Tuesday’s Stock Market Report featuring IAG, Antofagasta, Micro Focus International and AdEPT Telecom

The Markets

Activity in the UK services sector accelerated during March according to the latest PMI survey data, which suggested the sector experienced its quickest rate of expansion since August. Markit, which carries out the industrial surveys, said that results for the first three months indicated UK GDP growth of 0.7%, which would be a slight acceleration from the 0.6% level that the Office for National Statistics estimated for the final 3 months of 2014.

The Greek Government has claimed that Germany owes Greece €279 billion (£204 billion) for the country’s occupation and looting during the 1940s. This is the latest development in the struggles surrounding Greece’s attempts to renegotiate its debts, but Germany has retaliated with claims that the matter was legally and politically settled before reunification.

At the London close the Dow Jones was 82.33 points higher at 17,963.18 and the Nasdaq was 20.69 points ahead at 4,371.67.

In London the FTSE 100 closed 128.31 points higher at 6,961.77 and the FTSE 250 climbed by 252.65 points to 17,521.48. The FTSE All-Share increased by 65.44 points to 3,761.47 while the FTSE AIM Index rose by 6.66 points to 721.91.

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Broker Notes

Jefferies reiterated its “buy” rating and 900p price target for mine operator Antofagasta (ANTO). The broker said that Antofagasta possesses significant advantages over its competitors, including its strong balance sheet and exposure to copper’s anticipated price recovery. However, low organic growth was flagged as cause for concern. Shares grew by 22.5p to 740.5p.

JP Morgan Cazenove downgraded airline owner IAG (IAG) from “overweight” to “neutral”, as part of a shift in its position on the overall industry away from legacy firms and towards budget carriers. The broker said it believes firms such as Easyjet and Ryanair offer stronger returns and IAG faces are also exposed to fierce competition from the far east. IAG shares dropped by 7p to 591.5p.

Engineering support services outfit Babcock International (BAB) was upgraded to a “buy” rating at Charles Stanley, with a target price of 1,014p. Deutsche Bank reiterated its own “buy” position for the business and BNP Paribas raised its target price to 980p last Tuesday. Shares in the company climbed 28p to 1,013p.

Blue Chips

Mineral giant Rio Tinto (RIO) has completed an A$560 million (£287.4 million) off-market share buyback tender at a price of A$48.44 (£24.86). The scale of the tender was expanded due to strong demand from stockholders. The on-market buyback will continue until the end of the year with a total budget of US$1.57 billion (1.05 billion pounds). Shares in Rio rose by 111p to 2,862p.

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Mid Caps

International software products firm Micro Focus International (MCRO) said that the strengthening of the US dollar against other key currencies means that full year financial performance will not meet prior guidance, with revenues anticipated to be around $70 million (£47.1 million) below expectations. The firm has completed its strategic integration review and will be moving it forwards in the coming months. The shares fell by 2p to 1,181p.

Small Caps

The board of voice and data services provider AdEPT Telecom (ADT) has increased its recommended final dividend to 2.5p after net debt fell faster than expected during the year ended 31st March. Management said it expects EBITDA to be roughly 14% ahead of its 2013 level, but warned that turnover growth would be slightly below market forecasts. The shares grew by 10p to 155p.

Construction equipment manufacturer Somero Enterprises (SOM) increased its revenues by 32% to $59.3 million (£39.9 million), driven by an expanded presence in China and excellent sales in North American markets. The Russian and Middle Eastern arms of the business where negatively impacted by political factors in the regions. The shares climbed by 19.46p to close at 134.96p.

Gold-focused minerals outfit Amara Mining (AMA) posted a loss before tax of $7.9 million (£5.3 million) during 2014 as the company continued to work towards production at it Yaoure site. Indicated resource levels were increased by 466% and a full pre-feasibility study including metallurgical testing is underway. Amara shares rose by 1.37p to 15.5p.

Cloud computing services firm Nasstar (NASA) more than quadrupled its revenues to £11.2 million during 2014 following the acquisition of e-know.net and Kamanchi earlier in the year. The loss before taxation narrowed to £1.9 million from £3 million in the prior year. Nasstar is focused on adding sales capacity to continue growing in the current year. Shares rose by 0.25p to 8.87p.

Printer Grafenia (GRA) has said that its performance has continued in a similar fashion since its last release and its final results for the year ended 31st March will be in line with market expectations. The firm met its performance targets for its new products and initiatives. Full financial details will be published in early June. The shares ended the day flat at 18p.