London midday: Shares soar on US earnings optimism

14th Oct 2009 12:12

Shares are racing away after US bank JP Morgan followed Intel and smashed through forecasts for the third quarter.Futures are pointing to more than a 120 point gain for the Dow when the US kicks off and UK shares are climbing in anticipation.Intel's results came in well ahead of expectations perhaps signalling that economic activity is picking up again, while JP Morgan reported third quarter earnings of $3.6bn, or 82c a share, better than the 52c estimated by analysts. Revenue of $26.62bn was better than the $24.96bn predicted. The icing on the cake came from better than expected trade figures from China, which has sent mining shares sharply higher. China's exports fell at the slowest this year in September.Kazakhmys, Xstrata and Lonmin are all well ahead as is Rio Tinto, which set a new record for iron ore production in its third quarter."We are seeing early signs of a recovery in some of our key markets, although we remain cautious about the near term outlook," Rio chief executive Tom Albanese said.Silver miner Fresnillo is higher but lagging its peers after it said silver production increased 9.3% during its third quarter. The company is on track to achieve a good outcome for 2009 as a whole.Diageo is not joining the party, however, after its chief executive, Paul Walsh, said at the company's AGM that net sales in the three months to 30 September were down 6% on an organic basis in comparison with the corresponding period of last year. Walsh added that customers' stock levels in its biggest market, the US, have not picked up since the end of June.Pub group Punch Taverns is another party-pooper in what has been a bad morning for drinks-related stocks. It reported an annual loss of over £400m as it took a £663m charge for write-downs on the value of its pub estate. Even before the write-down, underlying profits for the year to 22 August fell from £262m to £160m on revenues down from £1.56bn to £1.44bn. After one-offs there was a loss of £405m against a loss of £80m.Fashion group Burberry is a must-have share after a better-than-expected 5% rise in second quarter sales thanks to a good performance in Europe and Asia. Total sales rose to £343m compared with £328m last time, though sales were down 5% at constant exchange rates.Defence giant BAE Systems has traded in line with expectations since its half year results were published at the end of July, it revealed Wednesday. It also said it would deal with any issues that arise from the Serious Fraud Office's (SFO) investigations into allegations of bribery " at the appropriate time and, if necessary, in court". A weaker sterling will benefit the full-year numbers and operating cash inflow in the second half year should be stronger than in the first, the weapons group added. Information services company Experian reported a 1% rise in half year sales and said it remains on track to at least maintain margins, grow profits at constant currency and deliver strong cash flow conversion. International Power is a laggard, however. The power generator said the final price of its 50% stake in the Hartwell Plant, which it sold to Oglethorpe Power, was $148.5m (£93.5m).Cardboard and paper supplier DS Smith said first half pre-tax profits will be 'substantially' ahead of expectations, although lower than last year's levels.Online and mail order retailer N Brown upped its interim dividend by over 50% as strong sales over the internet and a better bad debt picture lifted underlying profits by 13%. Drug developer Phytopharm powered forward after results from two phase two trials showed its Cogane may be a "highly encouraging novel potential treatment for Parkinson's Disease".