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China hopes boost FTSE as Galliford Try buckles on profit warning

Asia-focused financials and miners drive FTSE 100 higher on China optimism, but shares in 'mid-cap' builder Galliford Try slump on profit warning.

China hopes boost FTSE as Galliford Try buckles on profit warning

Asia-focused financials and miners have lifted the FTSE 100 on upbeat housing data from China, while shares in mid-cap builder Galliford Try (GFRD) have taken a dive on a profit warning.

The UK blue-chip index climbed 30 points, or 0.4%, to 7,468, buoyed by slightly faster growth in new house prices in China in March. This signalled a rebound from slowing growth in the previous month, offering hope Chinese government stimulus measures had helped strengthen its economy.

Insurer Prudential (PRU), reliant on Asia for a large proportion of its business, topped the FTSE 100, up 1.9% at £17.35.

Miners also gained, buoyed by the news from China, the world's top metals consumer. Antofagasta (ANTO) led the way, up 1.3% at £10.16.

JD Sports (JD) was among the top risers on the FTSE 250, up 3.7% at 551.4p as the sportswear retailer reported better-than-expected full-year earnings, bolstered by acquisitions and overseas expansion, helping it to navigate a challenging retail environment.

Profits rose 15% while like-for-like sales were up 6%, with shareholders enjoying a 5% rise in its dividend. This was despite a loss of £4.3 million in its outdoors businesses Blacks and Millets, blamed partly on last year’s heatwave.

‘While the management have clearly got their retail offer right and are expanding into new markets the shares already trade on 16 times 2020 forecast earnings which is a premium to the sector, so they are no better than a "hold" for now,’ said Ian Forrest, investment research analyst at The Share Centre.

Ashmore (ASHM) rose 3% to 467p after the emerging markets-focused asset manager reported an 11% in assets under management in the first quarter. 

Galliford Try fell to the other end of the 'mid-cap' index, slumping 18% to a seven-year low of 595p. The house builder said it would be undertaking a strategic review of construction business which would reduce its size, resulting in a fall in profits.

‘Galliford appears to be acknowledging the need for a more disciplined approach with its plan to scale back its construction arm – which faces spiralling costs on some projects particularly the Queensferry Crossing joint venture,’ said Russ Mould, investment director at AJ Bell.

‘Shareholders are entitled to be somewhat disturbed by the fact that as recently as February it was happily expressing its confidence in full year guidance,’ he added. ‘At least Galliford is taking its medicine now with the aim of enjoying a healthier future, underpinned by its higher return regeneration and housebuilding businesses.’

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