The Market Close - Shares in Inmarsat rocket as SoftBank looks for satellite partners - Collins Sarri Statham Investments

Today's Closing Update

U.S. shares traded slightly higher on following a positive read on private-sector employment, but gains were kept in check as investors sought further confirmation from economic reports amid equity valuations considered rich.

European and U.K. shares advanced, breaking a five-day losing streak as investors welcomed a rally in oil prices and continued to follow developments in the U.K. election campaign.

UK manufacturing activity slowed as expected in May, according to a closely followed survey, but economists disagreed over whether it would be enough to buoy the overall economy. The UK manufacturing purchasing managers’ index from IHS Markit/CIPS slipped to 56.7 in May from the three-year high of 57.3 the previous month, but above the consensus estimate of 56.5. With a PMI above 50 indicating growth, the sector seemed to have remained resilient in May, Markit said, with production and new orders both expanding at above-average rates, with good domestic demand and a solid increase in new export business. Some economists suggested this was more to do with a global upturn than a benefit from sterling’s ongoing weakness since the Brexit vote. The output balance softened to 57.4 in May from 58.2 in April and export orders fell back to 53.5 from 55.6.

Shares in Inmarsat rocketed following a report that the satellite communications services provider is in talks with Japan’s SoftBank about a possible tie-up. Sources said that Intelsat plans to announce that its bondholders have rejected a proposal to combine the satellite operator with SoftBank’s OneWeb, making a deal unlikely. It was understood that SoftBank has already started talks with alternative satellite partners, including Inmarsat.

Willie Walsh, the head of British Airways owner IAG, has backed the BA boss in his first interview since the IT fiasco that grounded flights last weekend. He said Alex Cruz, the British Airways chief executive, had done a great job. Mr Walsh said he doubted anyone could have managed the challenge better and that Mr Cruz did well to get planes back in the air as quickly as he did. The IAG boss again apologised for the chaos caused by the outage. “Clearly we will do everything we can to make up [for] the disruption they suffered,” Mr Walsh said. Saturday’s IT meltdown grounded hundreds of flights and disrupted the travel plans of tens of thousands of passengers around the world.

FirstGroup warned of ongoing economic uncertainty in the UK as it posted a jump in annual profits. The firm saw underlying pre-tax profits rise 23% to £207m, following a strong performance from its First Student school bus operation in North America. Aberdeen-based FirstGroup said its American arm benefited from the weak pound. But the pound’s impact on fuel costs left it nursing a £19.8m profits hit across its UK bus and rail divisions. Overall group revenues over the year to 31st March were up 8.3%, at £5.65bn, with operating profit rising 12.7% to £339m. Underlying operating profits in its bus operations fell 29% to £37m, while rail earnings dropped 26% to £53.8m.

Ahead of its agreed merger, Micro Focus International confirmed that US-based HP Enterprise Software saw margins improve but sales continue to drop off in the second quarter. HPE Software, which has been spun off by Hewlett Packard Enterprise into a vehicle called Seattle SpinCo as preparation for its separation, reported second quarter of $685m, down 11% year over year, or down 9% at the underlying level. Reported operating profits of $181m for the quarter represented an improvement in the operating margin to 26.4% from 24.8% in the same period last year, “predominantly driven by the team’s continued focus on disciplined cost controls”.

Smiths Group has agreed to sell the explosive trace detection business formerly owned by Morpho Detection to OSI Systems Inc for an enterprise value of $75.5m. Smiths agreed to buy Morpho from Safran in April 2016 for an enterprise value of $710m and approval of the deal from the US Department of Justice and the European Commission was dependent on Smiths divesting the trace business.

PPG Industries has withdrawn its offer for AkzoNobel after the Dulux owner rejected three bids from the US chemicals manufacturer. Akzo rejected PPG’s third offer of €96.75 per share on 8th May, saying it undervalued the company.

Oil Prices held gains after government data showed a larger-than-expected drop in U.S. crude inventories as refinery activity increased and crude imports fell.

Gold fell as a robust snapshot of private-sector hiring provided support for the dollar and backed expectations for a U.S. interest-rate hike later this month—souring investor appetite for the yellow metal a day ahead of the much-anticipated May jobs report.

Market Close

Market	Index	Change	% Change
UK 100	7,543.8	+23.8	+0.3%
UK 250	20,010.6	+38.5	+0.2%
GER 30	12,667.2	+52.1	+0.4%
FRA 40	5,323.3	+39.7	+0.8%
U.S. 30	21,037.31	+28.66	+0.1%
U.S. 500	2,417.8	+6.0	+0.3%
OIL (BRENT)	51.21	+0.45	+0.9%
GOLD	1,265.36	-3.65	-0.3%

UK Risers & Fallers

Company	Price	Change	% Change
Inmarsat	844.5	+44.5	+5.6%
Paddy Power	8420	+350	+4.3%
3I Group	927	+32	+3.6%
Taylor Wimpey	190	-13.1	-6.5%
FirstGroup	141.8	-7.5	-5%
National Grid	1050	-39.5	-3.6%

Reported Economic Data

Time/Date	Previous	Forecast	Outcome
8:30am: U.K. Manufacturing PMI	57.3	56.5	56.7
12:15pm: U.S. ADP Non-Farm Employment	177k	181k	253k
12:30pm: U.S. Unemployment Claims	234k	239k	248k
2:00pm: U.S. ISM Manufacturing PMI	54.8	54.7	54.9
3:00pm: U.S. Crude Oil Inventories	-4.4m	-2.7m	-6.4m