FTSE 100 movers: Morrisons slumps; Melrose boosted by broker note

Paper and packaging companies DS Smith and Smurfit Kappa were among the risers on the top-flight index as Jefferies said there was an opportunity for a re-rating in the sector as the market is too negative.

Melrose Industries was on the front foot as Bank of America Merrill Lynch maintained its 'buy' rating on the stock in a note on capital goods. It said the valuation was particularly appealing given scope for disposals (Nortek, PowderMet) and expectations are sufficiently conservative on automotive demand development and aerospace turnaround.

Broadcaster ITV gained as Liberum suggested that STV's signing of a five-year partnership with Sky on Monday covering its video on demand services could make a tie-up between ITV and Sky possible.

Ashtead advanced as UBS upped the equipment rental company to 'neutral' from 'sell', lifting the target price to 1,800p from 1,700p as it said fears about a slowdown were priced in.

The bank said that while Ashtead's performance has been significantly ahead of its original 'sell' thesis back in December 2016, the shares have fallen by around 35% since early-cycle data started to deteriorate in August last year.

On the downside, Morrisons - the first of the big four supermarkets to report its Christmas trading - was down in the dumps as wholesale growth over the festive period disappointed investors, despite the grocer beating retail forecasts and notching up its fourth consecutive Christmas of growth.

The shares also took a knock after data from Kantar Worldpanel showed the group was the second-weakest among its rivals. Morrisons saw its growth slow to 0.1%, with its market share dropping to 10.6% from 10.8%.

Analysts at Bernstein said the 0.6% LFL retail growth figure should be "reassuring" against a high comparative growth the year before, slightly up versus consensus of 0.5% and "despite a very cautious UK consumer at the end of 2018".

However, Bernstein also noted that the contribution from wholesale missed consensus by 60 basis points, almost all of which was due to the McColl business being transferred after the deal signed early last year.

Vodafone was weaker after a double-downgrade to 'underperform' by RBC Capital Markets, which slashed its price target to 125p from 260p, pointing to a vulnerable dividend.

"Its underlying markets remain 'challenging' and it has very little financial headroom despite synergies and cost cutting," RBC said.

FTSE 100 - Risers

Smith (DS) (SMDS) 326.00p 6.54%
Melrose Industries (MRO) 176.70p 6.25%
Smurfit Kappa Group (SKG) 2,206.00p 6.06%
Marks & Spencer Group (MKS) 276.20p 5.95%
Next (NXT) 4,840.00p 5.79%
Rolls-Royce Holdings (RR.) 856.00p 5.73%
GVC Holdings (GVC) 726.00p 5.29%
easyJet (EZJ) 1,158.00p 5.27%
ITV (ITV) 132.50p 5.08%
Ashtead Group (AHT) 1,841.50p 5.02%

FTSE 100 - Fallers

BT Group (BT.A) 229.90p -3.38%
Morrison (Wm) Supermarkets (MRW) 212.90p -3.07%
Fresnillo (FRES) 901.40p -1.59%
AstraZeneca (AZN) 5,938.00p -1.12%
Vodafone Group (VOD) 155.72p -1.07%
Smith & Nephew (SN.) 1,409.00p -0.77%
London Stock Exchange Group (LSE) 4,177.00p -0.69%
Severn Trent (SVT) 1,838.00p -0.68%
Unilever (ULVR) 4,091.50p -0.33%
GlaxoSmithKline (GSK) 1,511.00p -0.22%