Tuesday’s Master Investor Market Report

– The FTSE 100 rose 59.06 points to 6,732.44.
– The FTSE 250 gained 214.48 points and closed at 17,700.75.
– The FTSE All Share increased by 33.82 points to 3,669.37.
– The FTSE AIM All Share finished 2.48 points higher at 752.30.

UK inflation has returned to 0% after rising last month, with the Office for National Statistics saying that the drop was due to falling food and clothing prices. Bank of England Governor Mark Carney said that inflation would most likely remain subdued in the near future, but may begin to rise around the end of 2015. However, Chris Williamson from Markit questioned whether core inflation figures excluding volatile sectors like fuel and food bore out this hypothesis and said that, “the Bank of England needs to determine whether pay growth will continue to accelerate as firms compete for staff, or whether low inflation will keep the overall rate of increase below levels that would normally worry the monetary policy committee into hiking interest rates”.

Numis cut its rating on Alent (ALNT) from “add” to “hold” but increased its target price to 503p after the company agreed to a takeover offer from US outfit Platform Speciality Products. The deal valued Alent at around $1.35 billion (£0.87 billion) which is a c. 49% premium over Friday’s closing price. Numis Analyst Nick James commented, “this feels like a good price for a decent business, albeit one which was struggling to demonstrate much top line growth of late”. Shares in the business fell by 3.5p to 483.5p today.

Textbook publisher Pearson (PSON) saw its rating reduced from “overweight” to “equalweight” by Morgan Stanley as a result of both contract losses and lower than expected higher education enrolment in the US. Pearson shares fell by 19p to 1,231p.

Consumer travel operator FirstGroup (FGP) announced its results for the three months from 1st April. UK bus and rail services have performed well, while Greyhound services are still facing demand challenges and First Transit is seeing reduced activity in some areas of Canada. Shore Capital rated the firm as a “buy” and commented, “with S&P recently upgrading its credit rating outlook and the business on track to achieve its targets, it is in our opinion only a matter of time before the market turns its attention to the repayment of debt and potential transformational impact this could have on cash flow”. FirstGroup shares declined by 0.6p and closed at 118.5p.

Johnston Press (JPR) said that it has suffered a slowdown in trading during the second quarter of 2015 as well as additional disruption centred around the general election. Business is expected to improve in July, but revenues for the first half of 2015 are now forecast to be around 5% below their 2014 level. Whilst there was some positive news from the digital arm, it did not fully offset the ongoing decline of print advertising. Johnston shares plummeted by 19% to 115p.

Tomorrow’s news today

Burberry (BRBY) and Halfords (HFD) are among the firms that will publish announcements tomorrow morning.

UK unemployment figures will also be published.

Quote of the day

“A wild and crazy weekend involves sitting on the front porch, smoking a cigar, reading a book.”
– Robert M. Gates