FTSE 100 oil majors Royal Dutch Shell (LON:RDSA) and BP (LON:BP) are among this Friday’s UK share prices to watch, finding support in a rise in oil as tensions in the Middle East returned to plague investors. Semiconductor company IQE (LON:IQE) meanwhile has tumbled after warning on profits.
Oil shares in demand on Friday
Oil shares have been in demand, tracking oil prices higher, amid tensions in the Middle East, as Iran shot down a US military drone. President Donald Trump meanwhile tweeted that Iran had ‘made a very big mistake’. Royal Dutch Shell (LON:RDSA) is up by about 1.5 percent in early afternoon trade compared with about a 0.2-percent gain in the benchmark FTSE 100 index, while shares in blue-chip peer BP (LON:BP) are changing hands about 1.7 percent higher.
Elsewhere on the FTSE 100 index, Halma (LON:HLMA) has been little moved by news that the safety, health and environmental technology group has inked a deal to acquire Ampac Group, a fire and evacuation systems supplier in the Australian and New Zealand markets, for A$135 million (£74 million). The blue-chip group said that the acquisition would extend its geographic footprint.
Halma’s share price is marginally underperforming the London market with about a 0.15-percent drop intraday. Today’s performance comes after UBS lifted its stance on the shares yesterday, pointing to improving end market signals and M&A growth. Sharecast quoted the broker as commenting that with the share price up around 40 percent year-to-date, short-term risks are skewed to the downside at current levels, but fairly reflecting the long-term growth potential. The broker reckons that the stock is currently pricing eight percent implied long-term growth.
Rolls-Royce Holdings (LON:RR) is in the doldrums as JPMorgan reaffirmed the company as an ‘underweight’. Sharecast reports that the broker has pointed to a weakening market for wide body jets and the European Union’s drive to reduce the hit to the environment from aviation which, they argued, eft the engineer’s guidance on research and development looking ‘unrealistic’. Rolls-Royce’s shares are about 2.4 percent worse off.
In smaller UK share prices to watch, IQE, which makes semiconductor wafers for chips, has tumbled this Friday, after warning that its annual revenue would be lower than expected.
“These are unprecedented times for the global semiconductor industry as geo-political conditions affect interconnected global supply chains,” Dr Drew Nelson, Chief Executive of IQE, said in the statement. “It is now clear that the impact of Huawei’s addition to the US Bureau of Industry and Security’s Entity List is having far-reaching and long-lasting impacts on global supply chains.” The results prompted Peel Hunt to slash its full-year earnings per share estimate in half.
“With the global handset growth now at risk, and the infrastructure growth hampered by supply chain complications, we move our FY19 revenue forecast to £146.7mln (vs £172.2m previously and IQE’s new guide of £140-160mln) and adj operating margin forecast to 5.1 percent (vs 10.0 percent previously),” the broker said in a research note, as quoted by Proactive Investors. Canaccord Genuity in turned slashed its valuation on the shares. Sharecast, however, quoted the analysts as also commenting that “the bad times rarely last forever”.
“We have seen a few semiconductor cycles before and believe the current weakness will not persist forever with a cyclical rebound only a question of time,” the broker elaborated. IQE’s shares are down by more than 27 percent.
In other UK share prices to watch, Trainline (LON:TRN) has made its market debut in London today, pricing its initial public offering at the top of its targeted range. Investors, however, have reacted positively to the float, with the shares trading at about 423, above the company’s IPO price 350p. Trainline’s admission on the LSE’s Main Market and the start of unconditional dealings is scheduled to take place on June 26, and the company expects to be considered eligible for inclusion in the FTSE UK Index Series in due course.
Next week’s UK share prices to watch
While the summer lull in corporate reports is set to continue next week ahead of the next reporting season, Tullow Oil (LON:TLW) and Wood Group (LON:WG) are set to provide some excitement on Wednesday, scheduled to update investors on their recent trading. Serco Group (LON:SCRP) will follow with a trading announcement on Thursday, after it emerged this week that Babcock (LON:BAB) had rejected its takeover approach.
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