UK stocks trade higher on Friday as expectations of a cut in US interest rates spurs further overnight gains on Wall Street and in Asian markets. Comments from the president of the Federal Reserve Bank of New York that ‘it pays to act quickly to lower rates at the first signs of economic distress’ were taken as a signal that the Fed could cut rates aggressively at its meeting at the end of this month.
Also strong results from Microsoft gave investors hope that the US earnings season will continue to support the market. Microsoft shares closed at an all-time high (you can read about the stock here).
The FTSE 100 index of leading shares adds 0.5% to 7,536 led by energy, industrial, mining and technology stocks.
Bucking the trend is advertising giant WPP (WPP) which sheds 2.5% to 915p after French rival Publicis cuts its full year revenue guidance due to a poor second quarter in the US.
Advertisers are being squeezed by competition from non-traditional rivals such as Facebook and Google while at the same time many clients are cutting their budgets.
Also on the losing side is packaging group DS Smith (SMDS) which dips 0.5% to 361p after the Competition and Markets Authority (CMA) announces that it is investigating the proposed sale of its Rapak rigid and flexible packaging business to Liqui-Box.
Given that DS Smith and Liqui-box are two of the four major main suppliers of ‘bag-in-box’ packaging to food, wine, drink and dairy producers, the CMA is concerned that the deal ‘could create insufficient competition in the supply of these products, leading to their customers potentially having less choice and paying higher prices, especially as there are very few large suppliers in the UK.’
The CMA says it is also worried that the reduction in competition ‘could lead to lower quality products and/or a poorer service.’ It has asked the firms to address its concerns or risk an in-depth investigation.
Shares in Acacia Mining (ACA) jump 20% to 223p after the firm finally agrees takeover terms with Canada’s Barrick Gold. Holders of Acacia will receive 0.168 new Barrick shares for each Acacia share, which is worth 232p at the current exchange rate or a 24% premium to last night’s close of 187p.
In addition to the share swap, Acacia investors are entitled to receive special dividends from the Exploration Properties and any cash from the sale of the assets, which are valued between $37m and $87m.
Broadcaster ITV (ITV) gains 2% to 111.5p after it announces that it will launch its Britbox HD streaming service in the fourth quarter of this year at a price of £5.99 per month. The service is 90% owned by ITV and 10% by the BBC and will stream old and newly-commissioned content.
Operator of food and beverage travel concessions SSP (SSPG) firms 1% to 688p after it reports a ‘good’ third quarter. Underlying growth was slightly disappointing at just 2% but thanks to new contract wins in Europe and the US total sales were up 9.2% and the company is sticking to its full year earnings guidance.
Household services group Homeserve (HSV) also firms 1% to £11.48 after a positive trading update for the period to 18 July. Strong performance in its Membership business, especially in North America, is expected to support continued investment in its Home Experts division.
There were also updates on two of its European operations. In Spain the company has reached a five-year billing agreement with customers acquired through its joint venture with electricity firm Endesa, while in Italy it has put its Assistenza Casa unit up for sale due to ‘limited opportunities for growth’.