London market shrugs off Standard Life Aberdeen woes
The FTSE 100 Index closed up 20.84 points at 7,234.81.
London’s top-flight index continued to climb on Thursday, brushing aside a significant slump from Standard Life Aberdeen after Lloyds Banking Group called time on a £100 billion contract.
The FTSE 100 Index closed up 20.84 points at 7,234.81, as global indexes regained their poise following last week’s turbulence when interest rate fears sent equity markets into meltdown.
Despite the brighter performance, Standard Life Aberdeen was rooted in the red, dropping more than 7%, or 29.3p to 360p.
Aberdeen took on the deal to manage the £109 billion of assets when it bought Scottish Life Investment Partnership from Lloyds in 2014.
But there was a clause allowing Lloyds to end the mandate if Aberdeen merged with a competitor – and this was triggered by last summer’s £11 billion tie-up between Standard Life and Aberdeen Asset Management, creating Europe’s second-biggest fund manager.
Laith Khalaf, Hargreaves Lansdown senior analyst, said: “This is a blow for Standard Life Aberdeen, but has been on the cards ever since the merger.
“Standard Life and Scottish Widows are long-standing rivals, and the prospect of one group managing the fund range of the other was never going to sit entirely comfortably in the corridors of power in Edinburgh.
“Losing this book of business would strike a sour note for the Standard Life Aberdeen merger, and undermines some of the rationale for joining forces, which was built on scale.
“However, while almost a fifth of Standard Life Aberdeen’s assets look like they might be walking out the door, this only equates to 5% of revenues, as these investment services are relatively low margin.”
Across Europe, Germany’s Dax and the Cac 40 in France finished 0.1% and 1.1% higher respectively.
On the currency markets, sterling climbed above the 1.40 US dollars mark – rising 0.4% to 1.404 – boosted by the greenback’s weakness and the prospect of a UK interest rate hike in May.
Versus the euro, the pound was 0.2% higher at 1.126.
The price of oil tumbled 0.7% to 63.84 US dollars a barrel as the weak dollar was countered by US production hitting record heights.
In UK stocks, the latest twist in the GKN tussle sent the engineering giant’s share price higher after the company’s chairman took aim at Melrose’s takeover bid.
In a letter to shareholders, Mike Turner branded the £7.4 billion approach “highly opportunistic” and said the turnaround specialist was “more focused on financial engineering than real engineering”.
It also spelled out the benefits of a new strategic plan, which will see GKN sell off parts of its business to fund a £2.5 billion payout to shareholders. GKN shares rose 3.5p to 414.8p.
Outside the top tier, embattled fashion and homeware retailer Laura Ashley endured a tough session, sinking as low as 26% after first-half earnings slumped due to lower sales and the weak pound.
The group – which has 161 stores across the UK – saw pre-tax profits tumble 45% to £4.3 million for the six months to December 31, with like-for-like retail sales down 0.5%.
It blamed the weak pound as the “most significant single factor” causing the profits fall as it continues to be hit hard by sterling’s collapse since the Brexit vote.
The retailer pared losses at the time of the market close, dropping 1% or 0.1p to 6p.
The biggest risers on the FTSE 100 Index were Fresnillo up 61.5p to 1,391p, Johnson Matthey up 102p to 3,206p, BAE Systems up 18.8p to 591.2p, Old Mutual up 7.3p to 246.7p.
The biggest fallers were Standard Life Aberdeen down 29.3p to 360p, AstraZeneca down 116.5p to 4,713.5p, Royal Dutch Shell B down 40.5p to 2,279p, DCC down 110p to 6,690p.