Thursday, 2 February: FTSE indices were on the march higher, with natural resources companies lending support to the FTSE 100(+0.47%), following weaker trade in Asia and stronger sterling continuing to hamper gains in the index.
GVC(+6.33%), the FTSE 250 gaming company traded higher as it raised guidance for its current financial year, as organic services revenues rose 1.7% in the fourth quarter of 2016. Net gaming revenue increased by 7% year-on-year, hailing it as ‘a particularly pleasing performance’ given ‘adverse’ sports results in the last few weeks of the year and a strong comparative 2015 period. GVC pointed to the international diversity of the business combined with a proven portfolio of both sports and gaming brands as helping cushion the firm against punter friendly sports results in the UK and adverse currency moves in some of the group’s markets.
Reckitt Benckiser(+4.08%) helped to lead the FTSE 100 higher as it confirmed it is in talks for a proposed £13.2bn takeover of US baby formula maker Mead Johnson Nutrition. The consumer goods company behind Dettol, Vanish, Durex & Nurofen announced it is in talks with New York-listed Mead for a US$90 per share deal to be financed with cash and debt. The deal was confirmed by Mead late on Wednesday, while Reckitt issued a statement confirming it is in “advanced talks” earlier this morning.
Earlier in the day, UK construction PMI data came in at 52.2 in January from 54.2 in December. Markit, which compiles the survey said the headline index marked the weakest rise in overall business activity since the post-Brexit referendum recovery began in September 2016. The three subsectors – housing, commercial and civil engineering all recorded softer rates of output growth in January. Despite this weaker data, sterling was little changed.
The BOE did more to move the needle on sterling as it announced that committee members voted 9-0 to keep the base rate unchanged at 0.25%. This was accompanied with an upwards revision of UK GDP growth from to 2%, from 1.4% for 2017, whilst inflation rate guidance was kept unchanged for the same period citing a slack labour market moderating inflationary pressure. Sterling pared most of the gains seen this week against both the euro and dollar, but was notably stronger on a year-to-date basis against both currencies.