ADVFN Morning London Market Report: Friday 12 April 2019

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London open: Stocks nudge up ahead of US earnings; Plus500 tumbles


London stocks nudged higher in early trade on Friday following mixed sessions in the US and Asia, as investors eyed the start of the first-quarter US earnings season.

At 0825 BST, the FTSE 100 was 0.1% firmer at 7,425.55, while the pound was flat against the dollar at 1.3062 and 0.2% lower versus the euro at 1.1576.

CMC Markets analyst Michael Hewson said: “Reports of additional progress on a US-China trade deal don’t appear to have been enough to prompt much interest with most attention set to be on today’s Q1 numbers from US banks JP Morgan and Wells Fargo, both important bellwethers of the US economy.

“Banks across the board have been finding it difficult to maximise returns in the current low rate environment. Trading in the first three months of this year has proved to be even more difficult, with inversion of the US yield curve prompting JP Morgan to review its staffing levels in news out last month. With the bank missing profit estimates in its last quarter for the first time in 15 quarters, and the recent announcement of job cuts in its asset and wealth management divisions, today could well see another disappointment.”

He added that Wells Fargo would offer an insight into the US housing market, where data has been weakness in recent months. “This could well be another disappointing quarter.”

Market participants were also digesting the latest trade figures out of China, which showed exports rose 14.2% in March from the previous year following a 20.7% slump in February, but imports dropped 7.6% compared to a 5.2% fall the month before. Analysts had been expecting exports to rise 7.3% and imports to decline by 1.3%.

On the UK corporate front, gaming retailer Games Workshop rallied after saying that trading since January has “continued well” with sales and profits ahead of last year.

Transport company National Express was in the green as it announced the acquisition of a 60% stake in WeDriveU, an employee shuttle company in San Francisco’s Silicon Valley, for $84.3m (£64.5m) with an option to buy the rest over three years.

On the downside, online trading platform Plus500 saw its shares tumble 34% as it posted a 65% drop in first-quarter revenue amid “subdued” financial markets, with the number of active customers and average revenue per user both down amid low levels of volatility. Sector peers IG Group, Playtech and CMC Markets all lost ground.

Entertainment One was in the red as the Peppa Pig owner dropped from its all-time high after successfully placing 28.9m shares at a discounted price of 450p, raising £130m to help fund the acquisition of UK music brand Audio Network.

In broker note action, Johnson Matthey was knocked lower by a downgrade to ‘sell’ at Investec and Micro Focus was hit by a downgrade to ‘equalweight’ at Barclays.

Elsewhere, Intermediate Capital was initiated at ‘overweight’ by Barclays, while BAE was started at ‘neutral’ by MainFirst.


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