UK Profit Warnings Soar

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Monday, 15th April: After having a fairly mellow week, the FTSE 100 started off a new one by opening slightly higher on Monday morning by 0.05%, fuelled by positive gains experienced in Asia. However, this didn’t last long as the blue-chip index was pressured into red by the mining stocks which sunk to the bottom of the index following negative sentiment attached to Q1 updates which was kicked off by Acacia Mining’s production fall of 13.0% revealed in their update due to “unanticipated production issues”.

Also causing issues for the blue-chip index today was fresh data released from EY which brought to light that 89 profit warnings were issued by UK-quoted firms in the last three months, the highest number since 2009 and almost 22% higher than Q1 2018. The two sectors which dominated the number of profit warnings made were general retailers and financial services, and travel and leisure wasn’t too far behind either. Surprisingly, Brexit was fifth in line for the top reasons which caused profit warnings, with the number one reason being sales short of forecasts.

The FTSE 250 however managed to avoid being affected by the miners and profit warnings with help from two companies in particular; IWG and Indivior, both up more than 20% in the afternoon.

IWG were at the top after the market was informed of a deal the group secured to sell its Japanese operations for £320 million to TKP Corp, which is expected to be completed next month and consists of an agreement between the two companies for an exclusive master franchise agreement to take place in Japan. Having started the year trading just above £2.00, the news today allowed the group to reach £3.47, up more than 25% on the day.

The FTSE 100 failed to shift back into positive territory as it closed flat at 7436.87, the FTSE 250 however closed 0.48% higher at 19807.1.

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