Comments from the European Central Bank that it would boost its bond buying programme during May and June to avoid the summer lull sent the euro lower and boosted stock markets.
The FTSE 100 finished up 26.23 points or 0.38% at 6995.10, with European markets also higher, especially the export-led German Dax, up 2.23%. Jasper Lawler, market analyst at CMC Markets UK, said:
It’s likely not a coincidence that the ECB is upping the ante on its bond-buying following a major bond-market sell-off especially with Greece’s debt negotiations going to the wire.
Back with UK listed stocks, Coca-Cola Hellenic Bottling led the way, up 61p at £14.80. The move was partly on hopes that a solution to Greece’s financial crisis might be getting closer, but more on the prospects for its key Russian market.
Ratings agency Moody’s said the recent rise in the rouble against the euro was positive for both Coca-Cola Hellenic and Carlsberg, since they both derive a significant amount of their earnings from Russia. Paolo Leschiutta, a Moody’s vice president, said:
We could see a reduction in both companies’ adjusted debt/EBITDA ratios by about 0.2 times if the rouble remains at its current level for the rest of the year. Although this is a modest improvement and part of the benefits might be absorbed during the year, it removes some of the pressure on their ratings, which are weakly positioned within their current levels.
Meanwhile analysts at Barclays raised their target price from £11.75 to £12.20, albeit with an equal weight recommendation, saying:
The early signs of gradual underlying improvement in many of CCH’s markets, €44m of self-help in 2015, and an abating foreign exchange headwind have provided some recent support to the stock. However, the shares now trade on a 2015 PE of 24.6 times . With questions on the sustainability of the pick-up in growth, we believe the risk/reward is still evenly balanced.
Land Securities was lifted 52p to £13.63 by a well received set of results and a 3.7% dividend rise , but Vodafone fell 7.5p to 226.6p on a cautious outlook.
Miners were also under pressure amid falling metal prices, with BHP Billiton down 57.5p at 1405.5p and gold and silver specialist Fresnillo falling 28p to 764.5p.
Among the mid-caps support services group DCC jumped 564p or nearly 13% to £49.54 after a better than expected 7% rise in full year earnings, a forecast of very significant profit growth this year and the €464m purchase of French gas company Butagaz from Shell. DCC also placed 4.2m new shares at £47 to help fund the deal.
Peel Hunt’s Christopher Bamberry said:
While 2015 prelims were towards the top end of the guidance range and free cash flow generation was very strong, the main news [was] the £338m acquisition of the Butagaz LPG business in France, which will be significantly earnings per share accretive.
Berenberg said the placing would mean DCC kept within its planned debt limits:
Importantly, this also means DCC can continue on its M&A strategy for the foreseeable future with the acquisition establishing a strong platform in continental Europe and reflecting DCC’s ambition to grow the business further. This was confirmed in a call we had with the chief executive earlier today, who said there will be more opportunities in the next few years.
Moneysupermarket fell 8.4p to 294.1p as founder Simon Nixon raised £56m by selling 20m shares or 3.7% at 280p each to take his stake to 12.8%. This follows his scrapping of a plan in March to sell up to 6.4% of the company’s shares.
Lower down the market Mr Kipling cake maker Premier Foods dropped 1.25p to 45.75p as profits fell 6%, although it said a rise in marketing spending for its top brands should offset the pressures from a supermarket price war. But analyst Martin Deboo at Jefferies kept his buy recommendation, saying:
Improved trends continue into the first quarter: sales were flat, a fourth consecutive quarter of sequential improvement. Profits have been maintained, after increased investment in marketing. Categories are improving a bit and Premier Foods continues to take share. The pension deficit has shrunk, again. We expect the 2016 consensus to hold. Worries?: pricing is set to be brutal and there are tougher comps to come. But the foundations continue to firm.
