U.K. Stocks Advance as Earnings Exceed Estimates
U.K. stocks rallied to an eleven- week high as U.S. and European companies reported earnings that topped analysts’ estimates.
Burberry Plc gained 4.6 percent after Hermes International SCA reported second-quarter profit that surpassed projections. Halfords Group Plc climbed 4.3 percent after Chief Executive Officer David Wild resigned. Kingfisher Plc (KGF) fell 1.3 percent after saying margins at its B&Q chains will narrow in the current quarter.
The FTSE 100 (UKX) rose 28.42, or 0.5 percent, to 5,714.19 at the close in London, the highest since May 3. The index has advanced 8.6 percent from its 2012 low on June 1 as central banks announced measures to boost economic growth. The broader FTSE All-Share Index gained 0.6 percent and Ireland’s ISEQ Index added 0.7 percent today.
“The earnings from the U.S. were more positive than people were expecting,” said Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England. “In an environment where short-interest ratio is relatively high, the good news is squeezing the market higher.”
Second-quarter earnings have exceeded analyst estimates at 72 of the 102 companies in the Standard & Poor’s 500 Index that have reported results so far, according to data compiled by Bloomberg.
International Business Machines Corp. yesterday raised its full-year earnings forecast after second-quarter profit topped estimates. EBay Inc., the world’s largest Internet marketplace, said revenue rose 23 percent to $3.4 billion, exceeding the average forecast of $3.36 billion. Profit excluding some items was 56 cents a share, higher than the 55 cent-prediction by analysts.
The U.S. economy expanded at a “modest to moderate” pace in June and early July, the Fed said in its Beige Book survey late yesterday..
“Manufacturing activity continued to expand slowly in most districts,” the Fed said in its Beige Book business survey, which is based on reports from its 12 district banks. “Employment levels improved at a tepid pace.”
In the U.K., retail sales grew in June at a slower pace than expected, a report showed. Sales including auto fuel rose 0.1 percent last month, following a revised 1.5 percent a month earlier, the Office for National Statistics said today. The median forecast of economists in a Bloomberg News survey called for a 0.6 percent gain.
Discussions will begin on September 9 and continue with “supervisors, regulators, central banks and treasuries” at the Financial Stability Board, said Jeremy Harrison, spokesman for Bank of Canada Governor Mark Carney, who is also chairman of the FSB.
HSBC Holdings Plc is among banks whose traders are under investigation for interest-rate manipulation in a global probe that led to fines of 290 million pounds ($454 million) for Barclays Plc last month, a person with knowledge of the matter said.
Burberry, U.K.’s largest luxury-goods company, added 4.6 percent to 1,289 pence after Hermes, the French maker of silk scarves and leather goods, reported second-quarter sales that beat estimates.
Halfords, a U.K. retailer of bicycles and car parts, climbed 4.3 percent to 205.8 pence. Wild, who joined as CEO in 2008, resigned after same-store retail revenue fell 7.5 percent in the fiscal first quarter ended June 29, the company said in a statement.
Ricardo Plc (RCDO) gained 2.9 percent to 350 pence after giving a trading update for the year through June 2012. The company said its full-year profit will show “solid growth” and will be at the upper end of analyst expectations. Analysts in a Bloomberg News survey forecast a pretax profit in the range of 16.2 million pounds to 16.7 million pounds. Ricardo will publish the results on Sept. 20.
Afren Plc, a U.K.-based explorer focused on Nigeria and Iraq, jumped 7.7 percent to 128 pence after saying its Simrit-2 exploration well in Kurdistan, Iraq, found more oil.
Kingfisher lost 1.3 percent to 271.6 pence after Europe’s largest home-improvement retailer said gross margins at B&Q will narrow this quarter, hurt by markdowns and sales promotions to attract shoppers.
G4S Plc (GFS), the security company criticized by lawmakers over its failure to deliver adequate staff for the London Olympic Games, declined 0.6 percent to 243.5 pence, its fifth decrease in six days. The U.K. government should review the company’s ability to deliver policing contracts before signing any more deals with it, Labour Party leader Ed Miliband said in a speech in London today.
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