LONDON (Alliance News) - UK shares have shrugged off a weak lead from Wall Street and Asia to open on a firm note Wednesday, cheered by a cash return by broadcaster ITV.
ITV proposed a GBP250 million special dividend at 6.25 pence per share, and raised its total ordinary dividend, as it posted a rise in pretax profit for 2014. Its shares lead FTSE 100 gainers, up 5.5%
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: up 0.2% at 6,898.73
FTSE 250: up 0.1% at 17,156.45
AIM ALL-SHARE: up 0.2% at 710.51
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Hang Seng: closed down 1.0% at 24,465.38
Nikkei 225: closed down 0.6% at 18,703.60
DJIA: closed down 0.5% at 18,203.37
S&P 500: closed down 0.5% at 2,107.78
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GBP-USD: flat at USD1.5364
EUR-USD: flat at USD1.1174
GOLD: flat at USD1,204.71 per ounce
OIL (Brent): down at USD60.58 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
(all times in GMT)
08:45 Italy Markit Services PMI
08:50 France Markit Services and Composite PMI
08:55 Germany Markit Services and Composite PMI
09:00 EU Markit Services and Composite PMI
09:30 UK Markit Services PMI
10:00 EU Retail Sales
12:00 US MBA Mortgage Applications
13:15 US ADP Employment Change
14:00 US Fed's Evans Speech
14:45 US Markit Services and Composite PMI
15:00 Canada BoC Interest Rate Decision and Statement
15:00 US ISM Non-Manufacturing PMI
15:30 US EIA Crude Oil Stocks
18:00 US Fed's George speech
19:00 US Fed's Beige Book
22:00 US Fed's Richard Fisher's speech
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The UK government said it has reached a deal to sell the state's remaining stake in cross-channel rail service Eurostar International Ltd for GBP757.1 million. Chancellor George Osborne and Chief Secretary to the Treasury Danny Alexander said a consortium comprising Canadian institutional investor Caisse de dépôt et placement du Québec and Hermes Infrastructure, a unit of UK-based investment manager Hermes Investment Management, has agreed to buy the government's 40% stake in the high-speed rail operator at a price higher than the expectations which had been set out when offers were invited in October. In addition, Eurostar has agreed to redeem the government's preference shares, raising a further GBP172 million for the exchequer.
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Cigarettes and tobacco products could only be sold in plain packaging under legislation approved by the Irish legislature. If signed into law by the country's president, the measure would make Ireland the first European country to take the step, designed to make it harder for tobacco products to make themselves stand out from competitors. That would, in turn, theoretically reduce demand. The bill's text requires tobacco products to be sold in dark packaging with large-print warnings and graphic images of the health effects of tobacco use.
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Shop prices in the UK declined at a faster rate in February, defying expectations for a slower drop, the British Retail Consortium said. Shop prices fell 1.7% year-over-year after the 1.3% drop in January. Economists expected a 1.2% drop. This was the twenty second successive month of fall in prices. Food prices decreased 0.4% and non-food prices fell 2.5%.
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India's central bank reduced its key interest rates unexpectedly by a quarter point. The Reserve Bank of India decided to cut its repo rate by 25 basis points to 7.50% with immediate effect. Consequently, the reverse repo rate was adjusted to 6.50%. The bank last reduced its key rates by 25 basis points in January.
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China's service sector expansion accelerated slightly in February, led by solid rise in new work, the results of a survey by Markit Economics and HSBC showed. The services business activity index rose slightly to 52.0 in February from January's six-month low of 51.8. Any reading above 50 indicates expansion in the sector. The composite index, a measure of manufacturing and service sector activity, climbed to a five-month high of 51.8 in February from 51.0 in the prior month.
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Japan's service sector contracted in February after expanding in the previous month, results of a survey by Markit Economics showed. The services purchasing managers' index, or PMI, fell to 48.5 in February from 51.3 in January. This marked a moderate rate of decline in service sector activity.
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US Federal Reserve Chair Janet Yellen raised questions about ethics in the financial industry on Wednesday. "It is unfortunate that I need to underscore this, but we expect the firms we oversee to follow the law and to operate in an ethical manner. Too often in recent years, bankers at large institutions have not done so, sometimes brazenly, " Yellen said in her speech. "The risk of regulatory capture is something the Federal Reserve takes very seriously and works very hard to prevent," she added.
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The US House of Representatives passed legislation to authorize the Homeland Security Department for the rest of the budget year, ending a legislative stalemate that had gone on for weeks. A budget for the department had been held up by congressional Republicans opposed to President Barack Obama's executive orders on immigration.
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Israeli Prime Minister Benjamin Netanyahu drew sustained applause and numerous standing ovations Tuesday from members of the US Congress. But as the Israeli premier sought to influence negotiations over Iran's nuclear programme, the audience for his remarks at the other end of Washington's Pennsylvania Avenue was less than impressed. US President Barack Obama dismissed Netanyahu's speech as offering nothing new. "Prime Minister Netanyahu has not offered any kind of viable alternative that would achieve the same verifiable mechanisms to prevent Iran from getting a nuclear weapon," he told reporters.
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Fresh accusations of duplicity cast new doubts about the chances of a ceasefire taking hold in eastern Ukraine, with the government accusing pro-Russian separatists of taking up front-line positions after only a brief withdrawal. Both sides agreed to pull heavy weapons back from the front in an agreement penned last month in Minsk. But there has been much doubt about whether the agreement was holding - doubts that are only growing after Tuesday's charges. The accusations, leveled by the Security Council in Kiev, came hours after the leaders of France, Germany, Russia and Ukraine agreed in a phone call to push for the implementation of the ceasefire plan.
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BROKER RATING CHANGES
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TRADERS: CITIGROUP CUTS TAYLOR WIMPEY TO 'NEUTRAL' ('BUY')
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TRADERS: NUMIS CUTS TRAVIS PERKINS TO 'HOLD' ('ADD')
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TRADERS: LIBERUM CUTS LAIRD TO 'HOLD' ('BUY')
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TRADERS: NUMIS CUTS KELLER GROUP TO 'ADD' ('BUY')
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TRADERS: CITIGROUP RAISES RIGHTMOVE TO 'NEUTRAL' ('SELL')
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COMPANIES - FTSE 100
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Legal & General Group reported an 8% increase in annual pretax profit, bolstered by double-digit operating profit growth in its retirement, capital and investment management divisions. The life insurance and investments group said it made a GBP1.24 billion pretax profit in 2014, up 8.8% from GBP1.14 billion in 2013. According to consensus estimates published by the company, analysts had been forecasting a pretax profit of GBP1.29 billion. Legal & General increased its dividend for the year to 11.25 pence per share from 9.30p in the prior year, slightly ahead of the 11.23p forecast by analysts.
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Fresnillo reported a steep drop in profits in 2014, as it was hit by a drop in gold production, falling precious metals prices, higher production costs, and the strengthening of the US dollar against the Mexican peso. The gold and silver miner forecast that its production would improve in 2015 and pledged to continue investing in growth products, even though its focus this year will be on improving efficiency and productivity and maintaining its cost position and margins. Fresnillo reported a pretax profit of USD251.1 million for 2014, down 40% from USD418.7 million in 2013.
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ITV proposed a GBP250 million special dividend at 6.25 pence per share, and raised its total ordinary dividend, as it posted a rise in pretax profit for 2014. The company proposed a final dividend of 3.3 pence, taking its total dividend for the year up to 4.7 pence from 3.5 pence. The company has committed to grow its full-year ordinary dividends by at least 20% per year over the three years to 2016. ITV posted a pretax profit of GBP605 million, up from GBP435 million, as revenue rose to GBP2.96 billion from GBP2.75 billion.
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COMPANIES - FTSE 250
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Melrose Industries reported a fall in pretax profit in 2014 as sterling headwinds exacerbated a fall in revenue for the manufacturing investment company. Pretax profit fell to GBP128.9 million from GBP144 million, held back significantly by the strength of sterling as pretax profit with currency effects stripped out rose 21%. Melrose has proposed a final dividend of 5.3 pence per share, up from 5 pence last year, bringing its total dividend for the year to 8.1 pence per share, up from 7.75 pence.
