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London midday: Stocks stay red but Sky jumps as Comcast makes formal bid
(WebFG News) - London stocks fell further into the red by midday on Wednesday, taking their cue from a selloff on Wall Street amid rising bond yields, despite higher takeover offers boosting Sky and Shire.
The FTSE 100 was down 0.7% to 7,369.40, while the pound was off 0.2% against the dollar at 1.3947 and flat versus the euro at 1.1430.
IG analyst Joshua Mahony said: "A US-led selloff has seen Asian and European markets trading in the red, as a rise in US treasury yields helps drive uncertainty over a potential shift out of stocks. One of the benefits of the incessant fall in interest rates has been a continued shift towards stock markets, which became the only game in town.
"However, with US 10-year Treasury yields topping 3% for the first time since 2014, fears have been stoked over whether we will see investors shift assets out of stocks and into bonds. Alongside the impact on investor asset allocation, there is also a fear that we will see the rise in borrowing costs impact highly leveraged companies and households."
A busy day for corporate news was dominated by M&A action, with Sky shares popping higher as US cable TV company Comcast made a formal takeover offer for the broadcaster of 1,250p that trumps the one made by 21st Century Fox.
Shire also rose after its directors said they would be willing to recommend the latest takeover proposal from Takeda Pharmaceutical that was pitched at roughly £49 per share, subject to further conditions. The UK Takeover Panel has given the two companies a new deadline of 1700 BST on 8 May to conclude talks.
Whitbread said it would spin off its Costa coffee chain into a separate listed business within the next two years following activist pressure, though shares in the Premier Inn owner reversed earlier gains to trade lower by noon. The company, which also released its preliminary results on Wednesday, said the demerger would be pursued "as fast as practical and appropriate to optimise value for shareholders".
The biggest faller was specialty chemicals group Croda International despite saying it was on track to meet expectations for the year and posting a 4% rise in core sales for the first quarter. Excluding currency swing, sales were down 2.7% in the quarter.
Lloyds Banking Group slipped despite posting a 23% increase in first-quarter profit, with some analysts pointing to a worrying rise in impairment provisions.
Metro Bank was under the cosh even as it posted a 41% jump in first-quarter deposit growth as lending and customer numbers grew, as the company's Common Equity Tier 1 ratio, a key measure of capital strength, fell 170 basis points to 13.6% at the end of the quarter compared to the end of last year. Analysts at RBC Capital said near-term regulatory and investment costs are higher than expected and so they reduced EPS estimates by 10% for this year and 6% for next.
Fresnillo and Antofagasta were both in the red following the release of first-quarter production reports.
On the upside, CRH reversed course to trade up after the building materials group reported a drop in first-quarter sales and announced plans for a 1bn share buyback.
Persimmon edged up after saying it was trading well this year after customer enquiries and sales of its houses increased. The housebuilder said enquiries were up 13% from a year earlier and that forward sales revenue had risen 8% to £2.76bn.
Fenner ticked up as it reported a jump in interim pre-tax profit and revenue and said its acquisition by Michelin should take effect on 31 May.
On the broker note front, Prudential was cut to 'neutral' at Citi and Intertek was downgraded to 'underperform' at Credit Suisse.
Market Movers
FTSE 100 (UKX) 7,383.40 -0.57%
FTSE 250 (MCX) 20,037.64 -0.78%
techMARK (TASX) 3,414.75 -0.56%
FTSE 100 - Risers
Sky (SKY) 1,348.00p 3.06%
CRH (CRH) 2,526.00p 1.57%
Imperial Brands (IMB) 2,424.00p 1.49%
Next (NXT) 5,205.00p 1.07%
British American Tobacco (BATS) 3,780.50p 0.97%
WPP (WPP) 1,125.00p 0.76%
United Utilities Group (UU.) 714.00p 0.65%
Burberry Group (BRBY) 1,769.50p 0.54%
Compass Group (CPG) 1,497.50p 0.54%
Persimmon (PSN) 2,704.00p 0.52%
FTSE 100 - Fallers
Croda International (CRDA) 4,399.00p -4.76%
Anglo American (AAL) 1,677.80p -3.99%
Antofagasta (ANTO) 941.00p -3.72%
Ashtead Group (AHT) 2,048.00p -3.17%
Intertek Group (ITRK) 4,760.00p -2.82%
Smurfit Kappa Group (SKG) 3,028.00p -2.26%
easyJet (EZJ) 1,588.50p -2.13%
Mediclinic International (MDC) 659.60p -2.05%
GKN (GKN) 442.30p -2.02%
Standard Chartered (STAN) 754.60p -1.90%
FTSE 250 - Risers
Capita (CPI) 189.25p 6.74%
Capital & Counties Properties (CAPC) 280.20p 2.45%
CLS Holdings (CLI) 243.27p 2.43%
Inmarsat (ISAT) 366.60p 1.86%
Lancashire Holdings Limited (LRE) 607.00p 1.76%
Go-Ahead Group (GOG) 1,996.61p 1.66%
Tate & Lyle (TATE) 568.20p 1.50%
Sirius Minerals (SXX) 29.84p 1.15%
RDI Reit (RDI) 36.65p 1.10%
JD Sports Fashion (JD.) 386.50p 1.10%
FTSE 250 - Fallers
Metro Bank (MTRO) 3,072.00p -12.68%
Clarkson (CKN) 2,415.00p -4.92%
Tullow Oil (TLW) 229.30p -3.94%
Ferrexpo (FXPO) 232.40p -3.57%
Superdry (SDRY) 1,455.00p -3.32%
Renishaw (RSW) 4,718.00p -3.20%
Investec (INVP) 560.00p -3.05%
Essentra (ESNT) 423.80p -2.80%
Sophos Group (SOPH) 498.41p -2.75%
Melrose Industries (MRO) 214.10p -2.68%