FTSE lifted by weaker pound, Persimmon bounces back, DFS outperforms challenging sofa market and takeover bid for Wincanton
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“A decline in the pound after weak UK retail sales data gave a boost to the multitude of companies in the FTSE 100 whose share prices are denominated in sterling, but which have US dollar earnings,” says Russ Mould, Investment Director at AJ Bell.
“This trend helped to lift the FTSE by 0.6% to 7,504 and make up for some of the territory lost earlier this week. Anglo American, Fresnillo, Ashtead and Rentokil were among the key beneficiaries from the currency movement.
“Persimmon was another stock to bounce back after weakness earlier this week thanks to a positive broker note from Morgan Stanley which upgraded its rating to ‘overweight’. Housebuilders and property stocks had been battered by the bigger than expected UK inflation data which caused investors to panic that the Bank of England would not be cutting interest rates any time soon.
“The gloomy UK retail sales figures shouldn’t have been a surprise given the messages coming out of listed retailers over the past few weeks. Many have flagged a slowdown in growth and how consumer spending has favoured experiences over material goods. But as always, there were pockets of strength in the retail sector, such as Next saying recently it fared well.
“Others have managed to take market share from rivals, even if their overall takings were down, and that’s where DFS lies. The sofa seller said it had outperformed a challenging market in the second half of 2023. Investors took that as a win and bid up shares in DFS by 1.5% off the back of the trading update. It’s during more difficult market conditions that clever companies try to inch forward while weaker peers take their eye off the ball and panic.
“The UK takeover machine whirred back into action after CEVA said it would pay 52% above last night’s closing price to buy logistics group Wincanton. A successful bid would end Wincanton’s 23 years on the UK stock market, during which it has battled difficult periods plagued by high levels of debt and several profit warnings but still managed to come out the other end intact.”
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