Thursday 23 November 2017

London market ahead after Donald Trump’s speech on tax reforms

The FTSE 100 Index closed up 9.31 to 7322.82.

Tax Overhaul-Cost
Tax Overhaul-Cost

By Ben Woods, Press Association Chief City Correspondent

The London market eked out marginal gains on Thursday as blue-chip firms with hefty American operations enjoyed a lift after US President Donald Trump revealed a plan for sweeping tax reforms.

The FTSE 100 Index closed up 9.31 points to 7322.82, with Irish building materials firm CRH and the equipment rentals business Ashtead Group sitting among the biggest risers as traders priced in Mr Trump’s tax overhaul.

The major revamp of the US tax code will deeply reduce levies for corporations, with a top tax rate cut from 35% to 20%, sending CRH 79p higher at 2,784p and Ashtead up 42p to 1,803p.

David Madden, market analyst at CMC Markets, said: “Both companies have large operations in the US, and if the American economy is going to potentially experience higher economic growth on the back of the pro-business tax reforms, the firms could rake in higher profits.”

Across Europe, Germany’s Dax was up 0.4% and the Cac 40 in France was 0.2% higher.

On the currency markets, the pound was 0.3% higher versus the US dollar at 1.343 amid profit taking on the greenback, while sterling was flat against the euro at 1.140.

The price of Brent crude was trailing by 0.7% at 57.22 US dollars a barrel amid concerns over tensions in the Middle East following a vote backing independence in the Kurdistan region of northern Iraq.

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Picture of cigarettes

In UK stocks, tobacco giant Imperial Brands fell by more than 4% after it revealed that talks were under way to thrash out a rescue deal for Palmer & Harvey (P&H) to ensure the troubled wholesaler has a “sustainable future”.

The FTSE 100 firm is working with “other stakeholders” to come up with a plan for the 90-year-old group, which is grappling with a substantial debt burden.

P&H, the UK’s biggest supplier of cigarettes, employs around 4,000 people and provides alcohol, groceries and frozen food to 90,000 retail accounts, including Tesco supermarkets.

Imperial Brands is said to be working with Japan Tobacco International (JTI) to throw a financial lifeline to P&H so it can push through a takeover by investment firm the Carlyle Group, according to Sky News.

Shares were down 133p to 3,172p.

Thomson owner Tui was also struggling despite saying it was on track for a double-digit surge in annual profits.

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Tui results

The travel giant said its “primary focus” has been on supporting holidaymakers in resorts impacted by Hurricane Irma, as well as rebooking customers in alternative destinations.

Tui did not give an overall cost of the impact of Irma on its business, but a spokesman said it saw “lower double-digit” costs for cancellations, customer care and repatriation for holidaymakers across Florida, Cuba, the Dominican Republic and some smaller locations like St Martin.

But the group stuck by aims to grow annual underlying earnings by at least 10% in the year to the end of September.

Shares were down 3p to 1,262p.

The biggest risers on the FTSE 100 were CRH up 79p at 2,784p, Ferguson up 133p to 4,898p, Rolls-Royce Holdings up 22.5p to 884p, and Ashtead Group up 42p to 1,803p.

The biggest fallers on the FTSE 100 were Imperial Brands down 133p to 3,172p, easyJet down 22p to 1,201p, Carnival down 83p to 4,730p, and Burberry down 29p at 1,733p.

Press Association

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