London stocks buck weak global trend on strong company news – Channel News Asia

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LONDON: Stocks markets in Europe weakened on Tuesday (May 17), led lower by Wall Street, but London won support from a raft of positive company results and oil price gains.

Frankfurt and Paris stocks closed in the red, while London edged 0.3 per cent higher in value.

In the British capital, shares in homebuilder Taylor Wimpey, which announced enhancements to its shareholder dividend policy and lifted its financial targets, rose 4.7 per cent.

Vodafone shares rallied 1.5 per cent to 227.00 pence after the mobile phone giant reported its first underlying earnings growth in eight years.

London’s resources-heavy FTSE 100 was also buoyed by oil prices striking recent multi-month high points, pushing close to US$50. Higher oil prices boost the energy sector because they translate into rising revenues and profits.

“Well-received corporate results and the price of oil near seven-month highs helped the FTSE 100,” noted CMC Markets analyst Jasper Lawler.

Meanwhile Britain’s annual inflation rate slowed last month for the first time since September, as air fares slid and clothes stores cut prices, official data showed.

UniCredit economist Daniel Vernazza said the fall was “very likely to be temporary” but much hinged on the outcome of next month’s Brexit referendum.

“If the UK votes to remain in the EU, as we expect, we can continue to expect inflation to gradually return towards the 2-per cent target,” he said in a note to investors.

US inflation, on the other hand, rose at the fastest pace in three years in April – at 0.4 per cent – as energy prices climbed, the government said.

Zacks Investment Research’s Sheraz Mian said the reading was “a tad on the elevated side” and would put inflation “back in the Fed discourse.”

Wall Street stocks gave back some of the prior day’s gains.

Shares in home-improvement retailer Home Depot fell despite better-than-expected earnings which analysts put down to markets having already priced in positive results.


Elsewhere, most Asian markets climbed on Tuesday as tech firms were aided by news of Warren Buffett’s billion-dollar stake in Apple.

After last week’s sell-off, US investors provided a blistering lead Monday with all three main indexes sharply higher, pumped up by news of Buffett’s giant stake in the iPhone maker.

Apple, which has tumbled since it last month reported the first fall in sales of the popular smartphones, rallied 3.7 per cent on the announcement.

And Asian suppliers to the firm followed suit, with Tokyo-listed Alps Electric, Japan Display and Taiyo Yuden enjoying strong gains. Hon Hai in Taipei added 0.4 per cent.

Overall stock markets in the region were also broadly higher. Tokyo jumped more than one percent thanks to a further rally in the dollar against the yen, a day after rising 0.3 per cent on reports of a possible delay in a sales tax increase.

Attention now turns to the release of Japan’s first-quarter economic growth data on Wednesday.

“Markets seem to be in a relatively sweet spot with a steadily stronger US dollar and resilient commodities prices,” said IG analyst Angus Nicholson in Melbourne. “Many investors have been predicting a pullback in markets, but despite all the negativity markets have continued to grind higher.”