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Bakery chain Greggs reported a higher profit for its last financial year, buoyed by revenue growth following its successful push into the food-to-go market and better market conditions, alongside strong returns on its shop refurbishments and cost control. The company's turnaround plans seem to be paying off, as its pretax profit for the financial year to January 3 increased to GBP49.7 million, up from 2013's profit of GBP33.2 million, driven by a 5.5% rise in revenue to GBP804.0 million from GBP762.4 million. Signalling its confidence, Greggs increased its total dividend for 2014 by 13% to 22.0 pence.
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Dignity said it swung to a pretax loss in 2014 due to costs related to its refinancing during the year, though profit increased excluding those costs on the back of higher revenue and the company raised its final dividend by 10%. The funeral services company said its pretax loss for the year was GBP67.7 million, attributable entirely to a GBP154.8 million financing cost related to refinancing its debt, which allowed it to return GBP64.4 million to shareholders.
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Carillion reported higher pretax profit for 2014 after 2013 was hit by big one-off items, but revenue was flat due to the strength of sterling and its profit excluding one-off items fell slightly due to its planned reduction in the sale of equity investments in Public Private Partnership projects. Carillion reported a pretax profit of GBP142.6 million for 2014, up from GBP110.6 million in 2013 when it had booked a GBP42.9 million charge for restructuring its energy services business.
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Great Portland Estates said it has struck a pre-let deal for its flagship Oxford Street development. The property company said it has signed a deal with fashion retailer New Look Retailers Ltd to pre-let the 73/89 Oxford Street site.
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Afren said it has decided not to pay the interest owed on its 2016 bonds and will default on the notes. The oil explorer said it has decided it will not pay the USD15 million interest due on February 1 on its 2016 notes. It said it has received assurance from its ad hoc committee of bondholders that they have no intention to take enforcement action against the company, meaning Afren will have no obligation to repay the 2016 notes. The group added its remains in talks with the lenders on its USD300 million Ebok facility, its bondholders and potential third-party investors about securing its financial future and on recapitalising the business.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Ryanair Holdings said its customer numbers and load factor both improved significantly year-on-year in February. The Irish low-cost carrier said it carried 5.8 million customers in February, up 29% from the 4.5 million it carried a year earlier. It added its load factor improved significantly up 11 percentage points to 89% from 78% in February last year.
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COMPANIES - INTERNATIONAL
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Apple regained the top spot in the world smartphone market from South Korea's Samsung Electronics after a gap of three years, according to a report released by market research firm Gartner Inc. Apple sold 74.832 million smartphones in the fourth quarter of 2014, capturing 20.4% of the world smartphone market, the Gartner report showed. During the same period, Samsung sold 73.032 million smartphones that gave it a 19.9% market share. China's Lenovo, Huawei and Xiaomi took the third, fourth and fifth positions, respectively. The last time Apple held the top spot was in the fourth quarter of 2011.
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Apple also is in talks to settle a lawsuit brought by electric-car battery maker A123 Systems, which has accused the iPhone maker of poaching key engineers to build a new battery division, according to media reports on Tuesday. Livonia, Michigan-based A123 Systems, a wholly-owned subsidiary of Chinese auto maker Wanxiang Group, is a developer and manufacturer of advanced lithium-ion batteries and systems and energy storage systems for transportation as well as other commercial and industrial applications. The company, which received a USD249 million grant from the US Department of Energy in 2010, filed for bankruptcy in 2012 and has been selling off assets.
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Consumer goods maker Henkel AG & Co reported that its fourth-quarter of 2014 net income declined to EUR310 million from EUR321 million in the previous year. Sales in the fourth quarter of 2014 rose by 7.1% to EUR4.126 billion from EUR3.852 billion in the prior year. Organic sales, which excludes the impact of foreign exchange and acquisitions/divestments, increased by 3.9%.
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Wednesday's Scheduled AGMs/EGMs
Local Shopping REIT
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
21 Jan 2015 11:48
