LONDON MARKET Closing Update 26 July 2017

Market Commentary
The U.K.100 was out of the blocks quickly this morning as it looked to capitalise on the momentum it
started to build in yesterdays session. Shortly after the opening bell rang the blue chip index headed
to day highs of 7487.05. The UK benchmark came slightly off the highs to close at 7452, up 17.5
points on the day. ITV has been one of the best performers closing up 2.4% to 180p after its dividend
rise more than made up for a drop in profits in and revenues, both of which were in line with
expectations. GSK posted its first half results at 11am with shares closing down 2.9% at 1540. The
drugmaker revised EPS guidance to growth of 3%-5%, targeting another 1bn cost savings by 2020.
Robert Barron, Chartered MCSI | Senior Stockbroker
Today's Closing Update
U.S. Shares set a round of records as traders welcomed another batch of upbeat earnings
reports from heavyweights Boeing Co and AT&T Inc.
European and U.K. Shares moved higher, as investors sifted through the latest round of
corporate earnings reports ahead of the Federal Reserves policy decision.
GlaxoSmithKline cut its full year guidance for earnings per share to 3-5% at constant exchange
rates from the previous 5-7% after sales growth slowed in the second quarter, while a new
strategic rejig will see a flat dividend next year. After taking 1.2bn of accounting charges due to
increases in the valuations of liabilities for the HIV and consumer businesses, GSK reported a
second-quarter loss per share of 37p compared with a 9p loss in the same quarter last year, up
59% or 29% at CER. The pharmaceutical behemoth generated second-quarter sales of 7.3bn,
which was up 12% on last year or 3% at CER thanks to strength in key pharma franchises,
respiratory and HIV, taking first-half sales to 14.7bn, a 4% CER increase on the same period
last year.
Unite Group reported a strong financial performance in its first half, with EPRA earnings up
12% to 40.4m, or 18p per share. The firm said profit before tax in the six months to 30 June was
down to 83.9m from 122.8m, with basic earnings per share falling to 36.7p from 48.3p year-on-
year, which it put down to a lower level of revaluation surplus as a result of yield compression in
2016. It still declared a 22% increase in the interim dividend to 7.3p per share, maintaining its
policy of distributing 75% of full-year recurring EPRA earnings by way of dividends each year.
The UK economy grew by 0.3% in the three months to June, driven in part by a booming film
industry, said the Office for National Statistics (ONS). The initial estimate showed growth picking
up from the first quarter of the year, when it was 0.2%. The ONS said the growth was driven by
services, particularly retail, which more than offset falls in output in the manufacturing and
construction sectors. It added there had been a "notable slowdown" in growth from last year.
"While services such as retail, and film production and distribution showed some
improvement in the second quarter, a weaker performance from construction and
manufacturing pulled down overall growth," said Darren Morgan, ONS head of national
accounts.
Sports Direct boss Mike Ashley has won a High Court battle with an investment banker over a
15m deal allegedly made in a pub. Jeffrey Blue told the court Newcastle United's owner
reneged on a promise to pay him a multimillion-pound sum if he increased the firm's share price.
The court heard about "drink-fuelled" meetings in pubs, including one where Mr Ashley "vomited
into a fireplace". Mr Ashley's lawyers said he had won a "comprehensive" victory. The hearing
was told that four years ago Mr Ashley met Mr Blue and three other finance specialists at the
Horse and Groom in London and "consumed a lot of alcohol". Mr Ashley said: "I can't remember
the details of the conversations that we had in the pub as it was a heavy night of drinking. "If I
did say to Mr Blue that I would pay him 15m if he could increase [Sports Direct's] share
price to 8, it would be obvious to everyone, including Mr Blue, that I wasn't being
serious."
Supervisory boards at two big German carmakers are to hold emergency meetings later after
they were accused of breaching EU cartel rules. Volkswagen and Daimler have declined to
comment on the allegations that they and other German car giants colluded to fix the price of
diesel emissions treatment systems. The claims first surfaced on Friday in a report by Der
Spiegel magazine. The issue is under investigation by EU and German anti-trust regulators.
Companies found to have infringed EU cartel rules are liable to pay fines of up to 10% of their
global revenue. Other firms under investigation are BMW, Porsche and Audi.

