FTSE climbs on Fed comments and oil rise, but Pearson slides

Discussion in 'Market News' started by Lily, Apr 7, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Publisher and education group goes ex-div but also hit by US concerns

    Leading shares are heading higher after comments from the US Federal Reserve suggested there may well be no rate rise this month, as well as continuing strength in the oil price.

    The rise in the FTSE 100 - up 31.19 points to 6192.82 - has come despite a number of companies going ex-dividend.

    Pearson is off sharply today, in part because it has gone ex-div (34p final dividend) but also presumably because of a negative read-across from US for-profit higher education provider Apollo Education Group, which reported second quarter results last night and withdrew its full year guidance after admitting that numbers would be below expectations driven by lower than expected student numbers...

    Our biggest area of concern with Pearson is its US higher education business, which we estimate is at least a third of group profits: with for-profits structurally impacted and community college enrolments also down, enrolment issues are compounding Pearson’s structural problems with textbooks.

    The Fed debated an April rate hike—some see a case for it, some think that would send a signal of urgency that isn’t “appropriate”. Subsequently, the Fed continues to expect to raise rates at a gradual pace, and is proceeding with caution. So while am April rate hike remains unlikely, a June hike is still on the table, provided upcoming data continues to support the argument for raising rates.

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