Britain’s internationally-angled FTSE 100 rose on Wednesday morning, led by emerging market success story Unilever, but the pound came under pressure as investors watched prime minister David Cameron announce that Britons would be offered a referendum on the country’s place in Europe.
The FTSE 100 rose by 0.3% in early trading, taking it to within just four points of the 6,200 mark. European indices followed US markets higher, after strong earnings reports from big corporations including Google had provided a late Tuesday boost.
Investors were looking ahead to a vote in the Republican-controlled US House of Representatives that would extend the debt limit for four months.
Asian indices were mixed, though Japan’s Nikkei 225 dropped by 2%.
On currency markets the pound edged lower, down 0.15% to $1.5811 with Cameron’s speech causing some jitters, as well as nervousness around UK economic reports due later in the morning.
Unilever emerging market boost
Unilever (ULVR.L) led the FTSE 100, up 2.8% to 2521p, after strong growth in emerging markets helped the consumer goods maker to beat sales estimates, with full year sales growth of 6.9%.
Paul Polman, Unilever’s chief executive, commented: ‘Emerging markets again contributed double-digit growth helping us exceed €50 billion turnover, an important milestone in our journey to double the size of Unilever from €40 to €80 billion.’
Pablo Zuanic at Liberum kept his ‘buy’ rating on Unilever shares, with a target price of 3100p, saying that today’s results supported management’s recent guidance that ‘it should be able to deliver margin expansion year after year and sales growth above peers’.
Panmure Gordon analysts also reiterated their 'buy' recommendation on Unilever: 'The outlook remains the same; further sales growth ahead of the market and continued steady and sustainable margin expansion,' they said.
BT upgrade, United Utilities boosted by bid rumours
BT (BT.L) was among the morning's other FTSE winners, with shares up by 1.3% to 253 after analysts at Bernstein raised their rating to ‘outperform’ from ‘market perform’ as part of a review of European telecoms companies.
Compass, Kingfisher drop
Kingfisher (KGF.L) shares dropped by 1.4% to 269p after Deutsche Bank downgraded their target price for the Homebase owner to 290p. ‘Last week's data from Homebase and the Banque de France suggest market weakness and continued downside risk to Kingfisher's Q4 profits,’ said analyst Warwick Okines, though he kept his ‘hold’ rating on the shares.
Catering company Compass (CPG.L) was the biggest faller on the FTSE 100, trading without its dividend appeal, down 2% at 744p.