FTSE 100 charges ahead as Reckitt Benckiser finds the right formula
Reckitt Benckiser signalled it was back on track following a couple of one-off disasters.
The FTSE 100 has broken above 7,700 on the back of a bumper share boost for Reckitt Benckiser.
Reckitt Benckiser was the top riser on the index, with its shares surging 8% after the company said its infant baby formula business had lifted sales.
The consumer goods company, known for household brands including Dettol, Durex, Clearasil and Gaviscon, logged second-quarter revenues of £3 billion, marking a 23% rise.
Like-for-like sales growth came in at 4%, far ahead of analyst forecasts of 2.9%.
Ken Odeluga, market analyst at City Index, said: “Strong corporate updates from Reckitt Benckiser, Pearson and BT offered support to the FTSE 100 index, as did a weaker pound.
“After a run of bad news for the firm, stronger than forecast sales and an improved outlook reminded investors of what Reckitt Benckiser was capable of before its series of one off disasters across the year including a cyber-attack and failed Scholl footcare launch.”
Sterling tracked lower throughout the day, and was flat against the US dollar as the markets closed at 1.311.
Against the euro, the pound was flat at 1.125.
Reckitt Benckier’s success helped lift the FTSE 100 by 38.14 points overall, closing the session at 7,701.31.
European stocks were also on the rise, with France’s Cac 40 climbing 0.53% and the Dax in Germany up by 0.5%.
Oil prices continued to rebound on Friday after three weeks of declines. In afternoon trading, Brent crude was up 0.26% at 74.702 US dollars a barrel.
In the UK market, BT’s shares were in demand when the telecoms giant unveiled better-than-expected sales figures. Shares closed 5% or 11.15p higher at 236p.
In the quarter ended June 30, BT’s revenues came in at £5.72 billion. This was down 2% from £5.83 billion last year, but it beat analysts’ expectations of £5.7 billion, and adjusted pre-tax profits rose 3% to £816 million.
Oil giant BP said it was buying BHP Billiton US shale gas assets in a 10.5 billion US dollar (£8 billion) deal, helping lift shares 2.8p to 567.3p.
The move will see BP acquire BHP’s Petrohawk Energy subsidiary – which holds a raft of assets the oil firm is keen to take over.
Michael Hewson, chief market analyst at CMC Markets UK, said: “Any thoughts that BP might be looking to pay down its $40 billion debt pile appear to have reduced on the back of this acquisition and while oil prices remain in their current sweet spot, one can’t help thinking that BP management are leaving it late to do so.
“This remains the company’s Achilles heel in the event of another downturn.”
Investors are rewarding Pearson for its turnaround efforts, boosting its shares 33.6p to 957.4p over the session after the company announced a rise in profit.
The publisher’s revenues for the six months ended June 30 came in at £1.87 billion, down from £2.04 billion year on year.
But Pearson made a statutory operating profit of £233 million, up from £16 million during the same period last year, boosted by the sale of a teaching unit, Wall Street English.
Rightmove became the biggest faller on the FTSE 100 amid fears over the UK’s property market.
Revenues at the property portal grew 10% for the six months ended June 30, rising from £119.5 million to £131.1 million year-on-year, and operating profit was up 12% to £98.2 million.
The biggest risers on the FTSE 100 were Reckitt Benckier up 499p to 6,810p, BT Group up 11.15p to 236p, Pearson up 33.6p to 957.4p and BHP Billiton up 34.2p to 1,707p.
The biggest fallers on the FTSE 100 were Rightmove down 158p to 4,934p, Just Eat down 22p to 861.4p, CRH down 49p to 2,632p and British American Tobacco down 62p to 4,115p.