By This Is Money Reporters
17.10 (close): Signs of a rebound in emerging markets helped deliver a shares boost for consumer goods giant Unilever today as the Ben & Jerry’s ice cream maker confirmed a solid end to 2013.
The Flora-to-Dove soap firm delivered a better than expected final quarter, with underlying sales up by 4.1 per cent as it continued to put last autumn’s profit warning behind it.
But the wider London market struggled to gain headway – closing down 2.5 points at 6834.3 – as Wall Street returned in a cautious mood after yesterday’s holiday to celebrate Martin Luther King Day.
US reversal: Footsie fell back from earlier gains as US stocks beat an early retreat today
The Dow Jones Industrial Average fell more than 100 points in early trade after a mixed set of results from Verizon Communications and health care giant Johnson & Johnson.
A sharp upgrade to the International Monetary Fund’s growth forecast for the UK this year – to 2.4 per cent from a previous figure of 1.9 per cent – gave the pound a fillip as it predicted Britain would be among the fastest-growing of the world’s advanced economies in 2014.
Sterling rose against most major currencies, nudging higher to 1.65 US dollars and 1.21 euros.
Hargreaves Lansdown was one of the biggest risers in the top flight as investors digested last week’s shake-up of fund supermarket fees ahead of new regulations due to come into force in April.
Shares in the company fell sharply last week on fears of a price war before recovering today with a rise of 40p to 1549p.
The Bristol-based firm was joined on the risers board by Unilever, which climbed 43p to 2480p after it announced a 9 per cent rise in net profit to 5.3billion (4.4billion) for last year.
The company issued a profits warning in September due to currency weakness in countries such as Brazil and India.
Rival firm Reckitt Benckiser was higher, up 71p to 4754p, while drinks company Diageo added 38p to 1985p.
Brewing company SABMiller featured on the blue-chip fallers board as it highlighted the impact of continued weak consumer sentiment in its European and North American businesses.
The overall group performance for the quarter to December 31 met City expectations, but shares in the Peroni company still fell 8p to 3086p.
Outside the top flight, Imperial Leather and Carex maker PZ Cussons was in the spotlight after it reported an 8 per cent rise in half-year profits to 47.6million.
The Manchester-based firm hailed a ‘particularly robust’ performance from its UK arm, boosted by its St Tropez range after bringing model Kate Moss on board as brand ambassador at the start of the summer.
Shares slipped 8.7p to 387.5p even though it said trading at the start of the second half had been in line with expectations.
Carphone Warehouse lifted 1.7p to 281.5p as it reported a 5 per cent rise in like-for-like revenues for the UK in the third quarter to December 28, driven by the popularity of more expensive smartphones.
The biggest FTSE 100 risers were Associated British Foods up 114p at 2806p, Intertek Group 92p ahead at 3000p, Hargreaves Lansdown 40p higher at 1549p and Imperial Tobacco 56p stronger at 2284p.
The biggest FTSE 100 fallers were Rio Tinto down 104.5p to 3231.5p, Antofagasta off 25.5p to 819.5p, Anglo American 37p lower 1356p and Weir Group 53p weaker at 2174p.
16.00: The Footsie had been on course to finish at its best closing level this century but with half an hour left of trading today earlier gains had been eroded mirroring US stocks which saw an opening advance swiftly erased.
In late afternoon trade, the FTSE 100 index was up just 1.3 points at 6,834.0, dipping back below last year’s closing peak of 6,840.27. If the blue chip index were finish the day above that level, it will have recorded its best close since December 30 1999, when it reached an all-time high of 6,930.
In New York, the Dow Jones Industrial Average soon lost its early gains after returning from yesterday’s holiday for Martin Luther King Day, with the index dropping 45.3 points to 16,418.2 unsettled by more mixed corporate earnings.
Shares in US household products firm Johnson & Johnson fell 1.6 per cent after the company’s fourth-quarter earnings per share came in above analysts expectations but its full-year outlook disappointed investors.
But in London, gains by fellow household products giant, Unilever helped keep the Footsie from sliding back too far.
Shares in the Ben & Jerry’s ice cream to Dove soap maker added 45.0p to 2,482p after the Anglo-Dutch firm offered more signs that it has recovered from a profits warning last autumn as it unveiled a 9 per cent rise in net profit to 4.4billion for last year.
