FTSE 100 holding its own on ‘Super Thursday’ despite AstraZeneca PLC hammering



  • FTSE 100 up 5 points to 7,457



  • sees £10bn wiped from its valuation after cancer trial setback



  • Diageo top riser as earnings beat expectations



  • and blame economic uncertainty as profits slump


 


11.40am…CBI: Warm weather boosts retail sales


Another week and another report telling us that the recent spell of warm weather was good news for retailers.


According to the Confederation of British Industry’s latest Distributive Trades Survey, sales volumes grew at a “healthy pace” in the year to July – particularly grocery and clothing sales.


“The warm summer has added a sizzle to our high streets as shoppers defied expectations, with sales growth in clothing shops and grocers driving overall performance,” said CBI head of economic intelligence Anna Leach.


“But while retailers expect a similar pace of growth next month, the factors underpinning their sales growth are more shaky.


“Although employment is strong, real incomes are falling in the wake of higher inflation, and that’s expected to feed slower consumer spending growth ahead.”


 


11.15am…Bleak signs for property market


Things are looking bleak for the UK property market if the half-year results from PLC () and PLC () this morning are anything to go by.


Sales at London estate agent Foxtons were 15% lower at £58.5mln while profits dived to £3.8mln from 10.5mln a year earlier.


Countrywide, which operates the Hamptons International and Taylors brands among others, recorded a hefty fall in pre-tax prfoits from £8.4mln in the first six months of 2016 to just £447mln this time around.


“Foxtons blamed ‘unprecedented economic and political uncertainty’ for the slump in revenues and profits,” said ETX Capital analyst Neil Wilson.


“Certainly the London market has been the worst hit and Foxtons’ exposure to this made it more vulnerable.


“Countrywide suffered a similar meltdown in profits in the first half, with pre-tax profits collapsing 98% to less than half a million pounds.


“Both are cutting costs to fight the drop in activity. Countrywide said total costs are down £27 million year on year, while Foxtons reported a £3.7m reduction in costs.


“Shares in the pair remain depressed since the Brexit referendum and there is precious little to see this changing soon.”


 


10.20am…, GSK and Lloyds weigh on FTSE


The FTSE 100 has enjoyed a decent run over the past couple of days and some solid results from the wealth of big names reporting their half-year results today could have propelled it over the 7,500 level.


It’s not quite turned out like that though and the blue chip index is currently 0.1%, or 6 points, lower at 7,447.


Horrible day for


To be honest, given the collapse of AstraZeneca PLC () this morning, it’s a wonder the index isn’t nursing more substantial losses.


Investors in the UK drugmaker have been waiting anxiously for months for news on the MYSTIC lung cancer trial, which is seen by many to be pivotal to the company’s future.


The initial results came in today and it wasn’t good for Astra or its shareholders; the highly-anticipated durva-treme combo treatment failed to do anything more than standard chemotherapy.


The pharma giant tried to play it down and said the real focus should be on data due out early next year but, regardless of what Astra had to say, it was a massive setback and investors knew it.


The stock is down 16% to £42.98 this morning and is acting as a heavy weight on the Footsie. Only a few weeks ago, you’d have had to part with £55 to get your hands on an AZN share.


Lloyds down as PPI storm rages on


PLC () was also dragging on the FTSE 100 as the lender’s biggest profit in eight years wasn’t enough to impress investors as the PPI scandal reared its ugly ahead again.


Shares dropped 2.3% to 67.5p in early deals as Lloyds was forced to set aside another £1bn in conduct charges related to PPI and its treatment of mortgage customers.


Two of yesterday’s big fallers, () and engineering group PLC () were in the red once again today as well.


Diageo and top risers list


The big winner from the ‘Super Thursday’ results extravaganza was Guinness owner () which surged by 6.6% to £24.24 after it delivered net sales growth slightly above expectations in the first half.


Analysts had forecast year-on-year organic net sales growth of 4.2%, but the Johnnie Walker whisky producer delivered growth of 4.3% or organic volume growth of 1.1%.


South African mining giant PLC () was also in favour after it announced it would be returning to the dividend list six months earlier than expected.


