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Market Wrap - Midday

Miners drag on FTSE as commodity prices weaken

28 February 2017 11:47

Pharmaceutical giants Hikma (HIK) and AstraZeneca (AZN) had a good start to the day, but they failed to offset losses among miners as copper and gold prices weakened.

The blue-chip index was static at 7,257.

West Texas Intermediate and Brent crude oil slipped by 0.3% to $54 and $55.75 per barrel, respectively.

Gold fell 0.4% to $1,252 per ounce and copper cheapened by 0.3% to $5,908 per tonne.


On Wall Street, US president Donald Trump prepared to deliver an address to Congress later which will outline key spending priorities.

However, this failed to swing investor sentiment as the Dow Jones and S&P 500 closed flat on Monday.

Asian stocks were also subdued on Monday as traders waited for Trump's anticipated speech.

Among his proposals is a $70bn increase in military expenditure, which boosted munitions supplier BAE Systems (BA.) by 1.8%.


Engineer Babcock International's (BAB) trading update suggested it is set to deliver the stronger second half it promised ahead of its financial year end in March.

Wealth manager St James's Place (STJ) failed to rally despite a solid set of full year results as this is overshadowed by the departure of long-serving chief executive David Bellamy. After 11 years, Bellamy announced he is stepping down and will be replaced by finance director Andrew Croft.

Sub-prime lender Provident Financial (PFG) was flat as underlying pre-tax profit hit £334.1m for 2016, up 14% year-on-year. The dividend was bumped from 120.1p to 134.6p.

Shares in property investor British Land (BLND) nudged higher on confirmed press speculation it is in advanced talks over the sale of its 50% stake in The Leadenhall Building, also known as 'the Cheesegrater'.

Pharma giant AstraZeneca (AZN) was up 1.4% following the US Food and Drug Administration's approval of Type-2 diabetes treatment drug Qtern.


Price comparison site (MONY) warned group revenue was currently behind 2016 levels in the first two months of the year. Investors were unconvinced that management can still deliver on expectations.

Operator of the troubled Southern franchise Go-Ahead (GOG) slumped by nearly 14% to £19.75 as it warned on full year profits. The company blamed 'challenges' in its Govia Thameslink Railway franchise and a slowdown in passenger numbers in its regional bus service.

Challenger bank Virgin Money (VM.) posted a 33% advance in underlying pre-tax profit for 2016 to £213.3m and a 15% increase in its customer base.

Over 50s health insurer Saga (SAGA) reported there would be a one-off, pre-tax impact on profit of £4m for the year to 31 January 2017 as a result of the change in the Ogden rate, which will increase compensation payouts. It also said the rate change will not 'materially impact' its financial outlook.


The bad news hasn't stopped coming from support services group Interserve (IRV) as the company suspended its full year dividend. The market was not surprised as the stock failed to move significantly in either direction.

Online fashion retailer (BOO) announced it expected revenue growth for the year to 28 February 2017 to be approximately 50%, up from previous guidance of 46% to 48%.

Iron ore supplier Strategic Minerals (SML) announced it discovered significant cobalt mineralisation at its Hanns Camp project in Western Australia, sparking a share price rise of 18%.

The market was not impressed by diagnostic devices firm Sphere Medical (SPHR) despite meeting milestones for Proxima 4 and reducing its loss after tax.

Gaming group Webis (WEB) cautioned that its racing operations under Cal Expo continued to be below expectations thanks to bad weather, which reduced attendance and increased costs. Management said it is focused on returning to profitability by the end of May, but this failed to reassure investors as the stock fell by 22.5%.

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