Household products peer Reckitt & Benckiser also benefited, gaining 88.0p at 4,771.0.
Blue chip hotels operator InterContinental Hotels (IHG) was also in demand, ahead 24,.0p at 2,025.0p after broker Morgan Stanley suggested the for could hand back up to $ 2billion to shareholders over the next two years, around a quarter of its market value.
‘The recent disposals of the New York hotel and UK pension fund leave net debt at just 1.1 times 2014 estimates earnings before interest and tax versus its 2.5 times target, and we value the Paris and Hong Kong hotels at $ 1.5billion,’ Morgan Stanley analysts said in a note.
‘Assuming IHG sold both hotels, retained contracts to run them, and bought back shares (or paid a special dividend with a share consolidation), this would be 11 per cent enhancing’ to earnings.
Confirmation that the International Monetary Fund (IMF), as expected, has raised global growth forecasts, failed to have much of an impact.
The organisation expects the world economy to expand by 3.7 per cent in 2014 versus the 3 per cent it estimated last year. As predicted, the IMF bumped up the UK’s economic forecasts to 2.4 per cent in 2014 from 1.7 per cent in 2013.
Ishaq Siddiqi, market strategist at ETX Capital said: ‘Welcome upgrades for developed nations; markets take the adjustments in their stride, particularly US and UK and the expected easing of Chinese growth. Ambitious upgrade for euro zone growth this year to 1 per cent gives the bull something to cheer about but the caveat to all of this is that the threat of deflation remains high for developed countries.’
‘The IMF echoed the World Bank’s report last week that weaker emerging economies are exposed to capital outflows as developed nations expand and the Federal Reserve continues to taper this year. The IMF’s clearest warning is that the global economy is not out of the woods yet and much more is left to do by nations to rebalance, implement structural reforms, deleverage and spur growth.’
13.05: The Footsie maintained its modest gains at lunchtime underpinned by strength in consumer products giant Unilever after strong quarterly results, although overall trading was more subdued and an update from brewer SABMiller disappointed.
The FTSE 100 Index was 7.6 points higher midsession at 6,844.1, with traders looking for fresh direction from Wall Street’s restart following Monday’s holiday for Martin Luther King Day.
Unilever shares jumped 72.0p to 2,509.0p after the Flora and Dove soap maker offered more signs that it has recovered from a profits warning last autumn as it unveiled a 9 per cent rise in net profit to 4.4billion for last year.
Beer flat: Peroni beer firm SABMiller highlighted the impact of continued weak consumer sentiment in its European and North American businesses
A better than expected final quarter saw underlying sales grow by 4.1 per cent, allaying fears of a slowdown in emerging markets. The company issued a profits warning in September due to currency weakness in countries such as Brazil and India.
Rival consumer products firm Reckitt Benckiser added, 100p to 4,783.0p, while drinks company Diageo added 24.5p to 1,971.5p.
Hargreaves Lansdown was also a big blue chip riser, bouncing back after recent falls as investors digested last week’s shake-up of fees ahead of new regulations due to come into force in April.
Shares in the investment company, whose Vantage fund platform has 520,000 clients, fell sharply last week on fears of a price war before recovering today with a rise of 60p to 1,559p.
Testing group Intertek also rallied after falls last week, adding is 124p at 3,032p, lifted by a positive trading update from Swiss peer SGS, said it expected revenues to grow over the next three years.
And emerging markets focused bank Standard Chartered gained 32.5p to 1,360.5p on renewed talk its recent share price falls could leave it vulnerable to a bidder, with Australia’s ANZ the latest name added to the list.
Other banks remained weak though, with Barclays shedding 2.0p to 280.8p, dogged by yesterday’s surprise warning from German peer Deutsche Bank.
Brewer SABMiller was the biggest FTSE 100 faller as it highlighted the impact of continued weak consumer sentiment in its European and North American businesses.
The overall group performance for the quarter to December 31 met City expectations but shares in the Peroni beer firm still fell 34.5p to 3,059.5p.
Bookmakers were also lower, with William Hill down 5.8p to 356.2p and rival Ladbrokes off 6.7p to 160.0p after JP Morgan cut its price targets and reiterated underweight ratings on both, based on possible restrictions on gaming machines in betting shops as early as spring or autumn this year.
