FTSE lags wider Europe on dividends Traders pause for breath

Traders paused for breath on Wednesday morning, helping the DAX andCAC to post minimal gains whilst the FTSE 100 Index lagged wider European Indices after BP, GlaxoSmithKline, International Power and Royal Dutch Shell all went ex-dividend, taking 19 points off the UK Index.

What we have seen is traders using the weaker Copper price as an excuse to take some profits off the table in mining equities, whilst dividends are weighing on oil giants BP and Shell, which is in turn making the energy sector drag the FTSE 100 lower.

Apart from the merger news concerning the London Stock Exchange and a earnings from CSR and Reckitt Benckiser, it has been a rather slow start to the trading day with a lack of definitive news to drive equity markets. Today’s stock market action may therefore be more about traders taking a pause for breath, than the rally running out of steam. 6117 remains a key upside target for the FTSE100.

London Stock Exchange deal to merge with TMX Group powers shares 10% higher
Shares in the LSE jumped over 10 Per Cent today on strong buyer demand, after the London exchange announced it was set to buy TMX Group (the owner of Canada’s Toronto Exchange) in an all share deal valuing to newly combined Group at £4.3 billion. The move is a strategic one designed to open up doors for the group to shares of major mining firms and mimics a similar move by Singapore Exchange, which purchased the Australian Exchange owner ASX in a deal worth $7.8billion. The LSE-TMX merger is likely to pass a regulatory/political hurdle however considering the difficulty encountered by the Singapore Exchange and the ASX. That said, investors appear confident that this may be a smooth acquisition considering the high share demand this morning and a confident statement from LSE’s CEO that the merger should close this autumn.

CSR shares rally 9% on earnings
Shares of CSR Corp rallied over 9 Per Cent after the chipmaker posted revenues of $184.8 million for the fourth quarter and earnings of 7 cents a share, higher than the market had expected. The earnings follows the recent strong earnings from its tech peers and brightens investor optimism that the firm could become an attractive bid target after Broadcom’s CEO Mr McGregor talked up consolidation within the sector potentially involving CSR last week.

Reckitt Benckiser falls after earnings miss consensus
Shares in Reckitt Benckiser fell over 4 Per Cent to the bottom of the FTSE 100 performers list with its shares falling to its lowest price since August last year after the firm missed market expectations with earnings of 69 pence a share. The market had been expecting earnings closer to 72.2 pence a share and the results highlight fears of a slowdown in sector growth for consumer goods and heightened price competition. The earnings triggered cautious stances from brokers and investors have sold out of the stock as a result.

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