Tuesday’s Master Investor Market Report

– The FTSE 100 fell 36.24 points to 6,753.80.
– The FTSE 250 slipped 38.64 points to 17,839.79.
– The FTSE All Share dropped 17.63 points to 3,685.06.
– The FTSE AIM All Share finished 2.12 points lower at 772.00.

The UK trade deficit narrowed from £3.1 billion in March to £1.2 billion in April. The Office for National Statistics said that the development was due to a decline in oil, art and furniture imports as well as higher goods exports. Vicky Redwood, Chief UK Economist at Capital Economics, said that “although the near-term outlook for the external sector does not look fantastic, at least net trade this quarter looks unlikely to repeat the first quarter’s big negative contribution to overall GDP growth”.

News was less positive on the home front as poor weather through May cooled high street demand. According to the British Retail Consortium, sales values were flat on a like-for-like basis from a year ago. This is seen by analysts as a further disappointment after last month’s weak results. Despite improved real wages, price competition has continued and margins remain weak. June sales are also likely to be lower than 2014, due to a tough comparative.

Vedanta Resources (VED) has responded to speculation that it might formally merge with its subsidiary Cairn India by saying that it is committed to maintaining its premium listing and that Vedanta will make appropriate disclosures as required. If such a transaction were to take place it could be considered a reverse takeover. Vedanta has previously said that it is looking to simplify its structure and Societe Generale commented that an acquisition would give Vedanta access to the $2.7 billion (£1.75 billion) of cash held by Cairn which would ease its debt concerns. Shares in Vedanta rose by 28.5p to 573p.

WPP (WPP) said that revenues in the first 4 months of 2015 were up by 8% in sterling terms at £3.7 billion. Net margins were also significantly higher than in the same period of the prior year. However, the company also warned that sales growth in April was softer than expected, but management were satisfied given the current macroeconomic environment. The shares dropped by 17p to 1,470p.

Computer equipment manufacturer OMG (OMG) crept up 1.75p to 45.25p after its pre-tax losses for the six months ended 31st March widened to £2.8 million. Group revenues fell by 4.4% to £11.3 million after delivery of a large contract was delayed to the second half of the year. N+1 Singer retained confidence in OMG and said that “we make only minor adjustments to our forecasts and believe the group will continue to deliver increased shareholder value”.

The Competition and Markets Authority has said that BT’s (BT.A) takeover of EE will be subject to a “phase 2” investigation due to fears that the mobile phone market would be adversely effected. BT shares rose by 2.5p to 441.3p.

Optical components specialist Gooch & Housego (GHH) posted a 23.5% rise in pre-tax profits to £6.3 million for the six months ended 31st March, after a strong performance in the industrial sector caused by exceptional demand for the firm’s solid state and fibre optic laser products. Shares in Gooch & Housego ended the day flat at 790p.

Human resources outfit Penna Consulting (PNA) took advantage of an improving UK economy to boost revenues for the year ended 31st March by 22% and increase pre-tax profits to £4.6 million. The firm’s results were also buoyed by the full integration of Saville which was bought in December 2013. The shares climbed 25p to 172.5p.

Shares in marketing communications firm Creston (CRE) jumped 6p to 134p after revenues grew by 2.7% to £76.9 million for the year ended 31st March. Digital developments drove the improvement in turnover, which pushed profits before taxation up by 33.6% to £9.6 million. However, the insight and health arms contributed less to earnings than in the prior year.

Tomorrow’s news today

First Group (FGP), FlyBe (FLYB), Tricorn (TCN), Best of the Best (BOTB), and Ensor Holdings (ESR) are all due to report full-year results tomorrow. On the economic front, we are expecting UK industrial production data.

Quote of the day

“I have never known much good done by those who affected to trade for the public good.”
– Adam Smith