LONDON MARKET MIDDAY: FTSE 100 looks to add to gains in muted trade

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The abbreviated trading week in London started on a positive note, with the FTSE-100 lifted by travel stocks, as worries about a global growth slowdown were eased by news from China that it would lift Covid restrictions in Beijing and Shanghai.

The FTSE 100 index was up just 2.39 point at 7,587.84 midday Monday. The blue-chip index gave back some of its morning gains after it topped the 7,600 mark for the first time since mid-April. The mid-cap FTSE 250 index was up 227.02 points, or 1.1%, at 20,599.54. The AIM All-Share index was up 5.14 points at 973.39.

The Cboe UK 100 index was down 0.2% at 754.83. The Cboe 250 was up 0.8% at 18,311.31 and the Cboe Small Companies was 0.5% higher at 14,739.86.

In mainland Europe, the CAC 40 in Paris was up 0.8% and the DAX 40 in Frankfurt rose 0.7%.

AJ Bell Investment Director Russ Mould said: ‘The FTSE 100 built on its progress from last week to trade above the 7,600 mark with British Airways owner International Consolidated Airlines and cruise firm Carnival reflecting the holiday mood as Britons' enjoy a half-term holiday.

‘The airlines are under a lot of pressure to get things right after a long period where their wings were clipped by Covid restrictions, they cannot afford to have a summer disrupted by technical and staffing issues.’

IAG was up 3.8%, while Carnival climbed 4.4%. Tui, Wizz Air and easyJet were up 4.9% and 2.8%, and 1.2%, respectively.

Mould said, however, the ‘newfound confidence’ seen in markets in Europe on Monday will face a stern test later in the week with manufacturing PMI data on Wednesday followed by the US jobs numbers on Friday.

The good mood, for now at least, is likely to stay, owing partly to the lower trading volumes in Europe, as US financial markets will be closed for Memorial Day.

In the FTSE 250, Countryside Partnerships raced 21% higher, after the housebuilder turned away a second approach in two months from San Francisco-based investor Inclusive Capital Partners.

In-Cap said the offer - at 295 pence per share - represents a ‘compelling proposition for Countryside shareholders’. Countryside was trading at 290.20p in midday trading, giving it a market cap of about £1.45 billion.

‘The In-Cap team believes that Countryside shareholders deserve the opportunity to decide on the merits of any offer, and that if an approach is made in good faith, the Countryside board should act in the interests of its shareholders by engaging with the potential offeror and not deny its shareholders this opportunity,’ it said.

In-Cap currently owns about 45.8 million Countryside shares, a 9.2% stake.

IMI gained 3.5% after it agreed to buy Bahr Modultechnik Holding for an enterprise value, including debt, of €98 million.

Birmingham-based IMI said Luhden, Germany-based Bahr will become part of the industrial automation business unit within IMI Precision Engineering.

Bahr provides modular electric linear motion systems, serving ‘highly attractive automation-driven end markets, including pharmacy automation, warehouse automation and robotics’.

London-based advertising agency S4 Capital was up 4.6% as its revenue jumped in the first quarter and was ahead of its guidance to the market.

‘Momentum has been reinforced by two further 'whopper' additions making a total of eight against the target of 20, one through pitch and one through a combination, both of which will be fully effective in 2023,’ S4 explained.

Revenue in the first quarter of 2022 was up 70% on the year before at £206.8 million and up 41% on a like-for-like and pro-forma basis. Gross profit rose 65% to £171.1 million and by 35% on a like-for-like and pro-forma basis.

For 2022, S4 maintained its like-for-like gross profit growth guidance of 25%.

‘The chickens may well come home to roost in 2023, as interest rates rise further this year to counter the inflation surge,’ Executive Chair Martin Sorrell said. ‘But, digital marketing expenditure remains robust, even in a recession, as, for example, our results in 2020 demonstrated, given its secular growth trend.’

Comptoir's shares more than doubled on Monday, hitting a level not seen since September 2019, after the London-based restaurant operator reported a swing to profit for its recently ended financial year, as the company returned to full operations during the year after being closed under virus-related restrictions.

For the year ended January 2, Comptoir posted a pretax profit of £1.5 million, compared to a £8.1 million loss the year before, on revenue which grew 67% to £20.7 million from £12.4 million.

Comptoir's sites were closed from January 5, 2021, for indoor dining, but were re-opened in April for outdoor dining and then for indoor dining from May onwards. From this point, the group said trading level were encouraging, with the second half of the year boosted by the increase in staycations, benefiting sites outside of the main tourist and office areas.

The group did not recommend a dividend payment, as it expects that all available funds will be needed to continued meeting working capital requirements.

Looking ahead, Comptoir said its trading to date has risen to a level that it remains confident in its performance compared to pre-Covid levels in 2019, but notes that any growth will be affected by rising costs.

Brent oil was quoted at $119.75 a barrel midday Monday, up from $117.73 late Friday in London. Gold stood at $1,855.00 an ounce, higher from $1,852.40.

The pound was quoted at $1.2651 midday Monday in London, up from $1.2612 at the London equities close on Friday.

The euro stood at $1.0772, higher from $1.0705. Against the yen, the dollar was trading at JP¥127.37, firm on JP¥127.17.

Still to come on Monday is a German inflation reading at 1300 BST.

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