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FTSE 100: London index retraces losses on softer pound
by cityam
LONDON’s FTSE 100 retraced losses yesterday, shaking off investor fears over the risk of the effects of a US recession rippling through the global economy.
The capital’s premier index climbed 0.37 per cent to 7,628.11 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, jumped 0.54 per cent to 19,217.22 points.
The indices reversed a poor start to the day in the City as they were dogged by a risk-off early session caused by worries about the health of the global economy amid a US downturn.
Morning losses extended yesterday’s poor showing sparked by a string of data from the US, signalling the Federal Reserve’s aggressive interest rate hikes are beginning to soften the economy.
However a weaker pound helped the FTSE 100 turn around its poor start.
A big proportion of Britain’s biggest companies earn revenue outside the UK, which, when exchanged into sterling, is worth more when the pound softens.
Sterling lost 0.14 per cent against the US dollar, although it is up more than two per cent on the greenback so far this year.
British American Tobacco was among the best performers on the FTSE 100, adding 1.5 per cent after it said it expects profits and revenues to meet forecasts.
Oil giants BP and Shell fell around half a percentage point due to oil prices losing momentum. The pair represent a big share of the premier index so movements in their share prices have a strong influence over the FTSE 100’s direction.
Oil prices dropped 0.4 per cent.
Domino’s is “awash with dough” and set to generate net cash inflows of £147m this year, Peel Hunt have said. The pizza maker bagged £79.9m the completed disposal of its investment in Daytona JV. Analysts warned the firm may in danger of an “excess cash flow problem”. They’re pricing in £115m of share buy backs and £43m of dividends this year. Peel Hunt say ‘Buy’ at a target share price of 375p.
Peel Hunt has doubled down on their ‘Buy’ rating for banking group Paragon after the firm delivered “strong underlying growth” in the three months to March. The lender’s operating profits ticked up 22 per cent to £129m, well ahead of Peel Hunt’s forecast. A dividend of 11p has been declared and a further share buyback of £50m announced, taking the total to £100m in the year. Peel Hunt’s target price is 690p.
