Despite the positive close in the US yesterday evening UK stocks have largely opened flat this morning, with the FTSE’s gains derived almost entirely from the sharp move higher in Vodafone.
The telecoms giant is trading up over 9% after confirming they are in talks with US partner Verizon over the sale of their 45% stake in its wireless business.
The much anticipated news has propelled the stock to fresh highs above £2 per share and leaves the firm’s shareholders in celebratory mood early on.
At the other end of the index outsourcing group Serco
are suffering double digit losses after the group admitted overstating data on a key prison contract.
50% of group revenue is derived from government contracts, and Cantors point out that a worst case scenario where the discrepancy causes the government to freeze Serco out of future contract considerations would be a disaster for the share price. They have cut the stock from buy to hold accordingly.
Engineering group Melrose
are having a more positive morning, up 4% at fresh 12 month highs after announcing positive H1 results that leave the group on course for a fruitful 2013.
Signs of an improving order book for 2014 added further confidence, and a 6% rise in the interim dividend provided a cherry for the top of the cake.
On the macro front a big afternoon of US data could spark considerable volatility with Q2 GDP estimates expected to show 2.2% growth.
Those questioning the wisdom of short term tapering will voice concerns over the sustainability of the numbers in Q3, with Jobless Claims expected to show no real change at around 330k.
Both numbers will be open to significant interpretation as the market weighs their likely impact on the Fed’s asset purchases rather than the strength of the data itself…
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