Mining companies slipped back on profit taking after recent rises, with Rio Tinto losing 80.0p at 3,256.0p and Anglo American shedding 28.0p to 1,365.0p, despite positive news from China, the world’s biggest consumer of metals.
China’s central bank today offered emergency funds to cool money market interest rates in a move to combat the country’s latest cash squeeze, leading Chinese shares to rebound from six-month lows.
Domestic economic news was positive today, with growth in new British manufacturing orders the strongest since April 2011, according to the latest CBI quarterly Industrial Trends Survey.
In the three months to January 2014, domestic orders rose, uncertainty about demand fell and investment intentions for the year ahead picked up.
The CBI survey said manufacturers are optimistic about continued expansion in the next quarter, with expectations of growth in new orders at its strongest since April 2012.
Stephen Gifford, CBI Director of Economics, said: ‘Growth in the volume of total new orders has reached its highest rate since April 2011, and this is encouraging.
‘However, now is not the time to relax and take our foot off the gas. There are still risks ahead and our manufacturers need help to break into high-growth export.’ markets.’
10.40: Shares in consumer goods firm Unilever was the top blue chip rise midmorning as the Ben & Jerry’s ice cream maker toasted a strong finish to the year.
The Anglo-Dutch firm banished fears about a slowdown in emerging markets by reporting a better-than-expected 4.1 per cent rise in underlying sales growth for the fourth quarter of the year.
The full-year results update helped investors move on from last year’s surprise profits warning, with shares in the company up 101p to 2,538p.
Unilever strong: The firm was the top FTSE 100 riser as the Ben & Jerry’s ice cream maker toasted a strong finish to the year
However, the overall picture was more mixed and subdued as a result of Wall Street markets being closed yesterday for Martin Luther King Day. The FTSE 100 Index was up 9.4 points by midmorning at 6,846.1, consolidating around an eight month high.
Brewing company SABMiller topped the blue-chip fallers board as it highlighted the impact of continued weak consumer sentiment in its European and North American businesses.
The overall group performance for the quarter to December 31 met City expectations but shares in the Peroni company still fell 62.25p to 3,031.75p.
‘SABMiller was fairly uninspiring in terms of its update, and I think if anything those two together (Unilever and SABMiller) are reflective of what we’re seeing in terms of the Q4 reporting season,’ said Richard Hunter, head of equities at Hargreaves Lansdown.
‘There aren’t too many companies shooting out the lights at the moment, and in a broader context, it still remains to be seen whether the U.S. and UK economy are strong enough to stand on their own two feet without all the monetary stimulus that we’ve been seeing.’
Outside the top flight, Imperial Leather and Carex maker PZ Cussons was in the spotlight after it reported an 8 per cent rise in half-year profits to 47.6 million. Shares were 10.65p lower at 385.5p.
08.30: The FTSE 100 has opened 11.3 points higher at 6,848, tracking gains in Asian shares after the China’s central bank offered emergency funds to cool money market interest rates.
Chinese shares rebounded from six-month lows last night after rates eased following the move to combat the country’s latest cash squeeze.
‘Persistent fears of a credit crunch and recent data pointing towards a slowdown have had markets cautious that the world’s second largest economy may be reaching a tipping point,’ said Capital Spreads trader Jonathan Sudaria.
Rate action: Chinese central bank offered emergency funds to cool money market interest rates and ease a cash squeeze, which boosted Asian markets overnight
‘However, the loosening of money markets has given Asian indices a boost and we are set to see that optimism carrying over into Europe this morning.’
The FTSE 100 closed up 7.43 points at 6,836.73 yesterday, having hit an eight-month high at 6,840 points on Friday.
Meanwhile, the International Monetary Fund is set to upgrade its growth forecast for the UK more than any other major economy, according to media reports.
Stocks to watch today include:
UNILEVER: The consumer goods maker reported a decline in full-year turnover, as sales were hit by a slowdown in some emerging markets.
SABMILLER: The brewer reported higher third-quarter sales, helped by increases in lager and soft drinks.
ROLLS-ROYCE: The engineer is expected to make a public offer on the Finnish ship and power plant engine maker Wartsila, a Finnish newspaper reported, citing unnamed investors.