FTSE dips after Syria strike; WPP falls on Sorrel exit

LONDON

UK shares eased on Monday morning, with two corporate events taking centre stage: CEO Martin Sorrell’s exit from advertising company WPP and U.S. hedge fund Elliott Management raising its stake in hotel and coffee-shop operator Whitbread.

The blue chip FTSE 100 index .FTSE ended the session down 0.9 percent at 7,198.20 points, with traders across Europe remaining cautious, fearing that the weekend’s missile strikes in Syria could increase tensions between the United States and Russia.

Relief over the lack of an immediate escalation pushed oil prices lower and UK energy stocks followed suit. BP (BP.L) was down 1.6 percent and Royal Dutch Shell (RDSa.L) 0.7 percent.

Shares in WPP ended 6.5 percent down as investors gauged how the world’s biggest advertising agency would do without its founder, gone after an allegation of personal misconduct.

“It is not clear whether the current margin targets or dividend payout will survive management change,” Citi analysts said in a note, adding that the stock’s loss of a third of its value in the past year could attract “value” investors.

Analysts have speculated that the group, which was being restructured after a year of lower spending from some clients, could now sell some assets if led by different management.

WHITBREAD JUMPS

Shares in Whitbread (WTB.L) led the FTSE with a 7.2 percent rise after activist hedge fund Elliott Management revealed that it had increased its stake in Britain’s biggest hotel and coffee-shop operator to more than 6 percent.

“Its reported push for a (coffee-shop) Costa demerger differs from the company’s current strategy, likely leading to further speculation, which should support the shares,” Morgan Stanley analysts said.

The disclosure came nearly three months after Reuters reported that another activist investor, Sachem Head, wanted Whitbread’s management to examine a break-up to boost the value of its individual businesses.

Shares in Shire (SHP.L), the London-listed pharmaceuticals company that specialises in rare diseases, rose before paring gains to end 1.3 percent down after announcing plans to sell its oncology business to French drug maker Servier for $2.4 billion.

Shire, has also been flagged as a possible bid target for Japan’s largest drug maker Takeda Pharma.

“Oncology was an area Takeda had specifically highlighted in its rationale for a deal, so whether by accident or design Shire’s latest move could undermine the logic behind the transaction,” said AJ Bell investment director Russ Mould.

Steelmaker Evraz (EVRE.L) fell by 7 percent as jitters over U.S. sanctions against Russia continued to weigh on companies with exposure to the country.

Sage (SGE.L) was still trading in negative territory, down 3 percent after Friday’s decline of about 8 percent on a cut to the company’s full-year revenue growth forecast.


 

Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author’s Julien Ponthus, Kit Rees

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FTSE gets boost from miners as global trade tensions ease

LONDON

A recovery in mining stocks helped Britain’s top share index climb to a one-month high on Tuesday, as concerns around global trade continued to ease.

The blue chip FTSE 100 .FTSE index was up 0.4 percent at 7,222.80 points by 0826 GMT, while mid caps .FTMC also rose 0.4 percent.

The materials sector was the biggest contributor to gains, adding around 13 points to the index, recovering following some large losses in the previous session when stocks with exposure to Russia were hit after the United States unveiled new sanctions on Russian officials, oligarchs and their companies last week.

Shares in Evraz (EVRE.L), a Russian steel producer which plunged 14.5 percent in the previous session, recovered some of those losses to trade 3.9 percent higher.

Likewise Glencore (GLEN.L) rose 2 percent after the mining giant suspended a deal to swap its shares in Russian aluminium producer Rusal for Global Depository Receipts in EN+ due to the sanctions.

Both Rusal and EN+ (ENPLq.L) were targeted by the U.S. measurers.

“Glencore shares were hit, but we think that the market has overreacted – in a worst-case scenario the foregone business from Rusal volumes is worth around 0.9 percent of 2018 (estimated) EBITDA, whilst if the Rusal stake on the balance sheet (US$933m) is worth zero, this would be around 1.3 percent of Friday’s market cap,” wrote Bernstein mining analyst Paul Gait in a note.

More broadly, stronger metals prices and a rise in oil on the back of easing concerns over global trade underpinned the FTSE’s commodities-related stocks.

Last week risk assets were hit by an escalation in tensions between the United States and China, with investors worried that the tariffs would leads to a full-blown trade war.

However, a promise from Chinese President Xi Jinping to lower import tariffs on products such as cars helped soothe market nerves.

“President Xi’s speech overnight appears to have struck the right tone, providing some relief for investors who have been buffeted by the recent war of words between Trump and China over trade,” said Rebecca O’Keefe, head of investment at Interactive Investor.

Elsewhere, shares in Burberry (BRBY.L) rose 2.4 percent, buoyed by a well-received first quarter sales update from French luxury peer LVMH (LVMH.PA).

British greeting card retailer Card Factory (CARDC.L) topped the gainers among mid cap stocks .FTMC, its shares rising 6.6 percent after reporting a rise in annual sales and saying that it planned to declare a special dividend in September.


 

Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author Kit Rees

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