FTSE Reverses From Red To Green Into Holiday Weekend

On Friday, London stocks initially declined, following the trend of losses in Asian markets due to strong U.S. economic data, which raised concerns about prolonged high interest rates. The FTSE 100 index dropped by 0.4% before reversing higher to trade up 0.42% into the close. The mid-cap FTSE 250 also initially fell by 0.3% before turning positive, on course to break it’s three day losing streak ahead of the UK bank holiday weekend. The robust U.S. economic data indicated a surge in business activity in May to the highest level in more than two years. This, coupled with the hawkish tone of the U.S. Federal Reserve minutes from the previous meeting, has caused traders to reduce their expectations for rate cuts this year. In April, British retail sales volumes decreased by 2.3%, which was higher than the expected 0.4% drop according to a Reuters poll. The decline was attributed to wet weather, which deterred shoppers from visiting clothing retailers and sports stores. Retailers such as Ocado, Kingfisher, and M&S saw gains despite ONS data.

Intertek Group, a UK-based company, saw a 2.6% increase in its stock price to 5,085 pence following a positive trading update. The company had earlier reached a 2-year high.

Intertek reported a 7.5% growth in revenue at constant currency rates for the period of January to April, reaching 1,080.8 million pounds ($1.37 billion), with a like-for-like revenue growth of 7%. The company also reaffirmed its 2024 guidance of achieving mid-single digit like-for-like revenue growth at constant currency. As a result, Intertek emerged as one of the top gainers on the FTSE 100. Prior to this update, the company's stock had risen by approximately 16.7%. 

Mondi experienced gains after Citi raised its rating on the stock to ‘buy’. The company stated that after facing challenges in the past few years, the market headwinds of destocking and lower pricing are now turning around across Mondi's product segments (board, flexibles, paper). Citi projected a ‘normalised’ EBITDA of approximately €1.8bn in 2-3 years, and achieving this at 8x EV/EBITDA (the multiple before the Russia-Ukraine conflict) would value the stock at around £25/share in 3 years.

In the midcap space Wood Group has turned down a third unsolicited £1.52bn takeover bid from rival Dubai-based engineering and consulting company Sidara, stating that it still undervalues the group and its future prospects. Sidara increased its most recent offer by 3.8% to 220p per share on May 21, up from 212p a week prior and the initial offer of 205p. The deadline for a formal bid from Sidara is June 5. All three offers exceed Wood's closing share price of 180p on May 23, with the stock increasing by 3.89%.

FTSE Bias: Bullish Above Bearish below 8389

• Below 8300 opens 8280
• Primary support 8200
• Primary objective 8573
• 5 Day VWAP bullish
• 20 Day VWAP bullish

(Click on image to enlarge)

(Click on image to enlarge)

More By This Author: