Back after a long weekend, UK investors enjoyed a relatively quiet morning on world markets. Fed president James Bullard raised the prospect of a US rate hike this summer, while Reuters reports that Greece's finance minister has written to creditors to say that the demands under the latest bailout package are too onerous and cannot be fulfilled. Read The Trader Nicole Elliott's morning update here.
IC TIP UPDATES:
St Modwen Properties (SMP) continued to trade well in the first five months of this year, and expects to crystallise some of the gains from its development portfolio which currently stands at 1.7m square feet. St Modwen Homes now has 14 sites under development with another four expected to start later this year. Meanwhile, the New Covent Garden Market site is expected to achieve vacant possession by Spring 2017, at which point the company will explore its options of whether to sell, or develop the site itself or through a joint venture. Buy.
Investors in Flowgroup (FLOW) stomached a blow on Friday after the boiler specialists were forced to announce bad news out of the Department of Energy and Climate Change. The government body suddenly proposed to cut the number of UK mCHP boiler installations that can benefit from feed-in tariffs from 30,000 units to 1,560 in 2017, 1,560 in 2018 and 390 for 2019. The news sent the group’s share price down 20 per cent on Friday and it continued to fall in early trading this morning. Flowgroup is no stranger to disappointing regulatory changes and has proven its capacity to rebound before now. But the share price is now down on our November speculative buy tip, and we are reviewing our recommendation.
KEY STORIES:
Sales soared by more than a quarter at Kainos (KNOS), driving adjusted pre-tax profits up 19 per cent to £14.1m. The IT, consulting and software group also signed up 35 clients - including Netflix and Shire - for its Kainos Smart automated testing tool. But unimpressed investors sent its shares down 4 per cent in morning trading.
OTHER COMPANY NEWS:
Sales at Renold (RNO) fell 9 per cent in the year to 31 March as the industrial chains and power-transmission specialist continued to struggle in the face of weak industrial activity. But a brighter outlook for the 2017 financial year and the positive impact self-help had on stemming operating losses triggered a 2 per cent rise in the share price.
