London close: Stocks end off highs as pound claws back some ground; Sainsbury's surges
London stocks ended just in the black on Monday, off earlier highs as the pound reversed its earlier drop against the euro and clawed back some ground versus the greenback, with deal news underpinning sentiment after Sainsbury's announced plans to merge with Walmart's UK unit, Asda.
The FTSE 100 rose 0.1% to 7,509.30 as sterling regained some poise, trading up 0.2% versus the euro at 1.1390 and down 0.2% against the dollar at 1.3754, halving its earlier losses. The currency has been under pressure since last week’s weak UK GDP data dashed any remaining hopes of an interest rate hike in May.
Sainsbury's closed up 15% after confirming that it has agreed terms with Walmart over a merger with UK supermarket chain Asda to create a £51bn-revenue giant in exchange for a £3bn cash payment.
The agreed deal will see Sainsbury's, which also reported its final results on Monday, hold 58% of combined business and retain its chairman, chief executive and chief financial officer, as well as its listing in London. Tesco shares ended down but Morrisons reversed earlier losses to close up.
Spreadex analyst Connor Campbell said: "Obviously regulators are going to have a LOT to say about such a landscape-shifting deal, meaning there’s a long way to go before this bonkers but potentially brilliant marriage becomes a reality."
"Investors are already signalling how they feel about the merger, however; Sainsbury’s rocketed as much as 20% higher after the bell, sitting between £3.15 and £3.20 for the first time in a few months shy of four years."
In its 52-week fiscal year, Sainsbury's reported a return to profit growth, with underlying profit before tax up 1.4% to £589m, with profits up 11% in the second half after cutting £185m of costs. Looking to the current year, chief executive Mike Coupe said he was "comfortable" with the current City forecast for underlying pre-tax profit of 7% to £629m.
Elsewhere, advertising giant WPP racked up impressive gains after it posted a 0.8% increase in first-quarter like-for-like revenue and reiterated its guidance for 2018, as it said it would take a "fresh look" at business in light of Martin Sorrell's exit, amid talk that it could spin off assets.
Aviva edged higher after saying it will make goodwill payments to shareholders who sold preference shares in the period from 8 to 22 March, while gambling company Rank Group ticked higher after appointing former Ladbrokes executive John O'Reilly as chief executive.
On the downside, Glencore retreated after saying late on Friday that two of its subsidiaries in the Democratic Republic of Congo had been served freezing orders for $3bn of damages for alleged unpaid royalty agreements, news which prompted RBC Capital Markets to downgrade the stock to 'outperform' from 'top pick'.
Randgold Resources slipped saying that industrial disputes at its Tongon gold mine in Côte d'Ivoire would hit 2018 production guidance of 290,000 ounces although it was making efforts to recover lost output.
Mike Ashley's Sports Direct was in the red after disclosing stakes in US companies Finish Line and Iconic Brand Group, while Old Mutual declined as the Anglo-South African financial services group said that its businesses continue to trade in line with the expectations outlined in its results back in March.
On the broker note front, Barclays downgraded Victrex to 'underweight' and reinstated Elementis at 'equalweight', while Thomas Cook was boosted by an initiation at 'buy' by Jefferies.
Market Movers
FTSE 100 (UKX) 7,509.30 0.09%
FTSE 250 (MCX) 20,285.05 0.07%
techMARK (TASX) 3,447.10 -0.00%
FTSE 100 - Risers
Sainsbury (J) (SBRY) 309.00p 14.53%
WPP (WPP) 1,247.50p 8.62%
Antofagasta (ANTO) 972.40p 1.93%
Pearson (PSON) 833.80p 1.41%
ITV (ITV) 151.65p 1.37%
Morrison (Wm) Supermarkets (MRW) 243.10p 1.29%
Diageo (DGE) 2,589.00p 1.21%
Just Eat (JE.) 773.80p 1.02%
Evraz (EVR) 457.80p 0.93%
Paddy Power Betfair (PPB) 7,180.00p 0.91%
FTSE 100 - Fallers
Glencore (GLEN) 351.65p -4.70%
Micro Focus International (MCRO) 1,253.00p -1.65%
Coca-Cola HBC AG (CDI) (CCH) 2,448.00p -1.25%
Old Mutual (OML) 251.60p -1.22%
Taylor Wimpey (TW.) 191.75p -1.16%
Ashtead Group (AHT) 2,033.00p -1.07%
Severn Trent (SVT) 1,940.00p -1.05%
G4S (GFS) 258.90p -1.03%
easyJet (EZJ) 1,590.00p -1.03%
Sage Group (SGE) 634.60p -1.00%
FTSE 250 - Risers
Stobart Group Ltd. (STOB) 244.00p 3.39%
Thomas Cook Group (TCG) 123.60p 3.00%
ZPG Plc (ZPG) 358.20p 2.93%
Workspace Group (WKP) 1,109.00p 2.88%
Virgin Money Holdings (UK) (VM.) 278.70p 2.84%
Ferrexpo (FXPO) 235.50p 2.48%
Alfa Financial Software Holdings (ALFA) 359.50p 2.42%
Sanne Group (SNN) 621.00p 2.14%
Ascential (ASCL) 420.80p 2.14%
SSP Group (SSPG) 653.40p 2.13%
FTSE 250 - Fallers
IP Group (IPO) 133.80p -3.88%
Contour Global (GLO) 256.00p -3.03%
Hikma Pharmaceuticals (HIK) 1,288.00p -2.76%
Equiniti Group (EQN) 275.50p -2.65%
Hiscox Limited (DI) (HSX) 1,487.00p -2.36%
Cairn Energy (CNE) 226.60p -2.33%
Victrex plc (VCT) 2,622.00p -2.09%
Beazley (BEZ) 591.00p -1.99%
Dairy Crest Group (DCG) 542.50p -1.99%
Card Factory (CARD) 230.40p -1.96%