London midday: Micro Focus merger news lifts investor sentiment

London stocks jumped on Thursday, led by an increase in Micro Focus shares after news it agreed a $8.8bn merger with Hewlett Packard’s software business.

Micro Focus will issue American Depository Shares to shareholders in Hewlett Packard Enterprise, which was spun out of its more famous hardware parent in October 2015, so that once the deal is complete, the US corporation's shareholders will own 50.1% of the combined entity, with both companies remaining listed.

“Every sector of the FTSE 100 is higher on the Micro Focus deal because it’s a good sign for the continued growth of UK business and technology post-Brexit. British firms still have the confidence to buy overseas assets despite the drop in Sterling,” said Jasper Lawler, market analyst at CMC Markets.

Mining shares were also given a boost on signs China’s exports were improving. Exports fell 2.8% in August, compared to economists’ estimates for a 4.0% decline and the previous month’s 4.4% decrease, the General Administration of Customs revealed.

Imports rose 1.5%, exceeding forecasts for a 5.7% drop and following a 12.5% slide in July.

The trade surplus came to $53.05bn last month, down from $52.31bn in July, although below economists’ forecasts of $59.40bn.

Meanwhile, investors are awaiting the European Central Bank’s policy decision at 1245 BST and press conference at 1330 BST. Economists expect no change to policy with the focus instead on what President Mario Draghi has to say on the future direction of measures at the press conference.

“However, investors should be wary, too many events this year have been billed as major turning points, yet turn out to be damp squibs,” said IG’s chief market analyst, Chris Beauchamp.

“Janet Yellen’s Jackson Hole speech and Mark Carney’s appearance at the Treasury Select Committee yesterday being cases in point. It would take a fairly hefty increase in eurozone quantitative easing this afternoon to provide much excitement, with a vanilla extension to the current programme’s timescale unlikely to deliver the goods.”

Closer to home, the Royal Institution for Chartered Surveyors said in a report that confidence in the UK housing market has recovered moderately from its post-Brexit wobbles but numbers of both buyers and sellers remained in negative territory. The August residential housing market survey showed a slight increase in its past-price indicator after falling for five months in a row, with a balance of 12% more surveyors reporting an increase in prices, up from 5% previously.

Elsewhere, official data on US weekly crude inventories at 1600 BST will also be in focus amid worries about a global supply glut.

Oil prices gained ahead of the release after China data showed crude oil imports rose to their highest level of the year in August. Data from the American Petroleum Institute fuelled the rally after revealing a 2.1 million-barrel drop in inventories.

Brent crude jumped 1.4% to $48.71 per barrel and West Texas Intermediate increased 1.7% to $46.32 per barrel at 1150 BST.

On the corporate front, Dixons Carphone shares advanced after the electronics retailer posted a 9% year-on-year increase in first quarter group revenue and a 4% like-for-like rise in revenue.

Pearson slumped after US peer John Wiley & Sons slid nearly 7% in the previous session following the release of disappointing first-quarter results.

CMC Markets shares continued to come under pressure a day after it said first half net operating income would be lower than last year, blaming a lower value of client trades on low levels of market volatility.

Market Movers

FTSE 100 (UKX) 6,876.00 0.43%
FTSE 250 (MCX) 18,147.93 0.49%
techMARK (TASX) 3,494.65 0.62%

FTSE 100 - Risers

Micro Focus International (MCRO) 2,260.00p 15.60%
Dixons Carphone (DC.) 389.70p 4.14%
International Consolidated Airlines Group SA (CDI) (IAG) 422.40p 4.04%
easyJet (EZJ) 1,192.00p 3.29%
Anglo American (AAL) 862.40p 2.64%
Provident Financial (PFG) 3,036.00p 2.64%
Rio Tinto (RIO) 2,380.50p 1.99%
BHP Billiton (BLT) 1,017.00p 1.80%
Barratt Developments (BDEV) 500.50p 1.69%
Berkeley Group Holdings (The) (BKG) 2,743.00p 1.67%

FTSE 100 - Fallers

Pearson (PSON) 826.50p -4.28%
Mediclinic International (MDC) 969.00p -2.86%
Admiral Group (ADM) 2,006.00p -2.57%
Rolls-Royce Holdings (RR.) 752.50p -1.89%
Standard Life (SL.) 355.90p -1.52%
GKN (GKN) 320.90p -1.26%
Tesco (TSCO) 169.10p -1.26%
Morrison (Wm) Supermarkets (MRW) 197.70p -1.25%
Ashtead Group (AHT) 1,285.00p -1.15%
Burberry Group (BRBY) 1,301.00p -1.14%

FTSE 250 - Risers
Thomas Cook Group (TCG) 75.05p 4.75%
Sophos Group (SOPH) 261.30p 4.65%
International Personal Finance (IPF) 286.10p 4.23%
Rotork (ROR) 216.60p 3.93%
Intermediate Capital Group (ICP) 630.00p 3.45%
Restaurant Group (RTN) 401.00p 3.38%
ICAP (IAP) 489.10p 3.25%
Auto Trader Group (AUTO) 400.90p 2.98%
OneSavings Bank (OSB) 278.20p 2.96%

FTSE 250 - Fallers

Ocado Group (OCDO) 315.90p -2.80%
Phoenix Group Holdings (DI) (PHNX) 849.50p -2.69%
CMC Markets (CMCX) 237.90p -2.10%
NMC Health (NMC) 1,381.00p -2.06%
Meggitt (MGGT) 471.20p -1.87%
Countrywide (CWD) 260.30p -1.85%
NCC Group (NCC) 326.00p -1.75%
Regus (RGU) 294.90p -1.63%
Greggs (GRG) 1,056.00p -1.49%
Ascential (ASCL) 256.20p -1.46%