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FTSE falters after recent rally but InterContinental and Persimmon buck trend

Discussion in 'Market News' started by Lily, Feb 23, 2016.

  1. Lily

    Lily Forum Member

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    Global growth and Brexit worries push FTSE lower, as BHP and Standard Chartered disappoint

    Leading shares are edging lower as investors decide to take some profits after the recent rally, amid another fall in commodity prices and disappointing results from BHP Billiton and Standard Chartered.

    But there are some exceptions, notably Persimmon, up 85p or 4% to £20.58 after the housebuilder reported a better than expected 34% rise in underlying profits to £634.5m. The shares have rebounded after the sector was hit on Monday by concerns about the outlook if Britain left the European Union. Analysts at Canaccord Genuity said:

    The beat to our number was mainly due to a better margin performance than expected. While the results are very strong with consensus likely to edge up, the key focus will be on the capital return which has been accelerated and increased. The group has increased its capital return by 280p over the original plan of 620p set out in 2011. 110p is going to be paid in April 2016 with the remaining 550p to be paid to shareholders in equal instalments of 110p each year over the next five years.

    While the market was probably expecting some good news on the capital plan being accelerated, the increase in the capital return and smoothing of the remaining 550p is likely to be better than consensus expected. Shares should react well to strong results, positive outlook and news on capital return.

    Growth has slowed in America’s (which will also be impacted by refurbs and additional franchise investment), AMEA and Greater China mixed but Europe growth has accelerated. Concerns over hotel cycle will compete with M&A speculation which keeps us at hold.

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