LONDON (Alliance News) - The FTSE 100 closed higher on Friday after weak UK retail sales hit the pound, providing a boost to the dollar-earner dominated index, with Unilever leading the gainers following its rejection of a takeover bid from US food firm Kraft Heinz.
"It's been another strong week for the leading UK stock market with the FTSE 100 now within striking distance of its all-time high. The pound has come back under some pressure this week with several economic releases weighing on the value of sterling," said XTB chief market analyst David Cheetham.
The FTSE 100 index ended up 0.3%, or 22.04 points, at 7,299.96, meaning it ended the week up 0.9%. The FTSE 250 was up 1.77 points, at 18,707.49, ending the week up 0.3%, and the AIM All-Share finished up 0.2%, or 1.34 points, at 908.00, closing the week up 1.0%.
The BATS UK 100 ended up 0.3% at 12,347.20, the BATS 250 closed down 0.2% at 16,987.45, and the BATS Small Companies ended up 0.3% at 10,988.98.
The leading corporate news in London on Friday was the USD143.00 billion takeover bid launched for Anglo-Dutch consumer goods giant Unilever by Kraft Heinz. The deal was rejected by Unilever, which stated the 18% premium price offered still "fundamentally undervalues" the business.
Analysts said the deal demonstrates the pressure on brand owners to consolidate in a market riven with margin pressures and few organic growth opportunities. The key driver for the bid is thought to be the collapse in the value of sterling since the UK's Brexit referendum result in June last year, which has resulted in higher input costs for companies like Unilever.
Kraft Heinz said it would continue discussions with Unilever in the hope a deal can be struck, and said combining the two groups will create a "leading consumer goods company with a mission of long-term growth and sustainable living".
"[Unilever] has seen its share price soar after becoming the subject of a USD143 billion takeover bid from Kraft Heinz, a food conglomerate backed by Brazil's 3G and Warren Buffet. Whilst the bid of USD50 per share has been subsequently rejected there is some belief that there could be further offers in the not too distant future," said XTM's Cheetham.
Unilever ended Friday as the best performer in the FTSE 100, closing up 13%. Peer Reckitt Benckiser closed 3.1% higher on Friday.
UK data showed an unexpected 0.3% decline in retail sales in January, sending sterling downward. Economists had forecast a 0.9% month-on-month lift in retail sales. The pound dived soon after the data was released and traded at USD1.2421 at the London equities close compared to USD1.2493 at the same time on Thursday.
On a yearly basis, retail sales growth eased sharply to 1.5% from 4.1% in December. The annual growth was expected to slow only moderately to 3.4%.
The disappointing retail sale figures was the third data point of the week that has contributed to overall weakness in the pound, with lower than expected inflation and average earnings figures weighing on the currency for most of the week.
Pharmaceuticals were the other big blue-chip gainers on Friday.
Shire continued to build on gains following the well-received results and positive outlook it reported on Thursday, and ended up 1.5%, whilst peers GlaxoSmithKline and Hikma Pharmaceuticals ended up up 1.4% and 0.8%, respectively. AstraZeneca managed to recover some of the losses seen on Thursday after the stock went ex-dividend, ending the day up 2.1%.
Miners were the other big fallers in the FTSE 100 after benefiting from a rise in copper prices earlier in the week. Anglo American closed down 2.0%, BHP Billiton down 1.5%, Glencore ended 1.6% lower, Rio Tinto was 1.4% lower, and Antofagasta closed down 1.8%.
"Until today Unilever shares had steadily underperformed the FTSE 100 over the past six months, left behind by more glamorous sectors such as mining, but today has seen that situation reverse," said IG analyst Chris Beauchamp.
Anglo American reports full year results while BHP Billiton publishes interim results on Tuesday, followed by Glencore's full year results on Thursday.
In the FTSE 250, property developer Segro ended up 3.3%, after its net asset value rose in 2016 and it said there has been little apparent impact from the Brexit vote on occupier or investor demand for warehousing.
Inmarsat was the worst mid-cap performer on Friday after closing down 5.8%, at 612.57 pence. Societe Generale initiated coverage of the satellite communications firm at Sell, setting a 509p price target. Meanwhile, UBS downgraded its rating on the stock to Sell from Neutral, stating consensus for the maritime business are too optimistic, lowering its price target to 550 pence from 810 pence.
The euro was quoted at USD1.0622 at the London close on Friday compared to USD1.0668 at the same time Thursday.
The CAC 40 index in Paris closed 0.7% lower on Friday while the DAX 30 in Frankfurt ended the day flat.
In New York, stocks were trading lower at the London equities close on Friday, with the DJIA and the S&P500 index both pointing 0.2% lower, while the NASDAQ Composite was trading flat.
Brent traded at USD55.47 a barrel at the London equities close on Thursday, remaining similar to the price of USD55.33 a barrel at the same time Wednesday. Meanwhile, gold traded at USD1,238.62 an ounce at the London close, dipping from USD1,240.80 an ounce on Thursday.
US markets are closed on Monday to mark President's Day, but elsewhere in the economic calendar, the UK Rightmove house price index is released at 0001 GMT, the German producer price index is at 0700 GMT, followed by the UK CBI industrial trends survey at 1100 GMT.
The UK corporate calendar on Monday sees full year results from house builder Bovis Homes, retail property builder Hammerson, interim results from City of London Investment Group and miner Gemfields, plus third quarter results from multi-commodity giant Vedanta Resources.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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11 Jan 2017 09:36
