Rolls-royce drives up index with restructuring plan

THE FTSE 100 leapt to a threeweek high yesterday, with Rollsroyce helping drive the index north after announcing a sweeping restructuring plan aimed at saving £400 million per year.

London’s top flight rose 62.08 points, or 0.81%, to end at 7,765.79.

Rolls led the risers after announcing that 4,600 jobs are being axed in the firm’s latest shake-up, with the engineering giant looking to slash costs by another £400m a year.

The group said the bulk of the cuts would affect the UK workforce and be made over the next two years, with around a third expected by the end of 2018.

Investors warmed to the news, with shares rising 54.2p to 882.8p by the close.

The FTSE 100 was also helped by the European Central Bank (ECB), which said it would not hike interest rates until 2019, boosting stocks across the continent, as well as sterling weakness versus the dollar following US retail sales data.

Connor Campbell, financial analyst at Spreadex, said: “The UK index benefited from the pound’s downturn against the dollar, the strength of the US retail sales reading (and Wednesday’s Fed rate hike) outweighing the UK’S own retail beat.”

Sterling was trading 0.4% down against the dollar at 1.332, but rose by 1% against the euro to 1.145 following comments from the ECB.

Across Europe, France’s CAC 40 was up 1.56% and Germany’s DAX rose 1.68%.

In stocks, Revolution Bars shares slumped after the company issued a profit warning, saying it had been affected by both unusually hot and cold weather.

The bars business said its sales fell by 1.7% on a like-forlike basis in the second half to June 9, sending shares 11.6p lower to close at 145p.

Shares in Majestic Wine, meanwhile, went in the other direction after it swung to a fullyear profit.

The wine warehouse chain – which has 210 branches in the UK and two in France – recovered to an annual profit of £8.3 million for the 12 months to April 2, against losses of £1.5m the previous year.

The stock closed up 9p at 459p.

N Brown shares ended the day lower after announcing it is set to close 20 stores, putting 270 jobs in doubt. The group, which owns JD Williams and Simply Be, entered into a consultation with staff yesterday, saying weak footfall on the high street meant it had to close stores.

The company expects to incur a one-off cash cost of between £18m and £22m if it closes all 20 stores. Shares closed down 14.9p at 182.8p.

Brent crude was trading 0.7% down at 75.9 US dollars a barrel.

The biggest risers on the FTSE 100 were Rolls-royce up 54.2p at 882.8p, Smurfit Kappa up 96p at 3,052p, Centrica up 4.45p to 153.25 and BT up 6.1p at 214.1p.

The biggest fallers on the FTSE 100 were Persimmon down 79p at 2,727p, Unilever down 116.5p at 4,033.5p, Relx down 45.5p to 1,609.5p and Severn Trent down 51p at 1,880p.

NEW YORK

THE S&P 500 edged up and the Nasdaq reached another record closing high yesterday after the European Central Bank said it would avoid raising interest rates until mid-2019, and data showed US economic strength.

The strong retail sales numbers came a day after the Us.federal Reserve increased its key interest rate and hinted at the possibility of two more by the end of 2018.

The ECB announced it would end its bond-purchase programme at year-end but signalled that any interest rate hike was still distant.

“People are looking at potential tightening on the part of the ECB and realising it may not come to fruition,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. “I think people saw that today and thought that was positive news.”

The Fed’s rate rise on Wednesday was accompanied by an upbeat economic assessment. This was followed by yesterday’s better-than-expected retail sales data and unemployment falling to a near 45-year low, underscoring the bank’s optimism.

“(The Fed’s) ability to raise rates more, three or four times, that’s actually good news,” said Doug Cote, chief market strategist at Voya Investment Management in New York.

The Dow Jones Industrial Average fell 25.89 points to 25,175.31, the S&P 500 gained 6.86 points to 2,782.49 and the Nasdaq Composite added 65.34 points to 7,761.04.