The Master Investor Market Report featuring Lloyds, Rentokil Initial, Pure Wafer and HaiKe

• New mortgage approvals dropped slightly to 61,341 during March, according to the latest figures from the Council of Mortgage Lenders. This disappointed analysts who had forecast a rise to 62,500. Net mortgage lending was flat at £1.8 billion and consumer credit grew to £1.2 billion as effective interest rates dropped. The CML’s Chief Economist Bob Pannell said that “sentiment and activity are showing early signs of improvement, and should be further supported by the effects of stamp duty reform”.
• The latest Manufacturing PMI survey data for the UK has shown activity in the sector slowing substantially during April, although it still indicated growth in the month. Export orders fell significantly, supporting suggestions made in the wake of last week’s shock GDP figures that the sluggish global economy was having a material impact on the UK. David Tinsley from UBS said that “the source of the drop may be an indicator that the appreciation of sterling against the euro is having an impact on UK manufacturing competitiveness”.
• The FTSE 100 rose by 25.32 points to 6,985.95 points; the FTSE 250 declined
  by 6.36 points to 17,468.27; the FTSE All Share grew by 10.69 points to 3,770.75 points; and the FTSE AIM All Share finished the day up by 0.37 points at 753.64 points.

Lloyds (LLOY) saw its total income for the 3 months ended 31st March increase by 3% to £4,644 million, driven by a 7% improvement in net interest income to £3,021 million, which outweighed a significant fall in other income. The firm’s profits before taxation declined by 11% despite better underlying results due to losses on asset sales as well as the residual effects and disposal costs of the TSB. Augustin Eden for Accendo Markets said that at current price levels “Lloyds Banking Group could be the bargain of the decade” as the Government has declared its intent to sell its remaining stake. The shares rallied 5.49p to 82.87p.

Pest control outfit Rentokil Initial (RTO) recorded a 1.4% increase in revenues during the first quarter, earning £417.8 million during the period despite sluggish European markets and adverse currency movements. Demand has been strong in the UK, Asia and the Americas, with emerging market sales improving by 26.4%. Management said that the company was on track to meet its full year guidance. Analysts from Bank of America Merrill Lynch said they “believe improving GDP growth in the euro zone may help Rentokil as the year goes on, which is one of the reasons we are positive about the outlook”. The shares rose by 2.7p to 137p.

Photovoltaic systems and chip processing firm Pure Wafer (PUR) has finalised a settlement with its insurers relating to a fire that gutted its Swansea facilities in late December. Due to the extent of the damage, the facility was fully closed and many customers have migrated their business to competitors. As a result of this, management do not plan to reopen the site in the near or medium term and will instead return the received cash lump sum to shareholders in the near future. Due the terms of the agreement, the exact amounts involved cannot be revealed. Pure Wafer shares rocketed upwards by 50.5p to 107.5p.

Specialty chemicals producer HaiKe (HAIK) broke into profit from continuing operations after selling off its loss-making operations. However, revenues fell due to difficult economic conditions on the Chinese mainland. Including the disposed refinery business and other discontinued divisions, the firm made a loss of CNY362 million (£38.5 million). Management expect the firm’s performance to stabilise in the coming months. The shares declined by 4.75p to 18.25p.

Tuesday’s news today

Greene King (GNK) will make a trading announcement.

Construction PMI figures for the UK will be posted, as will US balance of trade data.

Quote of the day

“Don’t fight force. Use Them.”
― R. Buckminster Fuller