The FTSE 100 has risen as solid company results and an easing of tensions in Gaza and the Ukraine provided a boost to the index.
The UK blue-chip index added 31 points, or 0.5%, with Aggreko and Standard Life among the risers after reporting robust half-year results.
Aggreko (AGGK) rose 3.3% to £17.77 as investors welcomed a fall in profits that was not as bad as expected. The temporary power provider said a strong pound had hampered trading, leading to a 9% fall in first-half profits.
Analysts at Liberum said profits were 6% ahead of their expectations and maintained their ‘hold’ recommendation on the stock. ‘2014 should prove a trough year for profit, but a high level of [contract] wins is still required to improve utilisation and we remain cautious over the impact of increased competition,’ they said.
Standard Life (SL) meanwhile reported a 12% rise in first-half profits as it received a boost from the government’s auto-enrolment pension measures. The life insurer said it expected to add over 300,000 new auto-enrolled customers in 2014.
Barrie Cowes, analyst at Panmure Gordon, maintained his ‘buy’ recommendation on the company, saying it would also benefit from changes announced in the Budget making it easier for savers to access their pensions.
‘The shares have traded sideways in 2014 reflecting investment markets but the outlook remains positive and we think that Standard Life will be a net beneficiary of the proposed changes to retirement products in the UK.
Intertek (ITRK) was the biggest riser on the FTSE 100, jumping 3.8% to £28.11, as investors continued to react enthusiastically to results issued yesterday which said it was on track to deliver single-digit revenue growth in 2015. The outsourcing company, which checks goods to ensure they comply with regulatory standards, jumped 6.7% in yesterday’s trading.
Markets were boosted by news of a 72-hour ceasefire in Gaza and talks between Kiev and Moscow over the return of Ukrainian soldiers that had crossed into Russia.
The pound meanwhile rose against the dollar as new data showed UK services, construction and manufacturing sectors performing robustly. Sterling was trading at $1.6872 after news that the July 'all sector' purchasing managers' index reading came in at 59.1, the highest level since April. Any reading above 50 indicates expansion.
'The sustained buoyancy of the surveys indicates the country is on course for another spell of strong economic growth in the third quarter,' said Chris Williamson, chief economist at Markit.
Meggitt (MGGT) was the biggest loser, dropping 6% to 473.4p after the aircraft parts supplier warned revenue growth would be lower than expected over the year due to declines in US military spending. The downgrade is the company’s second in nine months.
Investec analyst Rami Myerson responded by placing his target price and recommendation under review. ‘The outlook statement was mixed, but given slower growth assumptions and a range of issues… we are likely to lower our full-year 2014 earnings-per-share forecast by 7-8%,’ he said.
‘That still leaves a heavy second half bias. Meggitt’s recent performance has been disappointing and likely to impact the potential for a rerating.’
InterContinental Hotels Group (IHG) also suffered in the morning’s trading, falling 3.2% to £22.90 despite reporting a 6% rise in first-half profits, although it warned that ‘political or economic uncertainty’ was continuing to affect some key markets. With the shares having had a decent run, up over 13% since the beginning of May, some investors appear to be banking profits.
‘Our cash flow analysis suggests that the stock is discounting annual net system growth in the high single digits over the medium term,’ said Greg Johnson, analyst at Shore Capital, who has a ‘sell’ recommendation on the stock. ‘With US/European system size historically below 2% this requires significant contribution from emerging markets, especially China. Such growth remains too rich for us.’
Outside the FTSE 100, ‘mid cap’ stock Imagination Technologies (IMG) enjoyed a bounce, rising 4.1% to 189.6p as analysts at Liberum upgraded the stock from ‘hold’ to ‘buy’ after share price weakness. Shares have fallen 28% since full-year results in June.
Fellow FTSE 250 stock Afren (AFRE) was another big faller, dropping 6.4% to 100.2p, as woes sparked by the suspension of its chief executive and chief operating officer pending an investigation into payments continued.
AIM-listed data software business WANdisco (WAND) rose 8.8% to 470p after securing a $10 million (£5.9 million) credit facility with HSBC.