LONDON (Alliance News) - Shares have opened slightly lower in London Wednesday, as the market digests a set of trading updates, particularly from FTSE 250 companies, and awaits UK unemployment and average earnings data due at 0930 GMT.
The earnings data took on extra significance after comments on Tuesday by Bank of England Governor Mark Carney saying the time when UK interest rates may rise is approaching.
In the FTSE 100, Burberry Group is the biggest faller, down 2.3%, after warning in a trading update about a challenging market in Hong Kong and "a more adverse geographic mix".
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,732.22
FTSE 250: down 0.3% at 17,588.70
AIM ALL-SHARE: flat at 755.16
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Hang Seng: down 0.3% at 25,049.32
Nikkei 225: closed up 0.4% at 20,463.33
DJIA: closed up 0.4% at 18,053.58
S&P 500: closed up 0.5% at 2,108.95
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GBP: up at USD1.5656
EUR: flat at USD1.1005
GOLD: down at USD1,154.60 per ounce
OIL (Brent): down at USD58.29 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 BST)
09:30 UK ILO Unemployment Rate, Claimant Count, Average Earnings
10:00 Switzerland ZEW Survey - Expectations
12:00 US MBA Mortgage Applications
13:30 US NY Empire State Manufacturing Index
13:30 Canada Manufacturing Shipments
14:00 Russia Industrial Output
14:15 US Industrial Production, Capacity Utilization
14:30 US Producer Price Index
15:00 US Fed's Yellen Speech
15:00 Canada BoC Interest Rate Decision
15:30 US EIA Crude Oil Stocks
16:15 Canada BoC Press Conference
17:25 US FOMC Member Mester speech
19:00 US Fed's Beige Book
20:00 US FOMC Member Williams speech
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Greek Prime Minister Alexis Tsipras defended a preliminary agreement brokered in Brussels to pass belt-tightening reforms in exchange for loans to keep Greece in the eurozone amid mounting domestic anger over its conditions. Tsipras has until the end of Wednesday to rally support in the Greek parliament to ratify key parts of the deal and allow formal bailout negotiations to move forward, as labour unions and political factions promised strikes and demonstrations to protest renewed austerity measures. "I won't tell the Greek people what I bring you is a success story," Tsipras said on Tuesday night in an interview on state broadcaster ERT, "but I have tried to do what was humanly possible." Tsipras defended the agreement as necessary to ensure that Greece does not face the bankruptcy and financial turmoil that would ensue if the country tipped out of the eurozone.
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US Treasury Secretary Jacob Lew will travel to Germany and France for talks on the Greek bailout deal, officials said. Lew will travel to Frankfurt on Wednesday to meet European Central Bank President Mario Draghi. He was due in Berlin on Thursday to meet German Finance Minister Wolfgang Schaeuble. He was then to go to Paris to meet French Finance Minister Michel Sapin before returning to Washington, the US Treasury Department said.
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China's economy grew in the second quarter of this year by 7% year-on-year, the National Bureau of Statistics announced in Beijing on Wednesday, slightly outpacing predictions. Growth was also 7% in the previous quarter, according to the authority. Analysts had expected a slightly weaker growth of 6.9% for the second quarter. "The national economy has been running within a proper range and the major indicators picking up steadily, showing moderate but stable and sound momentum of development," the bureau said.
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The Bank of Japan decided to keep its record monetary stimulus unchanged despite downgrading both inflation and economic growth outlook. The Policy Board of the BoJ governed by Haruhiko Kuroda decided by an 8-1 majority vote to maintain its target of raising the monetary base at an annual pace of about JPY80 trillion. The central bank said the Japanese economy is expected to continue recovering moderately and inflation is forecast to be about zero percent for the time being, due to the effects of the decline in energy prices. The bank said it expected the world's third-largest economy to expand 1.7% for the year through March 2016, downgraded from the 2.0% growth forecast in April.
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The US said it was open to negotiating with North Korea following this week's historic nuclear deal with Iran, a news report said. "Progress in the nuclear talks with Iran clearly demonstrates our willingness to engage countries with whom the US has long-standing differences," said State Department spokesman John Kirby, according to Yonhap News Agency. The US was prepared for such negotiations with North Korea, "provided that they are authentic and credible, get at the entirety of the North's nuclear programme, and result in concrete and irreversible steps toward denuclearization."
