FTSE Edges Into The Green As Election Budget Garbers Investor Support

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On Wednesday, UK stocks saw a slight increase as investors processed a new set of company announcements, along with a positive market response to the UK Chancellor’s election budget.

Legal & General, a UK insurer, has seen a 4.4% drop in its shares, making it the top loser on the FTSE 100 index due to its flat annual profit. The company reported an operating profit of 1.67 billion pounds ($2.12 billion), which is 5% below consensus. Some investors had expected the company to announce a buyback, but those expectations had decreased leading up to the results. Legal & General stated that its 2023 assets under management were affected by higher inflation in the UK, but it remains confident in its ability to achieve long-term profitable growth. The stock has seen a 7% decrease in the last twelve months.

On the positive side of the ledger Convatec, a UK-based company, has reached its highest stock value in over six years due to an improved outlook. The company's shares are up 7% at 270p, marking a peak since October 2017. This increase makes it the top gainer on the FTSE 100 index and is on track to have its best day in about 6-1/2 years. The company has raised its medium-term organic revenue growth outlook to 5%-7% from 4%-6% per annum. It also expects an improvement in the adjusted operating margin of at least 21% in 2024 and anticipates the adjusted operating profit margin to reach the mid-20s by 2026 or 2027. Additionally, Convatec reported a 7% growth in 2023 adjusted operating profit and its stock has increased by approximately 11.4% in the last twelve months.

Premier Foods, a leading UK company, saw its shares rise nearly 18% to 157p, the highest level in almost 13 years. This surge came after the company announced the suspension of pension deficit payments, following an agreement with the trustee of its pension scheme. The suspension is expected to increase the company's free cash flow by £33 million ($42 million) for the financial year ending March 29, 2025. As a result, Peel Hunt has raised the target price for Premier Foods to 200p from 163p, stating that the agreement will significantly improve the company's financial position and provide additional resources for growth. British pub groups' shares surged after Finance Minister Jeremy Hunt announced the extension of the freeze in alcohol duty until February 2025 in his pre-election budget. Marston's saw a 3% increase in shares, while Fuller Smith & Turner and J D Wetherspoon both experienced more than a 1% increase. Over the past 12 months, MARS shares had fallen approximately 29%, while JDW rose by 35% and FSTA was up by around 9%.

Hargreaves Lansdown and Liontrust Asset Management saw their shares rise after UK's finance minister announced a reform to tax-free savings accounts, allowing individuals to invest more money in UK equities. Hargreaves Lansdown's shares were up 3.5% at 772.8p, while Liontrust Asset Management's shares were up 3.6% at 682.5p. The reform, known as the "British ISA", will increase the tax-free investment limit to 25,000 pounds for UK equities, up from 20,000 pounds.

FTSE Bias: Bullish Above Bearish below 7650

  • Below7590 opens 7550
  • Primary support 7450
  • Primary objective 7768
  • 5 Day VWAP bearish
  • 20 Day VWAP bearish

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