Spreadex Market Update

FTSE falls as Centrica and BAE Systems sound alarm; Barclays up on dividend increase



In an overcrowded day for FTSE 100 earnings, the UK index found itself falling back towards 7200 as investors tried to sift through the latest updates.

Despite setting aside a £150 million chunk of change to cover the UK’s ‘economic uncertainty’ – come on, guys, just say Brexit – and posting a 1% drop in pre-tax profit to £3.49 billion, the fact Barclays more than doubled its full year dividend, whilst also lifting its basic earnings per share to 9.4p from 2017’s 10.3p loss, meant that investors reacted warmly, sending the bank 4% higher.

That was, however, maybe were the good news ended for the FTSE’s reporting firms. Plunging more than 10%, Centrica ran out of gas on Thursday, repeating its warning about the profit-impact of Ofgem’s price cap while stating that its target range for average adjusted operating cash flow ‘is under some pressure’.

On the surface, BAE Systems was feeling positive, saying it expected mid-single digit underlying earnings growth in 2019, a big improvement on 2018’s flat performance. However, it undermined all that by reminding investors it is ‘subject to geopolitical uncertainties’, the kind that could scupper its forecasts. With such doubt hanging over the financial year investors jetted off, causing BAE to drop 6%.

As for the Eurozone, the DAX pushed a bit further above 11400 after rising 0.3%. Whether it can maintain those gains is going to be dependent on the state of the flash German manufacturing and services PMIs; the former is forecast to bounce out of contraction territory, just, while the latter is expected to tumble from 53.0 to 52.8.

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