The FTSE 100 has inched higher, as investors held back from big moves ahead of an onslaught of economic data from the US and possible tougher European Union sanctions against Russia.
The UK blue-chip index rose by 13 points, or 0.2%, to 6,801 points, with big moves in the shares of car and aeroplane parts manufacturer GKN (GKN), up 6.3%, and financial sales force St James’s Place (SJP), down 5.1%, as the companies issued interim 2014 earnings statements.
Investors had an eye on data from the US released tomorrow, including an interest rates decision from the Federal Reserve, second quarter gross domestic product figures and jobs numbers.
The possibility of harsher action against Russia from the EU is also weighing on sentiment, according to Jonathan Sudaria, dealer at Capital Spreads.
‘It appears that world leaders have been busy on the diplomatic back channels and managed to agree on tough financial, energy and military action in unison with the US,’ he said.
‘Like the prior tit-for-tat exchange of token sanctions between the West and Russia, traders are concerned about how Russia will react and what they deem will be appropriate retaliatory action.’
GKN was the biggest riser on the FTSE 100, adding 21.5p to 364.6p after the engineering company reported a 6% jump in profits in the first half of the year, prompting a relief rally in its shares.
GKN said it was confident about the rest of 2014 following the rise in profits, which was in line with investor expectations, and said it would raise its dividend by 8% to 2.8p per share. GKN shares were down around 10% over the first six months of the year, with the strong pound hurting business.
Numis analyst David Larkam upgrade the stock from ‘add’ to ‘buy’, arguing the outlook for the business had improved.
‘The shares have underperformed the UK engineering sector in 2014 reflecting downgrades from currencies and Land Systems division,’ he said. ‘No further changes to forecasts today and with currencies now appearing to have stabilised attention can move back to underlying value and prospects.’
Next (NXT) was another riser, adding 170p, or 2.6%, to £66.95p after the clothing retailer raised its guidance for annual sales and profit for the second time in three months. Next this year reported a bigger annual profit than Marks and Spencer (MKS) for the first time and its latest figures show that outperformance is continuing.
‘While the market has benefited from much improved weather patterns year-on-year to deliver a stronger spring/summer season, Next is clearly taking market share, with performance unlikely to be matched by its quoted peers, in our view.’
House builders performed well in the morning's trading, as the Bank of England reported that mortgage approvals picked up in June to hit four-month highs. Persimmon (PSN) traded 1.7% higher at £12.89 while Barratt Developments (BDEV) rose 1% to 366.6p.
St James’s Place was the bigger faller, dropping 36.5p to 753.5p as the financial sales force succumbed to profit-taking as it announced record funds under management in the first half of the year.
With the shares having been up 8.5% over the year, versus a flat FTSE, investors have opted to take profits as the company delivered performance in line with expectations.
Outside the FTSE 100, AIM-listed oil and gas explorer Antrim Energy (AEN) jumped a huge 142.3% to 8p after the company announced it could produce up to 1.1 billion barrels of oil from its offshore Ireland operations.