Back in 2015 Anglo said it would suspend the divi following the drop in commodity prices, but it has resumed payouts to investors after a strong six months in which net debt fell and underlying earnings soared.


Shares in the miner are currently up by 3.7%, putting it second in the top FTSE 100 riser list this morning.


 


9am…Astra hit for £10bn


The big news of the day was stock specific, with investor in () hitting the panic button following the failure of its lung cancer drug at the final regulatory hurdle.


A lot of hope and expectation was priced into the stock. This not so much ebbed away as gushed, with the stock off almost 16% in early trade. That equates to a massive £10bn from the value of the business and probably puts AZ back in the shop window for potential acquirers. Read more here.


The drag provided by plummeting shares in the Anglo-Swedish pharma giant, which has a track record of self-inflicted wounds, subdued the FTSE 100 with the index of blue-chip shares up just five points at 7,457.33.


‘s () biggest profit in eight years wasn’t enough to impress a sceptical City audience more interested in the long tail of PPI claims.


On a positive note, shares in the Guinness-maker Diageo () were up 5% early after better-than-forecast earnings.


6.45am…subdued start predicted


London’s FTSE 100 is set to start Thursday higher, albeit only very slightly.


There’s positivity in global equity markets and commodities – notably crude oil and copper – and Wall Street again set a new high tide marker, helped by positive quarterly earnings for blue-chip names.


As President Donald Trump became embroiled in another controversy, this time his comments about LGBTQ in the military, Wall Street investors are seemingly able to find other things to focus on.


As well as corporate earnings, the Federal Reserve’s position on interest rates remains an important steer for US investors – though changes, if and when they arise, tend to be well flagged ahead of time. Wednesday’s Fed meeting did not see any real changes.


“As expected last nights Fed meeting came and went without much fanfare, and without any surprises,” said Michael Hewson, analyst at CMC Markets.


“The only changes of note were in relation to the wording with respect to the timing of when officials would look to begin the task of paring back the balance sheet. Instead of making reference to sometime this year the wording was altered to “relatively soon” though this had the important caveat of as long as the economy evolves as expected.


“This would appear to suggest that the Fed might be looking at September to announce a possible start date, though given the dysfunctional state of US politics this date could slip given recent comments from President Trump that a debt ceiling spat and a government shutdown might be on the cards, at around that time.”


On Wednesday, the Dow Jones closed nearly 100 points, 0.45%, higher at 21,711 while the S&P 500 moved only smidgen higher to 2,477. The Nasdaq, meanwhile, added 0.16% to close the session at 6,422.


In Asia, Japan’s Nikkei rose 0.47% to 20,147 while Hong Kong’s Hang Seng also climbed around 0.48% to 27,068.


The Shanghai Composite moved only slightly into positive territory, to trade at 3,249.


Australia’s ASX 200 advanced around 0.2% to 5,789.


In London, CFD and spreadbetting group IG Markets sees the FTSE 100 just slightly – I point – higher, calling the blue-chip benchmark at 7,448 to 7,452 only an hour before Thursday’s open.


Some big names are in the City schedule for Thursday, with   and both due to release results.


Thursday’s Agenda


Interims:  PLC (), PLC (), (), Burford Capital PLC (LON:BUR), PLC (), PLC (LON::INCH), PLC (), Properties PLC (), Group PLC (), PLC (), PLC (LON: LLOY), Lancashire Holdings PLC (), (), PLC (LON:RDSA, ), RELX (), PLC (), (),  Greencoat Wind UK PLC (), (), PLC ()


Finals: ANGLE PLC (), (), PLC (), (), Sky PLC ()


Trading updates:  (), (), Hogg Robinson Group PLC (LON:HRG), PLC (), (), PLC (), PLC ()


Headlines


Lloyds to repay £300m to customers over mortgage arrears errors – Sky News


Car production falls almost 14% as UK sales dip – BBC News


RBS deal with EU pushes UK closer to selling stake – Financial Times


GSK to cut drug development programmes to focus on ‘winners’ – The Guardian


Government’s air quality plan branded inadequate by city leaders – The Guardian

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