FTSE 100 Live: London markets open higher as Travis Perkins issues profit warning

FTSE 100 opened higher on Friday on a boost from energy and mining stocks, while a slump in top building materials supplier Travis Perkins following a profit warning pressured the mid-cap industrials.

London’s premier index was up 0.3 per cent and was on track for a weekly gain, underpinned by miners and a weak sterling. The FTSE 250 mid-cap index was flat.

Shares of Travis Perkins dropped 7.4 per cent  to a seven-month low after the London-listed company flagged its profit would be hit by challenges in the country’s housing market.

Fast-fashion firm ASOS jumped 6.2 per cent, extending gains from the previous session on a return to profitability, with RBC raising its price target on the online fashion retailer.

Meanwhile, Britain’s biggest retailer Tesco, said there were “encouraging early signs” that inflation was starting to ease across the market as it reported a 9 per cent rise in underlying UK sales in its latest quarter.

Investors keenly await domestic inflation data and a Bank of England rate decision due next week following a hawkish pause from the U.S. Federal and a 25-basis-point rate hike by the European Central Bank this week.

The biggest fallers on the FTSE 100 were Barrat Developments, Halma, Kingfisher and Tesco, while Ocado Frasers and Entain were all up. Asos also extended gains after announcing a return to profitability yesterday.

Oil prices are treading water, with hopes of higher fuel demand from China and OPEC cuts offset by gloomy economic data across developed economies – which has weighed down market sentiment.

Brent Crude is currently trading at $75.59 per barrel in this morning’s session, marginally down 0.11 per cent – while US counterpart benchmark WTI Crude was down 0.25 per cent at $70.44 per barrel.

While prices have effectively stabilised, this is barely half of last year’s peak – when oil hit $139 per barrel following Russia’s invasion of Ukraine last February.

CMC Markets analyst Michael Hewson said: “While European markets underwent a rather subdued and negative finish yesterday, US markets continued their recent exuberant run, with the S&P500 and Nasdaq 100 both closing higher for the sixth day in a row.

“This was a little surprising given that the Federal Reserve and the European Central Bank both delivered very hawkish outcomes in the space of 24 hours of each other, as well as painting very cautious outlooks for growth and inflation over the course of the next 12 months.”

Meanwhile,  Russ Mould, investment director at AJ Bell said “telecoms, consumer healthcare and miners helped to drive the FTSE 100 0.5% higher to 7,669.

“ASOS continued its rebound following yesterday’s trading update and news that Frasers was lifting its stake in the business, which now stands at 10.6%. Frasers itself topped the FTSE 100, rising 3.1%.

“The big question is whether Frasers will make a full takeover of the fashion retailer or stay true to form in just having a strategic stake. It likes to grab a bargain and typically buys something out of administration, but this situation might be different. ASOS’s market valuation is not rock bottom but it is certainly still cheap given that its recovery story remains in the early days and there are still considerable risks to earnings.

“Travis Perkins’ warning caused ripples across housing-related companies on the stock market, with select housebuilders, DIY retailers and building materials suppliers falling in sympathy. Interest rate hikes have already caused cracks in the housing market and there are fears things could get a lot worse.”

Gilt yields continued to climb.

Reuters – Ankika Biswas