Aggregates maker CRH led the blue-chip risers on Friday after results from a peer helped offset worries about its US market.
CRH jumped to a seven-month high, up 5.3 per cent to £13.43, after results from Lafarge beat expectations. The French cement maker attributed the jump to higher volumes and prices at its American and western European divisions.
Lafarge’s surprise followed better than expected numbers this week from Vulcan Materials, as well as US data on housing and producer prices that exceeded expectations.
The positive news helped bolster confidence that CRH, which takes about half of its sales from the Americas, would beat previous guidance when it reports full-year results at the end of February.
But analysts also noted US data showing the value of highway contract awards down 40 per cent year-on-year in January. Washington’s current highways funding programme runs out next month and efforts to pass a new bill have stalled in acrimony.
“Given the strength of the US residential market, there is upside in our 2012 numbers,” said Goodbody Stockbrokers. “However, we feel the market could be overestimating the extent of this given that highways [and] infrastructure remains subdued.”
The wider market edged higher, with the FTSE 100 rising 0.3 per cent or 19.69 points to 5,905.07. The index had remained stuck in a 50-point range for two weeks.
Lloyds Banking Group rose 3.1 per cent to 35½p ahead of results on Friday.
“We continue to believe that Lloyds is very attractively valued, hence our buy, but we fear that strong year-to-date performance and some slippage in core profits may cause some concern on results day,” said Deutsche Bank.
Ashmore, the emerging markets manager, lost 1.9 per cent to 390½p after both HSBC and Canaccord Genuity downgraded in previews of the group’s results due Thursday.
“We think the contraction in Ashmore’s revenue margins this year is likely to be significantly more than consensus expectations,” said HSBC. Most recent inflows have been in segregated mandates rather than pooled funds, resulting in lower management fee margins, it said.
Housebuilders were in demand ahead of the sector’s results season next week, with Taylor Wimpey adding 3.7 per cent to 47p and Redrow ahead 2.4 per cent to 130p.
“The fundamental reason to own the sector remains unchanged,” said JPMorgan Cazenove. “Companies do not need to do anything transformational, and do not require any macro improvement in order to improve margins and returns on equity year-on-year over the medium term.” It turned positive on Persimmon, up 4.1 per cent to 588p, and Berkeley, ahead 3.6 per cent to £13.63.
SIG, the builders’ merchant, rose 4 per cent to 107p after an upgrade to “outperform” from Goodbody Stockbrokers. Trading was unlikely to have deteriorated since an upbeat January trading statement and there remains significant scope for SIG to improve profitability, it said.
Retailers were buoyed by an unexpected rise in UK retail sales for January. Sales excluding fuel rose 1.2 per cent from December, against expectations of a 0.3 per cent decline, with internet sales rising to a record 11.9 per cent of the total. Argos owner Home Retail Group climbed 6.1 per cent to 109p and Supergroup took on 5.1 per cent to 550p.
Sports Direct advanced 3.9 per cent to 286¾p after Goldman Sachs added the stock to its “conviction buy” list. An enterprise valuation of 6.7 times current-year operating earnings “does not reflect Sports Direct’s secular online growth opportunity,” said Goldman. It forecast 14 per cent compound annual earnings growth to 2014, of which 11 per cent would come from online sales.
Afrenrebounded by 5 per cent to 131½p. The stock was helped by a bid approach for fellow African explorer Bowleven, as well as talk of interest from the oil majors in Kurdistan.
Soco International rose 3.1 per cent to 313½p following news on Thursday that Perenco had paid $1.29bn for Conoco’s Vietnam assets, including acreage just north of Soco’s TGT field. “The market seems to under-appreciate the value of Soco’s Vietnam portfolio,” said Merrill Lynch. Perenco’s deal valued the oil reserves at between $14 and $19 a barrel, compared with a $10 valuation implied by Soco’s share price, it said.
Soco has the potential to double production in the second half, which “should lead to a step change in cash flow generation that the market appears to ignore,” Merrill added. It repeated “buy” advice.