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BROKER RATING CHANGES
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GOLDMAN CUTS VODAFONE TO 'NEUTRAL' ('BUY') - PRICE TARGET 250 (275) PENCE
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BERENBERG RAISES TRAVIS PERKINS TO 'BUY' ('HOLD') - TARGET 2500 (2000) PENCE
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GOLDMAN RESUMES JUST EAT WITH 'CONVICTION BUY LIST' - TARGET 560 PENCE
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GOLDMAN RAISES LONMIN TO 'NEUTRAL' ('SELL') - TARGET 96 PENCE
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BERENBERG CUTS SIG TO 'HOLD' ('BUY') - TARGET 210 PENCE
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UBS CUTS ALENT TO 'NEUTRAL' ('BUY') - TARGET 503 (400) PENCE
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COMPANIES - FTSE 100
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Burberry Group reported a rise in revenue in the first quarter of its financial year and said profit for the year will be GBP20 million higher than the prior year if exchange rates remain at current levels, although it warned that the increase would be offset by "a more adverse geographic mix". The fashion retailer said that retail revenue grew 10% to GBP407 million in the three months to June 30, as it experienced double-digit growth in Europe, the Middle East, India and Africa, high single-digit growth in the Americas, but a low single-digit decline in Asia Pacific, hit by a challenging market in Hong Kong.
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Mining giant BHP Billiton said it expects to write down the value of its onshore US assets by about USD2 billion post-tax in its financial results for fiscal 2015. BHP Billiton noted that the gas-focused Hawkville field accounted for the majority of this impairment charge. The remainder of the charge relates to the impairment of goodwill associated with the Petrohawk acquisition. After the writedown, BHP Billiton's onshore US business will have net operating assets of about USD24 billion.
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Severn Trent said there has been no material change to the business since its last report in May, except it expects its interest charge for the full year to be lower year-on-year. The UK water and waste-water company reiterated its full-year cost guidance and dividend expectations, and said it continues making progress on making efficiency savings across the water division.
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The European Commission on Tuesday approved the purchase of Irish airline Aer Lingus by International Consolidated Airline Group, the owner of British Airways, after it made concessions to address competition concerns. The EU's executive had been concerned that the merged company would face insufficient competition on some routes, and that Aer Lingus would no longer transport passengers who have connecting long-haul flights with rival airlines. IAG, which also owns Iberia and low-cost carrier Vueling, agreed to offer up flight slots to rivals at London's Gatwick airport and pledged that Aer Lingus would continue to carry connecting passengers.
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Barclays is set to lose Deputy Chairman Michael Rake a week after he is understood to have played a key role in ousting Antony Jenkins as the bank's chief executive, The Times reports. Rake is set to leave the bank to take up the chairmanship of another, as yet unknown financial services company, The Times said, citing sources. He will retain his position as chairman of BT Group. Barclays Chairman John McFarlane, who will take up executive responsibilities from Friday, said Rake had been in charge of the process of removing Jenkins.
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COMPANIES - FTSE 250
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Wizard Parent sold a GBP270 million stake in software company Micro Focus International via a share placing. Wizard sold 20 million Micro Focus shares for 1,350 pence per share. Following the deal, Wizard will own 66.6 million shares in the company, or a 30.7% stake. Micro Focus shares closed Tuesday at 1,434.00p.
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Marwyn Value Investors has sold a portion of its stake in media company Entertainment One for GBP87 million via a share placing. Marwyn has sold 26.5 million shares in the company at 330 pence per share. Entertainment One shares closed at 362.9 pence on Tuesday. Following the sale, Marwyn's stake in Entertainment One has been reduced to 52.9 million shares, or 17.9% of the company's issued share capital.
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Intermediate Capital Group said the business may be hurt by "economic volatility" and uncertainty as Greece tries to stay in the Eurozone. Weakness in the euro against other major currencies isn't expected to have anything more than a "limited impact" on fund management fee income, which the company said is hedged. Interest income, however, is unhedged, meaning there is a "more immediate impact" from the current exchange rates, Intermediate Capital said.
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Halfords Group reported a rise in revenue in the first quarter of its financial year, driven by a strong performance in its cycling and car maintenance divisions. The car parts and bicycle retailer said that total revenue grew 3.6% in the 13 weeks to July 3, with retail sales up 3.4% and autocentres up 5.0%. On a like-for-like basis, total sales grew 3.5%, with retail like-for-likes up 3.5% and autocentres up 4.0%.
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Specialty pharmaceuticals company BTG maintained its revenue guidance for its current financial year on Wednesday, saying it has made a good start to the year. BTG said it is trading in line with its expectations in its financial first quarter that ended June 30 and said its full-year revenue guidance remains at GBP410 million to GBP440 million. The company posted revenue of GBP367.8 million for its 2015 financial year to the end of March.
