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London open: Stocks drop on downbeat Asian cues; Ted Baker tanks
London stocks fell at the open on Thursday, taking their cue from a mostly downbeat Asian session, as ex-dividends took their toll and fashion retailer Ted Baker tanked on the back of its interim results.
At 0825 BST, the FTSE 100 was down 0.2% to 7,493.67, while the pound was 0.2% higher against the dollar at 1.2960 and 0.1% firmer versus the euro at 1.1289.
Wall Street continued to outperform Europe, highlighted London Capital Group analyst Jasper Lawler: “After hitting a fresh record on Wednesday, the Dow closed off its high but stayed in the green for a fifth straight session. Financials led the way as treasury yields soared and interest rate expectations jumped higher.
“The market is now pricing in an 80% probability of a rate rise in December. Additionally, the markets are reassessing how far the Fed’s tightening cycle will go and expectations are for rate rises to continue for longer.”
Lawler noted that the “stunningly strong” US economy is growing at a faster rate than its peers, driving treasury yields to their highest since 2011.
“As economic data from around the world misses expectations, US economic stats are consistently surprising to the upside. US non-manufacturing data proved to be a prime example, with activity in the sector expanding at the fastest pace in 20 years, whilst service sector PMIs from the UK and Europe were lacklustre at best.”
In UK corporate news, Ted Baker tumbled as it posted a rise in interim revenue thanks to a solid performance from its online segment but a 3.2% drop in reported pre-tax profit as it incurred exceptional costs of £600,000 related to debtor balances owed by House of Fraser which are not expected to be recovered following its entry into administration in August.
Budget airline EasyJet, which said last week that full-year profit would be at the upper end of its guidance, flew lower after posting a 14.2% rise in passenger numbers for September but a drop in the load factor.
Electronics and industrial components distributor Electrocomponents rallied as it said it plans to invest more in the Asia Pacific region to “drive faster longer-term growth” after a half year where group profits are expected to grow 27%.
Smiths Group ticked just a touch higher after announcing the acquisition of industrial tube maker United Flexible from Arlington Capital Partners for an enterprise value of $345m.
Healthcare company BTG advanced as it upgraded its full-year sales expectations thanks to strong products sales in the first half for its interventional medicine business, while CYBG and Virgin Money rose after they received approval by the FCA and PRA for their £1.7bn merger.
In broker note action, Primark owner AB Foods was upgraded to ‘buy’ at Berenberg, while Shaftesbury was lifted to ‘neutral’ at Kempen and Ferrexpo was boosted to ‘overweight’ at Barclays.
Vesuvius was started at ‘hold’ by Berenberg and Tullow Oil was upgraded to ‘buy’ at Citi. Renishaw was lifted to ‘hold’ by Stifel but Spire Healthcare was downgraded to ‘underperform’ at Jefferies and Spirent was cut to ‘hold’ by Stifel. Johnson Matthey was started at ‘neutral’ by Exane.
British American Tobacco, British Land, DS Smith, Intertek, Kingfisher, Smith & Nephew, Taylor Wimpey, WPP, 888 Holdings, AG Barr, Balfour Beatty, Bodycote, Daejan Holdings, Hastings, Hays Hunting, James Fisher & Sons, Rightmove, SIG, Synthomer, TP ICAP and Travis Perkins were among the companies whose stock went ex-dividend.
