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FTSE edges up after Glaxo boost

Published 27/04/2016, 14:57
© Reuters. File photo of people walking through the lobby of the London Stock Exchange in London
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By Atul Prakash and Alistair Smout

LONDON (Reuters) - Britain's top share index edged up on Wednesday, boosted by strong results from drugmaker GlaxoSmithKline (L:GSK), while banking stocks were mixed as traders digested latest figures from Barclays (L:BARC) and Standard Chartered (L:STAN).

The benchmark FTSE 100 index (FTSE) was up 15.03 points, or 0.2 percent, at 6,299.55 points by 1335 GMT. That is 2 percent below a 2016 high hit last week.

The index is down around 12 percent from a record high it reached one year ago today, hit by concerns over China's growth and currency volatility, especially last August and in January.

GlaxoSmithKline provided the most support to the index, with a 2.2 percent rise adding around 6 points to the index.

It lifted the FTSE 100 after publishing results at 1100 GMT. Improving margins and growing demand for new drugs lifted the company's underlying earnings by a better-than-expected 14 percent in the first quarter, keeping it on course to achieve a promised return to growth in 2016.

Shares in Asia-focused Standard Chartered fell 2.6 percent following a downgrade by Deutsche Bank (DE:DBKGn). The stock had rallied 10 percent on Tuesday after the bank reported a rebound in first- quarter profits.

Deutsche Bank lowered its rating to "sell" from "hold" and cut its target price for the stock to 454 pence from 460 pence. It said Tuesday's rally was not justified by the revenue outlook and forecast returns in 2018.

By contrast, Barclays (L:BARC) was up 0.3 percent despite a slump in profits, with some traders pointing to a relatively strong performance at the bank's UK division.

Although first-quarter pretax profits missed expectations, pretax profits were 7 percent higher than forecast, after a 109 million-pound accounting charge was stripped out.

"Investors are perhaps hopeful that things are on the up from the group, with better returns on the horizon via a revamped investment banking division - the one that made it such a success in years gone by," Mike van Dulken, head of research at Accendo Markets, said.

The market showed little initial reaction to a report that Britain's economy slowed in the first quarter. First-quarter gross domestic product grew by 0.4 percent, in line with economists' forecasts.

Supermarket Tesco (L:TSCO) led declines, down 4.1 percent. Traders cited a downbeat note from JP Morgan, who retained an "underweight" rating on the stock.

"Tesco's ability to generate cash flow in the foreseeable future could be more constrained than we thought before the results," analysts at JP Morgan said in a note.

© Reuters. File photo of people walking through the lobby of the London Stock Exchange in London

Payments processor Worldpay (L:WPG) rose 3.2 percent after UBS raised its rating on the stock to "buy" from "neutral". Exposure to online transactions and investments in new value-added services should help Worldpay outgrow its peers, UBS said.

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