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JD Wetherspoon reported a rise in revenue in the 50 weeks to July 12 but reaffirmed that pretax profit for the full year is unlikely to be higher than the prior year. The pub company said that total sales increased 6.5% in the 11 weeks to July 12 and 7.6% in the 50 weeks to the same date, growing 2.9% and 3.4% on a like-for-like basis, respectively. Operating margin in the 11 weeks was 7.0%, compared with 8.3% in the same period the year before, and is expected to be around 7.4% for the full year.
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Property company Workspace Group said its total rent roll increased in the first quarter of its financial year, with its like-for-like rent roll and rent per square foot also both higher, though its occupancy rate fell slightly in the period.
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Moneysupermarket.com Group said that revenue growth slowed, as expected, in the second quarter of its financial year. In a statement, the price comparison website company said second-quarter revenue grew by 10% to GBP67.2 million year-on-year. Revenue for the first half ended June 30 was up 18% at GBP143.9 million.
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ICAP said it is well positioned to benefit from increased trading activity when macroeconomic conditions allow, as the company reported that revenue increased in the opening quarter of its new financial year, when excluding businesses it has closed under a restructuring programme. Revenue, excluding the discontinued businesses, was up 2% in the quarter ended June 30, when compared with the corresponding quarter of the prior year. It was down 1% at constant currency.
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Roadside assistance company AA said it has struck a financial services partnership with the Bank of Ireland UK. Under the ten-year deal between the pair, the AA will offer Bank of Ireland retail financial services products to its UK customers. The range will be AA-branded and will cover credit cards, loans, cash savings and mortgages. The first product, a credit card, is expected to be launched this month, with further products to be launched over the course of 2015. The first AA-branded mortgage product it expected to come to market in 2016.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Embattled oil company Afren said its shares have been suspended due to "material uncertainty" over its financial position and said it cannot inform the market about its finances until it completes a strategic review. Afren said the outcome of a review of its business plan is currently clouded by "significant uncertainty", but said it had already "become clear" that production would be "materially lower" than what it informed shareholders in its restructuring proposals in March.
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AGA Rangemaster Group said it has agreed to be taken over by US kitchen products company Middleby Corp in a GBP129 million deal. Middleby will pay 185 pence per share for AGA, a 77% premium to its closing price on June 16, when the offer was first made, and a 22% premium to AGA's closing share price of 152 pence on Tuesday. Middleby is based in Elgin, Illinois and makes bakery and other commercial use ovens as well as U-Line wine cellars and drinks cabinets and Viking range cookers for the home.
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COMPANIES - INTERNATIONAL
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A fake news report about an alleged USD31 billion purchase offer for Twitter pushed up Twitter stock values by more than 8% by midday Tuesday and triggered an investigation. The text appeared on a website that tried to mimic that of the financial news agency Bloomberg. Although there were clear indications that the report was not authentic - there was a name misspelling and other irregularities - the report quickly spread over social media, including on Twitter, triggering a buying frenzy for Twitter stock.
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Celgene said it has agreed to buy Receptos Inc for about USD7.2 billion in cash, in order to enhance its Inflammation & Immunology portfolio. Celgene lifted its financial outlook for 2020 as a result of the acquisition. Celgene will acquire Receptos' shares through a wholly-owned subsidiary for USD232.00 a share in cash. The transaction has been approved by the boards of directors of both companies and is subject to customary closing condition. The deal is expected to close this year itself.
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Restaurant operator Yum! Brands said its second quarter profit fell 30% from last year, mainly due to continued weak performance of its China division. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast. At the same time, the company reconfirmed its full year guidance of at least 10% earnings per share growth in 2015.
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Toshiba President Hisao Tanaka is planning to step down in September over the company's accounting scandal, a report said. Tanaka told close associates Tuesday of his intention to resign, the Nikkei business daily reported without citing any sources. A third-party panel investigating the scandal found that the president was among top officials who allegedly instructed subordinates to delay booking losses in the infrastructure business, the Nikkei said.
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Wednesday's Scheduled AGMs/EGMs
Griffin Mining
1Spatial
Severn Trent
Stallion Resources
SyQic
e2v Technologies
Speedy Hire
BT Group
BTG
ICAP
RPC Group
Workspace Group
Intermediate Capital Group
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
4 Nov 2013 13:12
