Investors cash in some profits after recent rises but BP bounces after better resultsLeading shares have fallen from record highs, hit by a spate of profit taking and renewed uncertainties over the global economy.Despite signs of progress in the prolonged attempts to solve Greece’s financial problems, the FTSE 100 has fallen 73.11 points to 7030.87. Investors are cautious ahead of the UK election, as well as the US Federal Reserve meeting this week. While no one expects an interest rate rise now or even in June, given the recent weak data, there is still disagreement about when the Fed will sanction dearer borrowing costs. Mike McCudden, head of derivatives at Interactive Investor said:In early trade investors appear to be treading cautiously ahead of the Fed?s two day meeting despite low expectations of any change to rate policy. With the strength in equities of late, investors are looking for any excuse to lock in some profits and Fed meetings tend to provide a prompt.Whitbread news is somewhat mixed. On the downside, the current chief executive is to retire, raising some uncertainty, moves to target selected overseas markets bring increased risk and potential currency headwinds, whilst the current valuation is seen as leaving little room for error.On the upside, profits are above forecast, a near 20% increase in the full year dividend has been declared, whilst current (2016 and 2018) growth milestones remain on track with new 2020 targets outlined.We see five reasons to buy: 1) valuation appealing, trading at 6.2% discount to March 2016 estimated net asset value, 2) IPD [property index] implies strong second half 2015 capital growth of up to 6.0%, 3) development pipeline could add another 90p to valuation and upside to 29%, 4) recent lettings show strong momentum, and 5) finally, we expect a positive 2015 result statement on May 19 2015. Continue reading...
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