The FTSE 100 gained ground on Thursday as solid developments from Rentokil and Entain added to general optimism around UK interest rates.
London’s leading index was 0.5% higher at the time of writing.
“There was enough enthusiasm towards shares in industrials, energy producers and financials to stop the FTSE 100 from going into reverse amid the latest disappointment from China and a slump in profit from packaging group Mondi,” said Russ Mould, investment director at AJ Bell.
A good start to the session for the FTSE 100 was made even better by the European Central Bank’s decision to cut rates by a further 0.25% to 3.5%.
After UK inflation fell to 1.7% yesterday, the ECB’s move to cut rates lends further weight to the view the Bank of England will cut rates in November and possibly again in December. Equity bulls will be over the moon with sustained rate cuts by the world’s major central banks.
Entain
Entain shares jumped 5% after revealing encouraging gaming net revenue figures in their joint venture with MGM and said they saw the UK and Ireland returning to growth sooner than first thought. The new CEO also made an impression with comments on speeding up the improvements to operations.
“Ladbrokes owner Entain’s new CEO Gavin Isaacs is certainly going out on the front foot after just over a month in the job. After the hints dropped in September’s strategy update, it’s no huge surprise to get an upgrade, albeit a small one, in today’s review of the third quarter,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“That’s been helped by underlying online Net Gaming Revenue improving by 9% which included a sooner-than-expected return to growth in the UK & Ireland.”
Rentokil Initial was the FTSE 100’s top gainer as investors cheered the first bit of good news from the pest control company in some time. Investors will be relieved to see Rentokil’s sales grew 3.6% in the third quarter on a constant currency basis following down beat warnings earlier in the year.
There was also cause to be mildly optimistic about North America where the group is taking measures to realign its cost base. The integration of the acquired Terminix into the group was said to be going well suggesting greater synergies in the coming periods.
“While today’s material bounce in the share price for pest control firm Rentokil will be sweet relief for shareholders who have endured a tough period, the move is worth putting in context, Russ Mould explained.
“The shares had been weak heading into the third-quarter update so they are now only modestly higher over the course of the last week and are still down more than 20% since September’s profit warning.
“Investors will have been reassured by the fact full-year targets remain unchanged and by the action taken to boost organic growth in North America and bring costs back under control. The company has also revamped its senior leadership team across the Atlantic.”
Rentokil Initial shares were 9% higher at the time of writing.