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Market overview: FTSE closes down 1 at 5,296

Date: Thursday 31 May 2012

Market overview: FTSE closes down 1 at 5,296

1630: Today revealed that UK consumer confidence for May improved to -29 points, from -31 in the month before. The consensus estimate was for a smaller improvement, to -31. Elsewhere it was reported that UK house prices rose slightly in May, as a squeeze in new properties on the market kept demand high, according to the Nationwide house price index. In companies, InterContinental Hotels Group (IHG) spent the day in the top spot on the back of M&A speculation, with analyst at Numis earlier this week speculating about a possible tie-up with sector peer Marriott. Looking abroad, Germany continues to show improving signs in its labour market, as its jobless rate edged lower, also in May. In the US, initial weekly unemployment claims rose by 13,000 to 383,000 (Consensus: 370,000). The FTSE 100 closed down one point at 5,296.

1553: The Footsie has dropped into the red after a weak start for US benchmarks Stateside. Adding to the disappointing US economic data (described below), the Chicago PMI fell sharply from 56.2 to 52.7 in May, despite analysts calling for a slight rise; six of the seven component indices declined.

1350: Gains have been pared following disappointing economic data Stateside. US initial jobless claims rose by 10,000 to a five-week high of 383,000 last week, compared with analysts’ expectations of a slight fall. ADP has revealed that private-sector payrolls increased by 133,000 in May, less than forecast. Meanwhile, US GDP growth in the first quarter was revised down from 2.2 per cent (initial estimate) to 1.9 per cent. FTSE 100 up15 at 5,313.

1122: There has been more fuel added to the InterContinental Hotels (IHG) and Marriott hotels hook-up rumours, with activist investor Nelson Peltz declaring a 4.27% stake in IHG held through Trian Fund Management. Peltz was instrumental in lobbying for the demerger of the drinks business of Cadbury-Schweppes, a development which paved the way for one of Britain's best-loved and most-storied companies passing into the ownership of a company famous for producing cheese in a jar. FTSE 100 is up 40 at 5,337.

0957: The FTSE 100 is up 47 points at 5,344 with Holiday Inn and Crowne Plaza owner InterContinental Hotels Group (IHG) leading the risers on the back of rumours of a merger with sector peer Marriott. According to a Numis research note earlier this week, 'hotel industry consolidation is inevitable at some stage' and 'the strategic rationale for a merger between InterContinental and Marriott is compelling.' IHG's shares are currently trading 4.3 per cent higher.

0835: Despite Wall Street taking a bath last night and Asian markets tumbling this morning, London has opened on the front foot, helped by demand for energy stocks. The big news is an agreed bid for business consultancy Logica from Canada's CGI Group. Information technology and business process services provider CGI is offering 105p cash per Logica share. Accountancy software firm Sage rises in sympathy, as traders take a punt on it being the next UK technology firm to fall into the hands of foreign owners. FTSE 100 is 31 at 5,328.

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