By Barbara Kollmeyer
Another public listing in London grabbed investor attention on Friday, with shares of U.K. cybersecurity company Darktrace soaring on its debut that came on the last trading day of the month.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.65% rose 0.3% to 6,986.69, with a 4% gain for April on track if gains hold through the close. That would mark the best monthly return since a 12% surge in November for stocks, as COVID-19 vaccine news cheered investors.
Helping the main index was a 0.4% drop in the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.4938% , as the dollar /zigman2/quotes/210598269/delayed DXY +0.48% climbed on strong U.S. personal spending data. Many U.K. blue chips derive revenue overseas and a weaker currency makes their goods more competitive.
Shares of Darktrace climbed 40% in a conditional trading on Friday, to 351 pence from an offer price of 250 pence, according to an April 30 filing. That equates to a market capitalization of £1.7 billion ($2.3 billion). The debut has been clouded by links to founding shareholder Mike Lynch, who is facing U.S. extradition charges. London has also struggled with some recent initial public offering flops, such as that of food-delivery company Deliveroo /zigman2/quotes/225812915/delayed UK:ROO +2.45% .
Trading on the London Stock Exchange’s main market for Darktrace will begin on May 6.
“The right price is very important for an IPO — let people who are getting in after the primary offer a chance to earn something for their trouble, rather than pricing it too aggressively and taking any upside off the table,” said Neil Wilson, chief market analyst for Markets.com, in a note to clients.
“Darktrace seems to have learned this lesson, with the £1.7 billion market cap at the offer well below the £3 billion they had previously hoped for. The area of cybersecurity in which it operates is also one that is seen growing materially over the next few years. For London it’s a welcome thumbs-up after the Deliveroo debacle and an encouraging float for future tech listings,” said Wilson.
Shares of Barclays /zigman2/quotes/208409333/delayed UK:BARC +0.75% /zigman2/quotes/206581728/composite BCS +0.78% tumbled 6%. The U.K. bank’s earnings beat first-quarter expectations , helped by a sharp drop in impairment charges.
“A 167% rise in profits was not enough to stop the bank from trading heavily in the red, with the bank largely leaning on reduced bad loan provisions to make up for falling income across credit card, corporate, investment, and international divisions,” said Joshua Mahony, senior market analyst at IG, in a note to clients.
AstraZeneca /zigman2/quotes/200304487/composite AZN -0.12% /zigman2/quotes/203048482/delayed UK:AZN +0.70% shares jumped 3.4% on Friday, as the U.K.-Swedish drug company reported better-than-expected earnings, led by its blockbuster cancer drugs. It also generated $275 million in sales from its COVID-19 vaccine.
The Nationwide House Price index revealed a surge in annual house price growth to 7.1% in April, from 5.7% in March. Prices rose 2.1% monthly, the biggest gain since February 2004. A record high average price of £238,831 was reported, a gain of over £15,916 over the past year.
A stamp-duty holiday extension has clearly boosted the market, but “when the clock does finally expire, there’s no doubt we will feel the impact,” said Matthew Cooper, founder and managing director of Yes Homebuyers, in a statement. Stamp duty is a property tax on buyers. “This will come in the form of a dramatic reduction in transaction levels, followed a few months later by a sharp dip in the rate of house price growth.” Shares of builder Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV +0.36% rose 1%.
Finally, tobacco giants British American Tobacco /zigman2/quotes/210207837/composite BTI -0.05% /zigman2/quotes/209116881/delayed UK:BATS -0.37% and Imperial Brands /zigman2/quotes/208789104/delayed UK:IMB -1.02% were top gainers on Friday, up more than 2% each. Gains came after media reports said billionaire investor Kenneth Dart had taken stakes in those companies via his Spring Mountain Investment fund.
The Financial Times and other outlets reported that he has taken a 7% stake in British American Tobacco and 3% of Imperial Brands, totally nearly £5 billion (nearly $7 billion). A spokesperson for British American Tobacco declined to comment, while Imperial Brands and Spring Mountain Investment didn’t immediately respond to requests for comment.