Friday’s Master Investor Market Report featuring Intercontinental Hotels, Energy Companies, Housebuilders and Numis Corporation

• The Conservative Party has won an overall majority with 331 seats in the House of Commons. Whilst sterling and UK equities had a good day, analysts are already beginning to warn of future troubles including the promised referendum on EU membership and the costs of a potential exit. Overall views were positive and there was relief that a clear winner had emerged with Howard Archer from IHS Global Insight saying that “the worse scenario was we had election result that resulted in a stale mate and expectations of another election at any minute. That would be bad for business confidence” and that gilts may also be boosted as the Government is freed to pursue deficit reduction.
• The Office for National Statistics has said that the UK trade deficit closed to £2.8 billion in March from £3.3 billion in February. Goods exports were up by 1.4% from the prior month, despite the strengthening pound which Martin Beck, a Senior Economic Advisor to the EY Item Club, said played a role in the widening overall deficit for the first quarter. The monthly surplus in services was £7.3 billion.
• The FTSE 100 rose by 159.87 points to 7,046.82 points; the FTSE 250 grew by 487.97 points to 17,935.93; the FTSE All Share climbed by 88.20 points to 3,814.45 points; and the FTSE AIM All Share finished the day up by 4.70 points at 753.32 points.

Intercontinental Hotels Group (IHG) saw revenue per room rise by 5.9% in the first 3 months of the year with growth present in all regions where the firm operates. The strongest improvement was 6.2% in the Americas, with a relatively sluggish 2.4% in China being the slowest despite management describing trading in the region as “robust”. Shares in the company rose by 61p to 2,820p.

Energy stocks have soared after the Conservative victory in the General Election as fears of a Labour government imposing price caps melted away. Companies in the sector including SSE (SSE) and Centrica (CNA) rose significantly, making gains of 83p to 1,647p and 20.8p to 278.2p respectively. Macquarie commented that “this election result is extremely positive for UK utilities as the Labour base position of a price freeze could, in extremis, have caused financial distress for UK retail companies” but some commentators believe that the renewables sector could face difficulties under the new government.

Housebuilders also saw their share prices grow today after fears about the introduction of a mansion tax had subdued prices in the run up to the election. Halifax’s latest survey of selling prices was also published, showing that the cost of an average home rose by 1.6% in April, beating analysts forecasts. Shares in Barratt Developments (BDEV) rose by 36.5p to 549.5p, Persimmon (PSN) grew by 8p to 1,317p and Taylor Wimpey (TW.) climbed 9.7p to 175.7p.

Revenues for the 6 months ended 31st March fell by 11.2% to £45.7 million at financial services provider Numis Corporation (NUM) as volatile markets in the first 3 months dragged down results. Profits before taxation also dropped to £11.9 million, but management said that there had been a strong start to the second half of the year with a number of substantial corporate transactions. Numis shares fell by 4.5p to 250p.

Quote of the day

“Clearly we have a mandate to get on with the work that we started five years ago.”
― George Osborne