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Market Wrap - Midday

Weaker pound and price hikes for toys pushes inflation higher

13 June 2017 11:50

Inflation in the UK continued to rise as it increased from 2.6% in April to 2.7% in May. The Office for National Statistics reported the increase was mainly due to higher prices for games, toys and hobbies.

The inflation reading was higher than expected and more than the Bank of England's 2% target.

House prices bounced back with a 5.7% annual rise as the average property price stood at £236,519 according to the Office for National Statistics. The data suggested the slower house price rises earlier this year were only temporary.

Investors also looked ahead as interest rate meetings in the US and UK were upcoming on Wednesday and Thursday, respectively.

The FTSE was steady at 7,516 thanks to stronger housebuilders, banking and airline stocks.

British Airways owner International Consolidated Airlines (IAG) and budget airline easyJet (EZJ) flew 2% and 1.6% higher to 600.5p and £13.46.

Barratt Development (BDEV) and Taylor Wimpey (TW.) led the housebuilders higher with gains of 0.5% and 1% respectively.

In the banking sector, Royal Bank of Scotland (RBS) and Barclays (BARC) sparked 2% and 1% higher to 255p and 207.4p.

Brent crude oil advanced 0.4% to $48.48 per barrel. Copper gained 0.3% to $5,776 per tonne, while gold cheapened 0.3% to $1,261 per ounce. OVERSEAS MARKETS

A continued sell-off in tech stocks hit Wall Street on Monday as the Nasdaq index closed 0.5% lower at 6,175.

iPod seller and tech giant Apple fell 2.4% and global streaming service Netflix slumped 4.2%. Online delivery service Amazon also weakened 1.4%.

Asian markets recovered from the depressed tech performance with the exception of Japan's Nikkei 225, which was flat at 19,898.

FTSE 100 RISERS AND FALLERS

The latest terrorist attacks appeared to deter thrill seekers as Merlin Entertainments (MERL) said the attacks in Manchester and London over the last month resulted in a 'further deterioration in domestic demand.' The owner of Legoland was also cautious about foreign visitor trends over the next few months, triggering a 2.6% decline in the shares to 490p.

Elsewhere, shares in equipment rental firm Ashtead (AHT) rose 0.9% to £16.56 thanks to a 7% jump in underlying pre-tax profit to £793.4m.

FTSE 250 RISERS AND FALLERS

Among the mid-caps, outsourcer Capita (CPI) was the top riser after the company reassured investors that profitability would improve in the second half of 2017 thanks to self-help initiatives. It also said it was considering a partnership with British Airways, helping the stock to rally 13% to 622.7p.

A five-year contract for scandal-hit Petrofac (PFC) lifted the stock by 4.6% to 399.6p. The oil services company agreed a deal with Kuwait Oil to provide specialist technical training and competency development services for over $35m. Petrofac's share price collapsed this year after chief operating officer Marwan Chedid was suspended on alleged bribery, corruption and money laundering.

In the fashion world, Ted Baker (TED) was in the spotlight thanks to continued growth in all areas of the business. The British fashion brand boosted sales by 14.2% in the 19 weeks to 10 June despite macro uncertainties, prompting the shares to nudge 2.5% higher to £24.86.

Halma (HLMA) continued its strong performance as it reported its fourteenth year of record sales and profit. The safety equipment seller also hiked the dividend for the 38th consecutive year by at least 5%, but this failed to boost the share price at £11.46.

Another equipment specialist, Ashtead (AHT) ticked 1.1% higher to £16.59 on strong annual numbers and an uplift in fleet rentals earlier this year.

SMALL CAP RISERS AND FALLERS

In the small cap space, there was a surge of good news, including takeover bids.

Shares in Kalibrate Technologies (KLBT) soared 48.8% to 84.8p after it agreed a recommended offer with private equity firm Hanover. Kalibrate shareholders would get 85.5p cash per share, which would value Kalibrate at approximately £29m.

Another takeover target Monitise (MONI) agreed a recommended offer with Fiserv UK, which meant shareholders would receive 2.9p cash for each share, valuing the financial services digital tech firm at £70m. The stock surged 22.7% to 2.8p.

The US Environmental Protection Agency approved Byotrol's (BYOT) 24-hour germ-kill surface sanitizer, causing shares in the business to surge by 20% to 5.2p.

In the utility sector, lower energy prices at Telecom Plus (TEP) dragged on sales and frustrated investors who overlooked its continued organic growth in membership numbers. Shares in the firm fell 5.9% to £12.24.

Life sciences group Abzena (ABZA) benefitted from strong top-line growth in the year to 31 March, prompting investors to mark the stock 1.2% down to 42p.

Story provided by StockMarketWire.com

Related Company: MERL

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