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London open: Stocks edge up after record US close; EasyJet flies higher
London stocks edged higher in early trade on Tuesday, taking their cue from a record close on Wall Street after the Senate agreed a temporary deal that has ended the government shutdown.
At 0840 GMT, the FTSE 100 was up 0.1% to 7,725.78, failing to make much headway even as the pound fell back from Monday’s post-Brexit high, trading flat against the euro at 1.1410 and 0.3% versus the dollar at 1.3952.
Analyst Michael Hewson at CMC Markets said: “US markets took another leg higher yesterday in the wake of the announcement that the US government shutdown that started at the weekend wouldn’t be lasting very long, which in turn means that any potential negative effect on the US economy is likely to be minimal at worst.
“The announcement that US senators had arrived at a stop-gap deal to fund the government until February 8th saw US markets, which had been trading slightly negative to flat, push up further to close at another set of record highs.”
On the data front, UK public sector net borrowing figures for December are due at 0930 GMT, while the CBI industrial trends survey is at 1100 GMT. Investors will also be keeping an eye out for any headlines from the World Economic Forum in Davos, which kicks off on Tuesday.
In corporate news, Easyjet flew higher as it reported a 14.4% increase in revenue for the first quarter of its financial year and said it had cut costs by 1.6%. It was also boosted by an upgrade to ‘outperform’ at RBC Capital Markets.
Sky advanced even as the competition regulator dealt a blow to 21st Century Fox and its planned takeover of the broadcaster. The Competition and Markets Authority said it has provisionally found that Fox taking full control of Sky “is not in the public interest” due to media plurality concerns, but suggested some potential remedies.
Computacenter rose after announcing plans to return up to £100m to shareholders through a tender offer.
SSP was up after the travel catering group posted a 13.5% jump in total revenue for the first quarter, while IG Group gained as it posted record half-year results and announced the launch of a new German subsidiary.
Pets at Home surged as it reported a 9.6% increase in third-quarter sales to £223.3m, while Paragon Bank advanced as it said new lending rose 24% in the first quarter to £469.8m.
On the downside, N Brown, the plus-size clothes retailer, tumbled. Although it had a sturdy third quarter, with a strong surge in its Simply Be brand and in the USA, it was relatively subdued compared to previous months. Sales grew 3.2% over the extended 18-week period, which was slightly short of the average of City analyst forecasts at 3.6%.
Brewer and pub operator Marston’s fizzed lower after saying it took a hit from the snowy and icy weather in early December and between Christmas and New Year, although its pubs saw record sales on Christmas day.
National Grid was on the back foot as it hit out at Ofgem over its proposals for the new Hinkley Point power station.
Clothing retailer Superdry, formerly SuperGroup, slipped as it said that chief financial officer Nick Wharton is planning to retire and will be succeeded by Ed Barker, the current director of group finance.
In broker note action, Croda was lifted by an upgrade to ‘buy’ at Berenberg, but WPP was hit by a downgrade to ‘neutral’ at Credit Suisse, while Rentokil was lower after a downgrade to ‘add’ at Peel Hunt.
Homeserve and Serco were also trading lower after downgrades by Peel Hunt.
