London Market: Earnings outstrip expectations

UK stocks are likely to rise in coming days on hopes that British American Tobacco and other companies releasing earnings this week will beat expectations. Dimming prospects of recession may also lift stocks.

Unilever, Lloyds TSB Group and Barclays have topped analysts' expectations over recent weeks.

"Companies have delivered earnings that have been better than lowered expectations,'' said Howard Maguire, who helps manage $20bn in UK equities at Threadneedle Investment Management. "That's what the market is picking up on.''

The FT-SE 100 index rose 0.5 per cent last week, gaining 104.1 points, or 1.7 per cent, to 6205.5 on Friday. BP Amoco led the gainers, rising 5.3 per cent, as crude added as much as 6.7 per cent.

Lloyds, Barclays and other banks could be among the gainers this week as investors consider the threat of recession less likely. Maguire said he's weighing banks.

"We're looking into areas that have been unduly depressed because of fears of recession,'' he said. "It's not as bad as we thought it was going to be.''

Although the Bank of England left the benchmark lending rate unchanged last week, investors still see rates likely to fall from 5.5 per cent by the end of the year. That's good news for banks that benefit from increased revenue from lending.

House builders also benefit as the cost of borrowing slides, encouraging individuals to borrow to buy houses.

"The economy from a cyclical point of view looks OK with interest rates heading down,'' said Khuram Chaudhry, a UK strategist at Merrill Lynch.

Among construction companies releasing earnings this week, Aggregate Industries reports 1998 profit on Wednesday. It could say full-year earnings per share rose to 4.26p from 2.9p last year, according to analysts polled by IBES International.

Tilbury Douglas, a construction company reporting Thursday, could say 1998 earnings per share rose to 20.38p from 18.2p last year, according to analysts surveyed by IBES.

Last week, Wilson Bowden, a UK homebuilder, said 1998 profit rose 36 per cent on strong growth in home sales.

GlaxoWellcome, the world's second-largest drugmaker, was among the leading decliners last week, dropping 3.1 per cent. Vodafone, the UK's largest phone company, lost 2.5 per cent.

These declines reflect a shift out of highly valued growth stocks into areas more sensitive to swings in the economy.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there