UK stocks open on a cautious note with investor confidence capped by disappointing economic data from China and poorly-received results from banking group HSBC (HSBA), which reports a drop in underlying third-quarter profits. The UK benchmark FTSE 100 drifts 27 points in early trading to 6,519, having closed Friday's session at 6,546.47, its highest close since 6 October.
A 12% drop in underlying third quarter pre-tax profit at HSBC to $4.41 billion does not go down well with investors, the stock sliding 0.3% to 637.6p. The market is unimpressed by a 15% rise in third quarter costs and the need to put aside more than $900 million to cover potential fines from the forex-fixing scandal and PPI mis-selling
Airline stocks perform positively, the sector lifted by Irish low-cost carrier Ryanair's (RYA) profit guidance near 20% hike on strong winter bookings. The shares in the airline jump nearly 10% to €8.34, while Easyjet (EZJ) and International Consolidated Airlines (IAG) are also in demand, adding 2.6% to £15.39 and 1.2% to 414.2p respectively.
Mining stocks were mostly weaker with Fresnillo (FRES), Glencore (GLEN), Angofagasta (ANTO) and Rio Tinto (RIO) among the worst performers as investors reacted to the disappointing data from China. Glencore was also being affected by a ratings downgrade from Nomura to 'reduce'.
Premium drinks giant Diageo (DGE) gains 11p (0.6%) at £18.49 on the sale of its Bushmills Irish whisky brand to Jose Cuervo Overseas. In exchange, the deal gives Diageo full global ownership of the fast-growing Tequila Don Julio brand, expands its presence in the Mexican spirits market and brings $408 million into the distiller's coffers.
Fast-food delivery portal Just Eat (JE.) rises 2.5% to 315.2p as it third quarter trading statement shows healthy growth in orders over the summer. Like-for-like orders surged 51% in the three months to September, while total orders, including the newly consolidated French business Alloretso.fr, rose 56%. Shares outlined why we have a bullish short-term view on the stock here last month.
Acquisition activity in the trading platform industry helps Plus500 (PLUS:AIM) 6p higher to 517p, up 1.2%. Analysts at Liberum say US-based GAIN Capital’s (GCAP:NYSE) $82 million (£51 million) offer to buy unlisted City Index, the UK’s oldest spreadbetting platform, indicates Plus500 is undervalued, assuming the same acquisition multiples.
The UK technology space starts the week quietly although investor nerves are jangled by a suspected reduction in oil and gas investment pressuring CAD software supplier AVEVA (AVV). Shares in the Cambridge-based company drop 3.5% to £14.81 ahead of interim results due 10 November.
Co-location data centres operator Telecity (TCY) remains weak, the shares drifting 10.5p to 760p, as the market focuses on unusually high customer churn and forex issues in the company's trading update.
But petrol station data supply specialist Kalibrate Technologies (KLBT:AIM), a running Shares Play of the week, rallies strongly, up 8% to 113.5p, with investors gravitating to the firm's increasingly reliable earnings and exciting growth in India and China.
Trinidad oil play Range Resources (RRL:AIM) gains 7.6% to 0.86p as it announces a $50 million fund raise which comprises $20 million of equity and $30 million of debt in the form of convertible bonds. The arrangement with Beijing-based fund Core Capital Management will be used to pay down other borrowings and accelerate increases in oil production but SP Angel is concerned: 'Should the $50 million debt/equity package be pushed through, we would be a seller of the shares as we believe it is too great a burden for the balance sheet and the asset base. '
Respiratory disease-focused drug developer Verona Pharma (VRP:AIM) rises 2.8% to 1p on securing funding from the Cystic Fibrosis Trust to develop a treatment for the condition that affects the lungs and pancreas.