17.10 (close): Long-awaited cheer from Royal Bank of Scotland saw shares in the taxpayer-owned lender surge eight per cent, amid another positive session for the London market.
The FTSE 100 Index completed a week of gains after it emerged that the US economy created 288,000 jobs in April, the best figure since January 2012.
That boosted the US dollar and meant sterling was down slightly against the greenback at 1.68 and flat against the euro at 1.21. The FTSE 100 Index was 13.5 points higher at 6822.4, having risen to an eight-week high and within sight of a record level.
AstraZeneca shares were little moved by new developments in its takeover situation after Pfizer sweetened its approach to £50 a share, valuing the firm at around £63billion.
The new proposal was not enough to trigger a positive response from Astra’s board, who said the financial and other terms described in the offer were inadequate and substantially undervalue the business.
As the UK company has refused to engage, Pfizer may now consider it is time to take its approach direct to Astra shareholders.
Despite the latest improved offer, Astra’s shares were 7p lower at 4808p and well short of the £53 a share that some analysts think Pfizer will have to pay.
The rise in RBS’s share price of 25.1p to 331.7p came after it said pre-tax profits rose to £1.64 billion from £826 million in the same period last year.
However, the figures were accompanied by a warning from chief executive Ross McEwan that there are still ‘plenty of issues from the past to reckon with’.
Investors were just relieved at the absence of new hits to cover past scandals or litigation, while the bank is on track to deliver £1billion of cost savings this year and exceed its original target from the rundown of its bad bank.
Elsewhere in the top flight, shares in Holiday Inn operator InterContinental Hotels rose eight per cent or 166p to 2190p after it said it will distribute 750million US dollars (£444million) to shareholders through a special dividend. It added that revenues per available room rose six per cent in the first quarter of the year.
Housebuilders were among other stocks on the front foot after the latest construction industry figures from CIPS and Markit showed the sector continued to enjoy strong growth in April.
Barratt Developments was 6.6p higher at 375p, Taylor Wimpey improved 3.3p to 108.6p and Redrow lifted 13.6p to 305p after brokers Citigroup said investors should revisit the sector following recent falls in share prices.
In other corporate news, Direct Line Insurance Group shares were 1.2p higher at 249p after it said weather claims in the first quarter will be £60million, better than the range of £70million to £90million previously forecast.
The biggest FTSE 100 risers were InterContinental Hotels up 166p at 2190p, Royal Bank of Scotland ahead 25.1p at 331.7p, Kingfisher up 8.4p at 426.4p and Antofagasta ahead 14.5p at 790.5p.
The biggest fallers were Associated British Foods down 97p at 2900p, Hargreaves Lansdown off 22p at 1193p, British American Tobacco down 52.5p at 3396.5p and Johnson Matthey off 51p at 3308p.
15.15: The Footsie hold firm but was still subdued in late afternoon trade as all attention was directed towards New York with US stocks starting strongly following a better than expected US April jobs report.
With just over a hour of trading to go, the FTSE 100 index was up 15.3 points at 6,824.2, largely consolidating after a week in which it has risen to an eight-week high and is within sight of a record level.
In early trade on Wall Street, the Dow Jones Industrial Average was up 56.4 points at 16,613.9 with investors pleased by an above-forecast increase in April non-farm payrolls (NFPs) which helped counter a disappointing first quarter US GDP growth reading earlier this week.
Brenda Kelly, chief market strategist said: ‘Today’s NFPs came storming back with a gain of 288,000, while the March number was revised up too.
‘The atrocious GDP reading has been banished from traders’ minds, as everyone focuses on the extremely positive headline number, with the drop in unemployment to 6.3 per cent adding to the generally positive feeling.
‘There are still problems beneath the surface, given the shrinkage in the labour force as well, which perhaps explains why markets haven’t exactly exploded with excitement, since it shows that it’s not entirely about job creation and that Americans continue to leave the labour force in droves. This is not an economy that is yet firing on all cylinders.’
