The UK stock market opens firmly higher in early trade on Tuesday buoyed by a swelter of decent trading results and a brighter view on near-term prospects. Investor spirits are also lifted by rising US markets overnight where the Dow Jones and S&P 500 rallied by around 1.5%.
The UK’s blue-chip FTSE 100 puts on nearly 70 points in early trade, or about 1%, to trade at 7,185.08.
But investors in fast food delivery business Just Eat (JE.) are not feeling the love, despite the company posting a 45% jump in annual revenue to £546m. The company reckons that 21.5m customers ordered 172m takeaway meals globally during the year to 31 December 2017.
But Just Eat also reports £76m pre-tax losses after writing-off £180m of goodwill in Australia and New Zealand.
The figures spark a share price slump of close on 14% to 733p, with investors becoming increasingly concerned that hefty expansion investment is not paying off as hoped for. That puts Just Eat firmly at the head of the FTSE All Share loser board on Tuesday.
SMURFIT REJECTS TAKEOVER PACKAGE
Leading the FTSE 100 higher is Ireland-based packaging company Smurfit Kappa (SKG), after firmly rejecting an approach to buy the company.
The cash and shares offer, from US peer International Paper Company, has been dismissed out of hand although details of the offer’s value are not made public. Smurfit points to its own recent strong trading results but investors clearly believe that this is not the end of the matter, bidding the Dublin company's share price up 19% to £30.22.
Word on the bid sparks excitement across the UK packaging sector with shares in the likes of DS Smith (SMDS) and Mondi (MNDI) also in demand, both up more than 5% on Tuesday.
Elsewhere, often seen as a barometer of the UK economy, office space rental group IWG (IWG), formerly called Regus, reports a 14% decline in pre-tax profit on a 5% rise in sales for 2017.
The company, which runs flexible office space across 3,000 sites in 114 countries, issued a profit warning last year and fielded a takeover approach, remains optimistic that the market is stabilising in the near-term.
‘We are seeing good demand,’ says chief executive Matt Dixon. ‘The froth has just come off the top of the coffee, particularly in London,’ he says on Tuesday. But investors are less convinced, pushing the share price around 2.5% lower to 234.1p.
POWER PROBLEMS
The world’s largest temporary power provider Aggreko (AGK) reports an 11.8% fall in annual profit, hit by discounts and issues in Argentina.
The company, which powers major events and fills gaps during electricity shortfalls, says pre-tax profit before exceptional items fell to £195m last year. That sees its share price tank, down 10% at 652.8p.
Also feeling the squeeze is industrial equipment rental company Ashtead (AHT), its stock down 8% to £18.84, the FTSE 100’s second largest faller.
That decline comes in the face of seemingly strong third quarter trading that largely matches expectations. Strong growth is evident in the company’s main North American market.
The shares 20% run since September presumably makes now a decent time to lock-in some well-earned profits for investors who may be a little shaken by the departure of Ashtead finance director Suzanne Wood.
BOOKIE FLOGS OZ OPERATION
Betting company William Hill (WMH) is selling its Australian business for A$300m, which works out at about £168.5m. The sale is to CrownBet.
In February the company took at £238m charge to write-down the value of its Australian business. The stock nudges a little more than 1% higher to 319.7p.
Finally, bosses of auto/aero engineer GKN (GKN) and Melrose (MRO) are due to appear before the Business Committee from 9:30am today. Respective union officials will also be present.
MPs are keen to get to the bottom of the long running hostile takeover of the former by the latter, with questions raised over GKN’s pension funding, who’s best to spark a turnaround at the group, and whether a sale would be good for engineering expertise in the UK.
Oil prices rose on Tuesday for a third straight session, underpinned by robust demand forecasts and as ministers from OPEC touted the strength of its agreement with global producers to cut output in order to bolster the market.
Gold prices edged up on Tuesday on a softer dollar and as investors covered short positions amid jitters about a global trade war due to U.S. President Donald Trump’s plan to impose steel and aluminum tariffs.
