Group (TALK) 140.40p -3.17%
Greencore Group (GNC) 217.70p -3.03%
GCP Infrastructure Investments Ltd (GCP) 123.40p -2.83%
RDI Reit (RDI) 36.40p -2.80%
IG Group Holdings (IGG) 770.50p -2.78%
Saga (SAGA) 122.30p -2.70%
TI Fluid Systems (TIFS) 249.20p -2.66%
Elementis (ELM) 287.00p -2.52%