Leading shares continue to show resilience in the face of the atrocities in France on Friday.
Investors seem to believe there will be no lasting effects on the global economy from the Paris attacks. But at the same time, any concerns that they might dent consumer confidence and slow down growth has prompted talk that central banks might decide to increase financial stimulus to support the economy (the European Central Bank) or not raise rates this year as expected (the US Federal Reserve).
So European and Asian markets have taken their cue from an overnight rise on Wall Street, which saw the Dow Jones Industrial Average end 1.3% higher.
As the FTSE 100 rises 102.55 points to 6248.93, the biggest climber is Smiths Group. Its shares have jumped 92.5p or nearly 10% to £10.18 after the engineering group said its expectations for the year were unchanged despite a 4% decline in first quarter revenues due to the continuing weakness in oil and gas markets. Changes in pension funding will boost annual free cash flow by £36m, the company said.
Analysts at Jefferies issued a buy note, saying:
Today’s trading update was unlikely to contain positive news – and it does not – but trading is broadly in line with expectations, something of a moral victory, in our view. That suggests Smiths is displaying the greater vitality the previous management sought to instil. There is some good news on pension funding, too.
Smiths has also been supported as investors were reminded of its detection business in the wake of plans for increased security following the Paris attacks. Tony Cross at Trustnet Direct said:
The diversified engineering group is clearly managing the downturn in oil and gas well, but on top of this its exposure to high tech body scanners used to enhance security is arguably another reason they’re finding support.
Meawhile Rolls-Royce, whose engines are used by military as well as civil aircraft, is up another 22p to 550p as attacks on Syria increase. Defence aerospace accounts for around 15% of Rolls’ revenues last year.
Travel and hotel companies, hit on Monday on worries about a slowdown in business after Paris, have recovered some lost ground. Tui is up 17p at £11.05, InterContinental Hotels has added 27p to £24.88 and British Airways owner Intercontinental Airlines is 9p better at 585p.
But easyJet is down 52p at £17.31 after a disappointing update, while Imperial Tobacco has slipped 29p to £35.60 as recent takeover froth subsides a little.
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