Banks, miners rise strongly.
GKN drops after full-year results.
Persimmon surges after handing back cash to shareholders.
The FTSE 100 opened higher on Tuesday, despite a negative reaction to statements from GKN, Whitbread and Serco, as banks and miners rose strongly following yesterday’s backing of the Greek bailout by the Bundestag.
Banks across Europe were performing well – the STOXX Europe 600 Banks index was up nearly 1% in the opening hour – ahead of tomorrow’s long-term refinancing operation from the European Central Bank.
GERMANY APPROVES GREEK BAILOUT
The German parliament approved the second €130bn Greek bailout package on Monday afternoon. It was passed by a wide majority with 496 votes in favour and only 90 opposed, although Merkel’s coalition fell short of obtaining the so-called “Chancellor’s majority.” German Chancellor Angela Merkel also reiterated the importance of quickly implementing the fiscal pact to return confidence to the euro. At the same time, she repeated her opposition to boosting the European Financial Stability Facility (EFSF) and European Stability Mechanism’s (ESM’s) capacity.
Ratings agency Standard & Poor’s announced late last night that it had downgraded the rating of Greece to selective default (SD) after the government’s retroactive insertion of collective action clauses (CACs) in the documentation of certain series of its sovereign debt last weekend. “The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms in the event that a predefined quorum of creditors has agreed to do so. In our opinion, Greece’s retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring.”
GKN, WHITBREAD FALL AFTER FULL-YEAR RESULTS
Automotive and aerospace engineer GKN dropped despite hiking its total dividend by a fifth after seeing double-digit growth in both sales and profits in 2011. The group did report a subdued performance in GKN Aerospace as it has struggled with governments’ defence spending remaining under pressure. However, stronger growth in its Driveline, Powder Metallurgy and Land Systems divisions meant that group sales rose by 13%.
Whitbread was a heavy faller after seeing both reported sales and like-for-like (LFL) sales slow down in the 11 weeks to February 16th, as strong growth at its Costa coffee shop chain was met with a more subdued performance at its hotels and restaurants.
Outsourcing giant Serco was also out of favour despite saying 2011 was a year of “solid operational performance and contract awards across the portfolio”, reflected in a 7.4% increase in revenue to £4,646m from £4,327m in 2011.
Irish building materials group CRH rose after profits beat consensus estimates and its own forecasts in 2011. Having indicated to the market back in November that profit before tax and impairment charges for 2011 would fall somewhere between €678m and €708m, the final figure was €743m, well ahead of market consensus of €656m.
Miners were tracking metals prices higher early on, with Vedanta Resources, Evraz, Rio Tinto, BHP Billiton and Anglo American among the best performers. Financials were also providing a lift, with Royal Bank of Scotland, HSBC and Old Mutual.
Essar Energy continued to fall, after seeing a steep fall in its share price yesterday as its reported a sharp drop in profits in the 12 months ended December 31st.
PERSIMMON SURGES ON THE FTSE 250
Persimmon is the latest house-builder to post results this week and its strategy of improving margins, investing in quality land and paying down debt, has proved successful in the face of difficult housing market conditions. It is due to the above that the company has announced its intention of returning £1.9bn in cash to shareholders. Shares jumped 14% early on.
Heading the other way was AZ Electronic Materials. The group, which produces speciality chemical materials to technological manufacturers, saw strong growth in profits in 2011, but warned that it expects “the more challenging trading conditions that we experienced towards the end of 2011 to continue into the first half of 2012.”
FTSE 100 – Risers
Evraz (EVR) 413.70p +2.73%
Vedanta Resources (VED) 1,503.00p +1.76%
Smiths Group (SMIN) 1,102.00p +1.57%
HSBC Holdings (HSBA) 561.80p +1.50%
Royal Bank of Scotland Group (RBS) 28.34p +1.43%
Anglo American (AAL) 2,711.00p +1.35%
ICAP (IAP) 392.40p +1.26%
Capital Shopping Centres Group (CSCG) 340.30p +1.25%
CRH (CRH) 1,385.00p +1.24%
Old Mutual (OML) 161.80p +1.19%
FTSE 100 – Fallers
GKN (GKN) 223.40p -3.91%
Whitbread (WTB) 1,672.00p -2.79%
Essar Energy (ESSR) 104.70p -2.70%
Serco Group (SRP) 546.00p -1.62%
Tullow Oil (TLW) 1,520.00p -0.72%
Sainsbury (J) (SBRY) 297.40p -0.50%
Polymetal International (POLY) 1,048.00p -0.47%
Pearson (PSON) 1,199.00p -0.42%
SABMiller (SAB) 2,564.00p -0.41%
Compass Group (CPG) 634.00p -0.39%
FTSE 250 – Risers
Persimmon (PSN) 713.00p +13.72%
Ophir Energy (OPHR) 456.90p +5.79%
Taylor Wimpey (TW.) 52.00p +4.69%
Provident Financial (PFG) 1,119.00p +4.29%
Moneysupermarket.com Group (MONY) 126.40p +3.95%
SDL (SDL) 684.00p +3.71%
Redrow (RDW) 134.40p +3.70%
Laird (LRD) 174.50p +3.19%
Kentz Corporation Ltd. (KENZ) 487.00p +2.92%
Bellway (BWY) 813.50p +2.91%
FTSE 250 – Fallers
AZ Electronic Materials SA (DI) (AZEM) 295.00p -5.33%
Allied Gold Mining (ALD) 113.60p -3.48%
Jardine Lloyd Thompson Group (JLT) 674.50p -2.39%
Supergroup (SGP) 552.00p -2.30%
Go-Ahead Group (GOG) 1,264.00p -2.17%
Heritage Oil (HOIL) 185.10p -1.54%
Elementis (ELM) 163.70p -1.33%
Domino Printing Sciences (DNO) 648.00p -0.92%
Atkins (WS) (ATK) 766.50p -0.90%
National Express Group (NEX) 219.10p -0.81%