EmailAs markets recovered some ground on the latest twists in the Scottish referendum, Tullow Oil is leading the way on hopes for a project in the Ivory Coast.
The company's shares have jumped 11.5p to 709p as Japanese trading house Mitsubishi bought a 20% stake in a deepwater oilfield off the coast of the West African country. Tullow has a 30% share in the block, and news of the investment has cheered investors. Tullow has had a volatile ride in recent months, with disappointing results from drilling in Mauritania, Ethiopia and Norway leading to $402m of writeoffs but positive results elsewhere including Kenya.
Overall the FTSE 100 has added 14.04 points to 6813.66 as a YouGov poll showed the no campaign in the Scottish vote holding a slim lead and retailers being urged to back the retention of the union.
But with US retail sales later, ahead of next week's Federal Reserve meeting, as well as worries about sanctions against Russia and possible US air strikes in Syria, investors remained cautious. Mike McCudden at Interactive Investor said:
Looking like a relatively subdued morning as investors await US retail sales data later today which could set the scene for a hawkish statement from the Fed next week. Furthermore, with enough potential banana skins lying in wait from the ebb and flow of the Scottish referendum to the euro zone, where the cracks are getting wider by the day, risk averse investors may be well advised to look for safe havens.
Supermarkets were among the risers, with Morrisons up 2.3p at 180.1p in the wake of its results this week, and J Sainsbury 3.1p better at 288.4p.
Among stocks with Scottish links, Royal Bank of Scotland has risen 2.2p to 348.2p, Lloyds Banking Group is up 0.32p at 74.40p, Weir is up 15p at £27.35 but Standard Life has slipped 1.7p to 411.7p.
But Whitbread has fallen 33p to £42.95 as UBS moved from neutral to sell and cut its price target from £44.50 to £42. The bank said the company's Premier Inn business could be hit by shared accommodation operations such as Airbnb:
While we estimate 55% of Whitbread clients travel for business and the company operates in the UK midscale and economy segment we do not think they will be immune from some of the impact from shared accommodation, given (1) Airbnb's current customer profile (leisure travel), (2) Importance of London for Whitbread (We estimate Airbnb is 3% of London accommodation supply now) (3) Future launch of Hub by Premier Inn might face competition which was not present six years ago and (4) Shared accommodation sites might have an impact on demand for Whitbread's international business.
Current hotel trading [is] expected to be strong but comparatives [will] get tougher. We see the current valuation as full, and given the around 5% downside to our price target we downgrade the shares.
One of the day's biggest losers so far is Aveva, off 465p or 21% to £17.03 after a shock profit warning. The software group said it would take a £14m hit from currency movements and the timing of contract renewals. Restructuring its sales organisation would also hit revenues, it said.
Overall it expected first half revenues of between £84m and £90m, compared to City expectations of around £107m. Analyst Julian Yates at Investec said:
Aveva has announced a surprise profit warning, flagging not only previously announced factors (rental timing, foreign exchange) which are not a concern to us, but also indicating some underlying weakness in its core market, which is more worrying. The company is looking to take some action on the cost base, which we see as sensible, but suggestive of market softness as opposed to a one-off. No 2015 guidance has been given, but our initial analysis suggests a 15% or so downgrade to 2015 earnings per share.
Today's news is disappointing as we felt the strength of the business model would prevent such a surprise downgrade. However we still see the model as solid and do not see this downgrade as a start of a business heading into a downward spiral. Instead, our initial reaction is that it reflects a re-basing of forecasts to better match the market environment. Ahead of more detailed analysis, we place our forecasts, target price and recommendation under review.
;