ADVFN Morning London Market Report: Friday 26 April 2019

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London open: Stocks drop as RBS and Just Eat fail to impress


London stocks fell in early trade on Friday, with first-quarter numbers from the likes of RBS and Just Eat failing to impress as investors eyed the release of the latest US GDP figures.

At 0850 BST, the FTSE 100 was down 0.4% at 7,403.99, while the pound was up 0.1% against the dollar at 1.2912 and flat versus the euro at 1.1583.

Spreadex analyst Connor Campbell said: “The UK index is in serious danger of dipping below 7,400 at some point this Friday, a move that would take it back to where it was at the very start of the month, completing the erasure of a steady April rise that had seen it trading at a near seven-month peak of 7,520 post-Easter.”

Royal Bank of Scotland shares fell sharply as it warned that uncertainty over Brexit would make trading more difficult as falling revenue drove a 16% fall in first-quarter profit.

Campbell said: “The real kicker appeared to be RBS casting doubts over its ability to meet its full year targets. Though the bank kept its guidance unchanged, it highlighted how the uncertain outcome of the UK-EU divorce, and the impact that has on business borrowing, ‘is likely to make income growth more challenging in the near term’.”

Online food delivery service Just Eat was under the cosh as it posted a smaller-than-expected jump in first-quarter group orders and said growth in UK orders had slowed.

Education publisher Pearson slipped as it backed its full-year guidance and reported underlying revenue growth of just 2% for the first quarter.

Ferrexpo tumbled after saying that Deloitte LLP has resigned from its office as statutory auditor with immediate effect, while Hastings retreated as it said net revenue slipped 1% in the first quarter.

On the upside, advertising group WPP gained as it backed its 2019 guidance and posted a rise in first-quarter revenue but a drop in like-for-like revenue due to “significant” client losses last year, particularly in the US.

Computacenter surged as it said it was on track to meet full-year guidance and that revenue and profitability in the first quarter to the end of March 2019 were ahead of the same quarter a year ago.

The big focus on the macroeconomic front will be the release of first-quarter GDP figures from the US at 1330 BST, with economists expecting a reading of 2.1%.

CMC Markets analyst David Madden said: “The figure will be closely watched as the Federal Reserve lowered its growth forecast for 2019 to 2.1%, from the 2.3% projection in December. The US central bank has dropped a big hint that interest rates are likely to hold steady for the foreseeable future, but they have also given themselves the wiggle room for a hike, should the economy outperform.”

On the UK data front, BBA mortgage approvals for March are at 0930 BST, while the CBI industrial trends survey for April is at 1100 BST.


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