UK stocks were flat on Thursday with the FTSE 100 trading sideways at 7,180 after the pound hit a six-month high of $1.31 against the US dollar on growing expectations of a Conservative majority in next week’s election.

Many of the FTSE’s biggest stocks generate their revenues and earnings overseas so strength in the pound can see the index struggle to make gains.

PROPERTY STOCKS IN FOCUS

Shares in real estate investment trusts (REITs) including British Land (BLND) and Land Securities (LAND) gained after fund manager M&G (MNG) suspending dealing in its flagship £2.5bn UK property fund yesterday afternoon.

M&G blamed Brexit uncertainty and weakness in the retail sector for a surge in investor requests to cash out, stoking memories of 2016 when property funds with £18bn worth of assets had to freeze dealing while they raised enough cash to meet redemptions.

Investment trusts have a closed-end structure making them more suitable to holding illiquid assets like property, British Land was up 1.2% to 593p while Land Securities was up 1% to 944p.

WINNERS & LOSERS

Homeware retailer Dunelm (DNLM) raised its full year profit guidance after successfully transitioning customers to its new website with no loss of sales and actually growing its margin through cheaper sourcing and better pricing to customers. Shares soared 13% to a new three-month high of 943p.

Best performer in the FTSE 100 was luxury retailer Burberry (BRBY) following news of more takeovers in the sector. French luxury goods house Kering, which owns Gucci, is understood to be in talks to buy Italian fashion firm Moncler. Burberry shares added 3% to £20.49.

Pharmaceutical giant AstraZeneca (AZN) received approval from China’s National Medical Products Administration to market its Lynparza cancer drug for use in treating ovarian cancer after trials showed it reduced the risk of disease progression or death.

Lynparza is the first drug of its kind to be approved for treatment in China. AstraZeneca shares firmed 0.5% to £73.37.

Investment platform AJ Bell (AJB), which owns Shares magazine, posted a 33% increase in pre-tax profits for the year to 30 September and a 13% increase in assets to £52.3bn thanks to a 17% increase in retail customers. Shares were flat at 408p.

Chief executive Andy Bell said: ‘The structural growth drivers for investment platforms in the UK remain strong and if we continue to meet the needs of customers we are well placed to benefit from these over the coming years.’

Logistics firm Clipper (CLG) delivered an upbeat half-year report, with revenues up 11.7% to £255m and underlying earnings before interest and taxes (EBIT) up 26% to £9.5m.

As well as new contracts in the UK with Marks & Spencer (MKS), Shop Direct and other retailers, growth came from the firm’s operations in Germany and Poland. Shares dipped 1% to 297p.

Shares in specialty chemical-maker Victrex (VCT) dropped 2% to £22.94 after the firm reported a downbeat full-year trading performance with revenues sinking 11% to £294m.

Volume sales of chemicals fell 15% as orders dried up from the automotive and electronics sectors as well as from re-sellers.

Packaging firm DS Smith (SMDS) delivered an unexciting set of first-half results with strong growth in operating profits and cash-flow despite a pedestrian top line.

Sales grew just 3% on a constant-currency basis to £3.2bn while operating profits climbed 14% to £351m and pre-tax profits climbed an even more impressive 30% to £213m.

Assuming that the global economy continues to expand at its current rate, chief executive Miles Roberts sees sales growing faster in the second half. Investors were less upbeat, selling the shares down 3.7% to 365p.

 

Disclaimer: AJ Bell, mentioned in this article, is the owner of Shares magazine. The author owns shares in AJ Bell and DS Smith

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Issue Date: 05 Dec 2019