The FTSE 100 (FTSEINDICES: ^FTSE) edged higher during early trade this morning, increasing by 55 points, or 0.8%, to 6,834. In the US, the Federal Reserve Chairwoman Janet Yellen said that economic growth is rebounding, and pledged to keep interest rates low “for a considerable time”. The Dow closed up 98 points and London’s benchmark index followed it higher. A survey by data company Markit, meanwhile, revealed 60% of British households believe the UK central bank will increase interest rates by Christmas. Investors will be closely monitoring Iraq where jihadist militants have seized key towns and reportedly attacked the country’s largest oil refinery.
Shares of SuperGroup (LSE: SGP) rallied after a series of recent falls. The fashion retailer warned in May that profits would be “towards the lower end” of estimates and the shares subsequently lost 20%. Sales of the Superdry brand fell 1.3% but the chief executive, Julian Dunkerton, was resolute that after nine quarters of like-for-like growth “taking a quarter out of context would be crazy”. Long-term investors are buying into the brand’s growth potential and, according to Investec, the sell off was overdone. SuperGroup was the FTSE’s leading riser this morning, up 8% to 940p.
Rolls-Royce (LSE: RR) (NASDAQOTH: RYCEY.US) was the second biggest gainer during early trade after unveiling a £1bn share buyback, following the completion of the sale of its energy turbine business to Siemens. John Rishton, the chief executive, said “as no material acquisitions are planned, and reflecting the strength of our balance sheet, we will return the proceeds of the Energy sale to our shareholders”. The announcement was taken positively by the market and the shares rose by 6% to 1,071p. Rolls-Royce, which operates four divisions, employs 2,400 staff in its energy arm, and the sale will allow the company to focus on the core business. Siemens’ energy sector, meanwhile, has 83,500 staff.
Lastly, printing technology group Xaar (LSE: XAR), which sold off heavily earlier this week on lowered revenue projections, recovered by 5% to 524p. The firm’s short term prospects are under pressure and year-to-date the shares have fallen by half. After posting exceptional growth in 2013, when group revenue increased by 55%, the firm has backpedaled. There were always dangers, but looking long-term we could see earnings driven up by the delivery of new products and the entry of new markets, such as packaging. Xaar is facing increasing competition and it will need to invest in technology to maintain its lead.
Mark does not own shares in any company mentioned.