Sector movers: Personal goods rises on M&A interest, resources retreats
Understandably, given the unexpected approach for Unilever from Warren Buffett-backed Kraft Heinz, the personal goods sector was the dominant support for the blue chip benchmark on Friday.
Even though the group, owner of brands ranging from Marmite and Hellman’s to Dove soap and Lynx deodorant, rejected the $143bn offer from the Warren Buffett-backed US company and said it “does not see the basis for any further discussion”, the shares were propelled back up around its all-time highs seen in October.
Analysts at RBC Capital Markets said the premium Kraft offered “has often proven inadequate in consumer staples M&A”, so they were were not surprised to see Unilever’s explicit rejection and suggested Unilever’s focus on sustainability “might make it very resistant to any further approach from Kraft”.
“In any case, we believe Kraft will likely need to raise its offer substantially if it hopes to change the outcome”.
Sector peer Reckitt Benckiser was also lifted by read-across.
Michael Hewson at CMC Markets chimed in with two salient points for shareholders Unilever, firstly that they will "have to weigh up the costs of throwing away a consistent path of dividend growth", as the company has delivered good regular returns over the last ten years.
“Another obstacle will be political considerations, given Kraft’s history of broken promises. UK authorities have already had experience of this in the Cadbury takeover a few years ago; when they promised to keep a factory open, only to then close it after the deal completed. It is hard to imagine that they will get duped again, and the politics of this may outweigh the commercials, particularly at a time when the UK government will want to safeguard as many jobs as possible, given that Unilever employs around 7,500 people in the UK.”
On the down slope, miners and oil and gas stocks were the major losers on Friday, as slightly weaker copper and oil prices weighed, versus rallying iron ore and steel rebar.
Anglo American, Shell, Glencore, Rio Tinto, Antofagasta and BHP were among the big FTSE 100 fallers
Some profit-taking was suggested as a motivator ahead of the Presidents' Day long weekend.
“A rather un-presidential Washington press conference and continued cabinet nomination problems have added to political uncertainty on both sides of the Atlantic,” said Mike van Dulken at Accendo Markets.
“This, coupled with weakness in the commodity space is weighing on sentiment, taking the wind out of a Trump trade's sails before a long weekend.”
Other fallers included financials, led by Standard Chartered ahead of its final results a week away, with all other UK banks save HSBC in the red.
After the morning’s disappointing retail sales from the Office for National Statistics, several in the sector, including Next, Debenhams, Marks and Spencer, were also on the back foot, though Dunelm and N Brown bucked the trend.
Top performing sectors so far today
Personal Goods 32,973.41 +9.59%
Household Goods & Home Construction 17,035.15 +1.87%
Pharmaceuticals & Biotechnology 14,039.31 +1.38%
Tobacco 56,794.25 +0.99%
Forestry & Paper 20,013.18 +0.98%
Bottom performing sectors so far today
Industrial Metals & Mining 2,551.00 -1.92%
Electricity 8,944.73 -1.44%
Mining 16,839.34 -1.41%
Aerospace and Defence 4,543.24 -1.36%
Insurance (non-life) 2,769.77 -1.20%
FTSE 100 - Risers
Unilever (ULVR) 3,797.00p 13.43%
Coca-Cola HBC AG (CDI) (CCH) 1,991.00p 4.13%
Imperial Brands (IMB) 3,786.50p 3.32%
Reckitt Benckiser Group (RB.) 7,100.00p 2.88%
Compass Group (CPG) 1,473.00p 1.73%
Shire Plc (SHP) 4,836.00p 1.53%
Associated British Foods (ABF) 2,606.00p 1.48%
AstraZeneca (AZN) 4,591.00p 1.47%
Pearson (PSON) 669.50p 1.44%
Fresnillo (FRES) 1,525.00p 1.40%
FTSE 100 - Fallers
Standard Chartered (STAN) 773.00p -4.36%
Rolls-Royce Holdings (RR.) 666.00p -3.97%
Anglo American (AAL) 1,339.50p -2.19%
Royal Dutch Shell 'B' (RDSB) 2,186.50p -1.75%
Glencore (GLEN) 319.45p -1.56%
Rio Tinto (RIO) 3,593.00p -1.48%
Antofagasta (ANTO) 836.00p -1.47%
BHP Billiton (BLT) 1,394.50p -1.38%
Royal Dutch Shell 'A' (RDSA) 2,094.00p -1.37%
Marks & Spencer Group (MKS) 325.50p -1.36%
FTSE 250 - Risers
Essentra (ESNT) 484.40p 14.92%
SEGRO (SGRO) 498.50p 3.21%
CLS Holdings (CLI) 1,660.00p 2.85%
PZ Cussons (PZC) 320.80p 2.75%
Fidessa Group (FDSA) 2,411.00p 2.64%
Ultra Electronics Holdings (ULE) 1,954.00p 2.57%
Wizz Air Holdings (WIZZ) 1,702.00p 2.41%
IP Group (IPO) 171.80p 1.90%
OneSavings Bank (OSB) 385.30p 1.80%
Finsbury Growth & Income Trust (FGT) 676.00p 1.65%
FTSE 250 - Fallers
Inmarsat (ISAT) 615.00p -5.46%
Drax Group (DRX) 342.10p -4.71%
Weir Group (WEIR) 1,947.00p -3.33%
Vedanta Resources (VED) 1,037.00p -2.90%
Lancashire Holdings Limited (LRE) 719.00p -2.84%
Cairn Energy (CNE) 222.80p -2.75%
Nostrum Oil & Gas (NOG) 459.20p -2.28%
Clarkson (CKN) 2,512.00p -2.26%
Rank Group (RNK) 203.60p -2.16%
Kaz Minerals (KAZ) 559.50p -2.01%