The FTSE 100 index closed Friday down 0.26% having endured its seventh straight day of losses. Piling on the pressure last week was the US White House’s decision to scrap a rebate rule that benefited pharmaceutical companies. As a result, pharmas AstraZeneca [AZN] and GlaxoSmith [GSK] dragged on the index due to their exposure to the US pharmaceuticals market.
Elsewhere, a Bank of England official’s comments on a possible cut in interest rates saw home builders on the rise.
At the close of trading last week, the FTSE 100 was 0.05% down from where it had started last Monday.
FTSE 100 winners
Barratt Developments’ [BDEV] share price jumped 5% in midweek trading after Morgan Stanley bumped its price target for the stock from 625.0p to 675.0p. This followed the housebuilder's "robust" full-year trading update. In the update, Barratt said that it forecasts pre-tax profit to come in above market expectations.
Reckitt Benckiser [RB] was up 2.4% on Thursday after paying out $1.4 billion to settle an investigation into an opioid addiction treatment made by its former prescription drugs operation Indivior. News of the settlement also sent FTSE 250-listed Indivior’s share price up 40% on the day.
Amount paid out to settle an investigation into opioid addiction treatment
Persimmon [PSN] was the top riser on Friday, climbing 4.55% following a Bank of England official’s remarks that the bank might cut interest rates to almost zero in the event of a no-deal Brexit. Persimmon had been having a tough time of it since the start of July when half-year results revealed a drop in revenue.
FTSE 100 losers
It was a topsy-turvy week on the FTSE 100 for Ocado [OCDO]. On Monday the company was led the losers as traders worried about the week's trading update, only to be the top gainer on Tuesday, climbing 6.1%. On traders minds was a trading update that showed earnings for the first half of the year had dropped, while fees from international partnerships had increased. In the end, Ocado finished the week down over 6%.
Just Eat's [JE] share price slipped 4.85% in intraday trading on Tuesday after Berenberg downgraded the stock from “buy” to “hold”. The investment bank slashed its target price from 880p to 600p, citing the threat of aggressive competition from Uber’s [UBER] UberEats and Amazon-backed Deliveroo as reasons for the downgrade.
Micro Focus’s [MCRO] share price tanked almost 10% early last week after warning that revenue would fall this year as it continues to merge Hewlett Packard's software division into its operations. Micro Focus's share price came under further pressure on Thursday when Numis cut its rating for the stock from "Buy" to "Add", revising its price target downwards to 2,350p.
|PE ratio (TTM)||4.91|
|Quarterly Revenue Growth (YoY)||-7.50%|
Micro Focus share price vitals, Yahoo Finance, 15 July 2019
What to watch out for this week
On the earnings front the City of London Group kick things off on Monday with full-year results, followed by half-year results from Nichols on Wednesday. Thursday sees Sports Direct International update the market with full-year results. Expectations are that Chief Executive MIke Ashley’s retail empire will post a drop in earnings following the House of Fraser acquisition.
Data releases to look out for include UK unemployment numbers on Tuesday, followed by CPI on Wednesday. Thursday will then see the release of retail sales figures. All should provide clues on how the economy is faring.
Support levels to watch on the index are around the 7450 level, while 7531 should provide resistance.
One FTSE 250 stock to watch
The FTSE 250 finished -0.6 down last week as it got battered by the same economic headwinds that hit the main index. However, unlike the FTSE 100, the mid-cap index did finish Friday in the black following the interest rate news from the Bank of England.
One FTSE 250 stock to keep an eye out for on the midcap index is AJ Bell [AJB]. The share price is up 65% this year and an impressive 78% since the company’s IPO late last year. Revenue and profit soared in the first half of 2019, but a slowdown in new business has seen the stock plateau. With Q3 results on 26 July, investors will be looking for an uptick in new business which would make the current 7.13 P/E valuation extremely attractive.