FTSE falters as Smith & Nephew and easyJet drop, but banks move higher

Discussion in 'Market News' started by Lily, Oct 6, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Medical group hit by downgrade while budget airline’s update disappoints

    Leading shares are edging lower as investors again pause for breath after this week’s attempt at a new record.

    Airlines are among the main fallers after easyJet, down nearly 7% at 934.5p, warned its full year profits would drop by around 28% this year after security concerns hit travel and the slump in the pound cost it £90m. British Airways owner International Airlines Group is down 2% at 388.5p.

    Smith & Nephew has gradually de-emphasised its slower growth areas and implemented various cost-savings measures, reinvesting the proceeds in faster growth areas of the business. However, the success of this strategy has been largely offset by various missteps and one-off headwinds, a trend we expect to continue. We have therefore become more cautious about the company’s organic revenue growth outlook, as well as on margins and earnings growth.

    Much better-than-expected services data out of the US Wednesday makes a December interest rate hike there more likely, which is great news for financial stocks. Banks were stronger in Asia, too, as traders bet that Deutsche Bank would not go under following reassuring comments from IMF officials in Washington. Shrinking oil stockpiles in the US have also sent Brent crude toward $52 a barrel, whetting appetite for risk assets like equities.

    Wall Street was up overnight, but Friday’s monthly jobs data is the major focus for the rest of this week. Expect trouble if the number comes in below 150,000.

    The statement is relatively light on detail but highlights a good performance in Specialty Pharma and Licensing. Interventional Medicine remains the fastest growing division led by the Oncology, tempered by the steady progress in Varithena and a decline in sales for PneumRx.

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