However, Kelly pointed out, with a long Bank holiday weekend ahead for the UK ‘many traders have opted to take their money off the table. If we do get a fifth consecutive daily gain, it will be a very quiet finish.’
12.50: The Footsie extended its gains into lunchtime led by strong gains in Royal Bank of Scotland which delivered some long-awaited cheer for investors today by reporting a sharp improvement in profits for the first quarter of this year.
The part-nationalised company’s shares surged by as much 12 per cent at one stage, although the FTSE 100 index was in a more subdued mood – only up 0.2 per cent, or 15.3 points to 6,824.2 – after a week in which it has risen to an eight-week high and is now back within sight of a record level.
RBS shares rose 28.45p to 335.1p came after the part taxpayer-owned lender said statutory profits trebled to £1.2billion in the first quarter.
Drugs twist: Pfizer may consider it is time to take its approach direct to AstraZeneca shareholders after being rebuffed in a third bid approach today.
However, the figures were accompanied by a warning from chief executive Ross McEwan that there are still ‘plenty of issues from the past to reckon with’.
Investors were just relieved at the absence of new hits to cover past scandals or litigation, while the bank is on track to deliver £1 billion of cost savings this year and exceed its original target from the run down of its bad bank.
Housebuilders were among other stocks on the front foot after the latest construction industry figures from CIPS and Markit showed the sector continued to enjoy strong growth in April.
Barratt Developments was 5.7p higher at 374.1p and Redrow added 16.95p to 308.35p after brokers Citigroup said investors should start to revisit the sector following recent falls in share prices.
Elsewhere in the top flight, shares in Holiday Inn operator InterContinental Hotels rose 8 per cent or 171p to 2,195p after it said it will distribute £444million to shareholders through a special dividend. It added that revenues per available room rose 6 per cent in the first quarter of the year.
On the downside, AstraZeneca’s shares were a touch lower on new developments in its takeover situation after Pfizer sweetened its approach to £50 a share, valuing the firm at around £63billion.
The new proposal was not enough to trigger a positive response from Astra’s board, which said the financial and other terms described in the offer were inadequate and substantially undervalue AstraZeneca.
As the UK company has refused to engage, Pfizer may now consider it is time to take its approach direct to Astra shareholders.
Despite the latest improved offer, Astra’s shares were 18p lower at 4,797p and well short of the £53 a share that some analysts think Pfizer will have to pay.
09.20: A jump by shares in Royal Bank of Scotland helped the Footsie recover from an opening fall in early morning trade, with the part-taxpayer owned lender delivering some long-awaited better news for investors today by reporting trebled profits for the first quarter of this year.
After just over an hour of trading, the FTSE 100 index was 3.5 points higher at 6,812.4 rallying from an early low of 6,798.61 but still in a subdued mood after a week in which it has risen to an eight-week high and is now back in sight of a record level.
RBS bounce: The bank saw its net profits tripled to £1.2billion in the first quarter, buoyed by lower costs and falling impairments.
RBS shares leapt nearly 15 per cent higher, up 44.7p to 343.7p after its net profits tripled to £1.2billion in the first quarter, buoyed by lower costs and falling impairments, bouncing back despite a warning from chief executive Ross McEwan that there are still ‘plenty of issues from the past to reckon with’.
Investors were just relieved at the absence of new hits to cover past scandals or litigation, while the bank said it is on track to deliver £1billion of cost savings this year and exceed its original target from the run down of its bad bank.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers said: ‘It seems that these numbers represent the calm before the storm. The initial share price reaction seems tinged with some relief.
‘The quarterly performance itself is respectable – a significant reduction in impairments, costs down, an improvement in underlying profit and a relatively robust capital cushion. Much further out, the streamlining of the bank and a following wind may enable the resumption of a dividend and the removal of the stultifying government stake.
‘However, in the meantime the bank is still in the midst of dealing with its legacy issues, and has warned that there will be a considerable rise in costs as the year progresses, driven both by the restructure and the possibility of further regulatory fines.
‘RBS is pursuing a similar route to Lloyds in preparing to simplify and focus its operations, but Lloyds is much further down the road,’ Hunter added.
