The FTSE 100 edged higher on opening, supported byMelrose (MRO), which rallied as investors set aside supply issue to focus on management’s bullish outlook.
London’s blue-chip index rose 0.2%, or 17 points, to 8,081 as investors showed some wariness over the Trump trade and turned their attention to the prospects of higher US inflation and higher debt under the new administration.
‘The twin concerns of reigniting inflation and deepening the nation’s debt have quickly risen to the surface, while the likelihood of US “exceptionalism” and any number of trade wars, most notably with China, have taken the steam out of the post-election rally,’ said Richard Hunter, head of markets at Interactive Investor.
He added that the UK market had been eclipsed by technology and growth stock surges in the US but this could now change.
‘The UK’s reputation as a more stable, and even defensive investment destination tends to weigh against prospects in this kind of environment, despite the increasingly accepted acknowledgement that valuations are historically cheap against most other developed markets,’ Hunter said.
Aerospace engineer Melrose jumped 8.2% to 530p despite suffering ‘industry-wide supply chain issues’ that hampered production during the three months to the end of October. However, investors chose to focus on the reiteration of full-year profit guidance of between £550m and £570m and expectations for improved cashflow next year as its restructuring completes.
United Utilities (UU) added 1.4% to £11.01 on the back of a Morgan Stanley target price upgrade from £12.50 to £13.
Discount retailer B&M European Value (BME) tumbled 4.3% to 362p after launching a £250m debt offer, while broker RBC cut its target price from 550p to 500p.
The mid-cap FTSE 250 softened 0.1%, or 14 points, to 20,464.
Engineering company Goodwin (GDWN) fell 5.5% to £65.80.
John Wood Group (WG) rose 6.8% to 53.4p. The offshore engineer clawed back a fraction of the huge losses it made last week after it launched an independent review of the business following write-offs on large projects this year. The review by Deloitte will look at accounting, governance, and controls at the oil services business.
Burberry (BRBY) climbed 2.9%, or 26p, to 932p after Stifel increased its target price on the luxury fashion brand from 720p to 830p. Although the company reported a slide in first-half revenues last week, investors have been optimistic about its ‘back to British’ plan under the new boss and the shares soared by about a third last week.
AIM-listed Boohoo (BOO) made headlines as the troubled fast-fashion retailer raised £400,000 with its retail share offer at 31p per share, just a fraction of the £39.3m fundraise it announced last week. Just 1.25m shares out of a possible 19.35m were taken up by retail investors, with the rest subsumed by institutional investors through a clawback process. Its shares retreated 0.5% to 29.8p.