A US judge has ordered Apple to pay more than half a billion dollars to a university after the tech
firm failed to abide by an earlier court ruling. Apple was sued in 2014 for allegedly using a
technology developed by a professor and his students in its iPhone chips without the University
of Wisconsin-Madison's permission. Apple was ordered to pay about $234m (179m) when it lost
the patent case. That sum has now been more than doubled because it continued to use the
tech. The judge said that additional damages and interest brought the sum owed to $506m.
However, Apple still hopes to overthrow the fine by appealing against the original jury verdict.
The penalty is still less than the $862m the university had originally sought in damages.

WPP said it has made a strategic investment in Within Unlimited Inc, a US-based virtual reality
entertainment and technology company. The size of the stake acquired in Within Unlimited was
not disclosed by WPP. WPP said Within Unlimited is based in Los Angeles, employing over 35
people, with partners and content collaborators including Apple, The New York Times, NBC
Universal and Alphabet Inc. The investment is part of WPP's strategy of focusing on three key
areas that differentiate the group's offering to clients, being technology, data and content.

Oil Prices rose to session highs after government data showed U.S. crude and fuel inventories
fell more than expected.

Gold prices fell, tracking a third-straight decline and pulling further away from the one-month
peak hit just a few sessions ago as traders readied for a Federal Reserve update on interest-rate
policy.

Market Close - 4:35pm

Market Index Change % Change

UK 100 7452.3 +17.5 +0.2%

UK 250 19,762.7 +121.4 +0.6%

GER 30 12,302.1 +37.8 +0.3%

FRA 40 5,186.4 +25.3 +0.5%

U.S. 30 21,719.28 +105.85 +0.5%

U.S. 500 2,479.3 +2.2 +0.1%

OIL (BRENT) 50.67 +0.47 +0.9%

GOLD 1,248.19 -1.87 -0.2%

UK Major Risers & Fallers - 4:35pm

Company Price Change % Change

Tullow Oil 165.75 +12.2 +7.9%

Anglo American 1200 +28.5 +2.4%

ITV 180.1 +4.2 +2.4%

Petra Diamonds 101.1 -7.5 -6.9%

GlaxoSmithKline 1540.5 -45.5 -2.9%

Paddy Power Betfair 7430 -205 -2.7%

Director Dealings
Company Commentary

Virgin Two Directors and the Chief Executive bought shares. Chief Executive Jayne-
Money Anne Gadhia bought 35,365 shares at 280.65. Creative Director Tim Arthur
bought 7,116 shares at 281.04. People Director Matt Elliott bought 3,531
shares at 281.04.

Fevertree Chief Executive Officer Tim Warrillow sold 1.5 million shares for 28.9 million.
Drinks Warrilow sold 1.5 million shares at 1,925 pence each, leaving him with 6.2
million shares, or a 5.4% stake in the company

Reported Economic Data

Time/Date Previous Forecast Outcome

9:30am: U.K. Prelim GDP q/q 0.2% 0.3% 0.3%

3:30pm: U.S. Crude Oil Inventories -4.7m -3.3m -7.2m

3:00pm: U.S. New Home Sales 610k 615k 610k

7:00pm: U.S. FOMC Statement - - -

Interbank Spot FX Rates - 4:35pm

Pairing Rate % Change

GBP/USD 1.3065 +0.31%

EUR/USD 1.1637 -0.09%

GBP/EUR 1.1225 +0.38%

USD/JPY 112.0500 +0.14%

USD/CHF 0.9581 +0.60%

GBP/JPY 146.3560 +0.44%