Lloyds Banking Group shares continued to see good gains following its well-received quarterly results yesterday, up another 0.6p to 80.1p.
Elsewhere among the top flight gainers, shares in Holiday Inn operator InterContinental Hotels rose 8 per cent, or after it said it will distribute $ 750million (£444million) to shareholders through a special dividend. It added that revenues per available room rose 6 per cent in the first quarter of the year.
And drugmaker AstraZeneca remained in focus after US giant Pfizer sweetened its takeover approach for the Anglo-Swedish firm to £50 a share, valuing it at around £63billion.
However, the new proposal was not enough to trigger a fresh rally in Astra’s share price, which was 26.5p lower at 4,788.5p as the UK-listed company said its board would meet to discuss the new approach. Astra has rebuffed two previous takeover approaches from Pfizer.
08.20: The Footsie was a touch weaker in opening deals today, slipping back after gains yesterday following mixed sessions overnight in New York and Asia on nervousness ahead of the latest US jobs report and with an eye still on the volatile situation in Ukraine.
In early trade, the FTSE 100 index was down 7.2 points at 8,801.7, having added 28.84 points yesterday to close at its highest level since March 4.
Reports of fresh violence in Ukraine turned investors cautious, with pro-Russian separatists in Slaviansk in eastern Ukraine saying Ukrainian forces had launched a ‘large-scale operation’ to retake the town.
Tense Ukraine: Pro-Russian separatists in Slaviansk in eastern Ukraine said Ukrainian forces had launched a ‘large-scale operation’ to retake the town.
On the macroeconomic front, the market focus was squarely on the US April jobs report, which is forecast to show employment rising at its fastest rate in five months, with around 215,000 additions to non-farm payrolls expected.
US economic indicators have been a mixed batch so far this week, with first quarter GDP and construction spending falling short of expectations while consumer spending recorded its largest gain in more than 4-1/2 years in March and factory activity accelerated last month.
Markus Huber, senior sales-trader/senior analyst at Peregrine & Black said: ‘Today’s US employment data is rather unlikely to sway the Fed in their plans what tapering is concerned, however after the very disappointing 1Q GDP reading a couple of days ago strong figures would certainly alleviate fears that the weakness seen in the first quarter might persists.
‘Overall sentiment for stocks is pretty much neutral for now with the Ukrainian crisis continuing to be a drag on markets. In order for stocks to move decisively higher from here either a clear upturn in economic activity will be needed or the situation in the Ukraine has to start to de-escalate.
‘During the first half of the trading day the focus will be on the release of Euro-zone employment rate and PMI data for individual Euro-zone countries and the Euro-zone as a whole with little changed expected compared to the previous month. Today’s economic data in Europe is more less expected to confirm that the recovery at a very modest pace is on track.’
The only UK data of note due today will be the Markit construction purchasing managers index (PMI) scheduled for 9.30am.
Stocks to Watch include:
ASTRAZENECA – US drugmaker Pfizer said it has raised its proposed offer for AstraZeneca to 50 pounds a share, adding that the British drugmaker was reviewing the proposal.
ROYAL BANK OF SCOTLAND – The part-nationalised lender trebled its profit in the first quarter, benefiting from improved cost control and a reduction in impairment costs.
INTERCONTINENTAL HOTELS GROUP – The hotels operator said it would return $ 750million to shareholders and was considering selling off more hotels as it posted its strongest room revenue performance in seven quarters.
MARKS & SPENCER – Britain’s biggest clothing retailer launched a new online push on Thursday, targeting the 19million customers a year who shop in its UK stores but do not use its website.
REXAM – The packaging company reported results in line with company expectations, but said that foreign exchange translation headwinds would weigh in 2014, cautioning also about metal premiums, which are at an all-time high.
RENTOKIL INITIAL – The support services firm said it was confident for the coming year after reporting a 7.6 increase in operating profit.
DIRECT LINE – The insurance group reported a lower gross written premium for ongoing operations than this time last year.
LAIRD – The technology company reported 7 per cent higher revenue, in line with expectations.