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LONDON (Alliance News) - Share prices in London opened weaker Thursday, the last day before a four-day Easter break, amid weak commodities prices, a firm dollar and negative equities market closes in the US and Asia.
Fashion retailer Next was the biggest blue-chip faller, down 7.3%, after reporting growth in profit in its recently ended financial year but warning that 2016 will be a challenging year due to an uncertain global economic environment.
Smurfit Kappa Group said it will transfer to a premium listing in London, which would make the Irish corrugated packaging company eligible to join the FTSE 100 index.
Smurfit said it has proposed transferring the listing category of its ordinary, London-listed shares from a standard to a premium listing on April 25 and, at the same time, change the category of its Ireland-listed shares to a standard from a premium listing. Smurfit said the move follows the review of its London listing Smurfit that took earlier this year, and the change in the denomination of its shares in London to sterling from euros.
Smurfit's market capitalisation is around GBP4.1 billion, which would make it set to join the FTSE 100 when the next quarterly review of the indices occurs in June.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.0% at 6,137.99
FTSE 250: down 0.8% at 16,736.96
AIM ALL-SHARE: down 0.1% at 709.56
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Hang Seng: closed down 1.3% at 20,345.61
Nikkei 225: closed down 0.6% at 16,892.33
DJIA: closed down 0.5% at 17,502.59
S&P 500: closed down 0.6% at 2,036.71
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GBP: soft at USD1.4068 (USD1.4092)
EUR: soft at USD1.1149 (USD1.1164)
GOLD: down at USD1,215.22 per ounce (USD1,221.50)
OIL (Brent): soft at USD40.15 a barrel (USD40.71)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times in GMT)
09:00 Italy Industrial Sales and Orders
09:00 EU Economic Bulletin
09:30 UK Retail Sales
09:30 UK BBA Mortgage Approvals
10:00 Italy Retail Sales
10:15 EU Targeted LTRO
11:00 UK CBI Distributive Trades Survey
12:15 US Fed's Bullard speech
12:30 US Initial and Continuing Jobless Claims
12:30 US Durable Goods Orders
14:30 US EIA Natural Gas Storage
15:00 US Kansas Fed manufacturing activity
17:00 US Baker Hughes US Oil Rig Count
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A picture emerged of the men who bombed the Brussels airport and a central subway line killing scores, with prosecutors and media naming two brothers and a Belgian with links to Paris as the search continued for a fourth attacker. Brothers Khalid and Ibrahim El Bakraoui were known to police and had extensive criminal records that were not linked to terrorism, federal prosecutor Frederic Van Leeuw said. The third man, reported by state broadcaster RTBF to be Najim Laachraoui, was already sought as a suspected bomb maker in November's terrorist attacks in Paris. Ibrahim, 29, was one of two suicide bombers who died at Brussels Airport. Khalid, 27, died in the attack at the Maelbeek subway station, where an explosion tore through the second wagon of a train that was headed away from the neighbourhood housing EU institutions. A fourth suspect is on the run after having dropped off at the airport a bag containing "the most significant" explosive charge that had been prepared for the attacks, Van Leeuw said. But the bomb only went off later, once a bomb squad was on the scene.
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The top diplomats of the EU and Germany urged Syria's conflict parties to start substantial talks on political transition, as a first round of revived peace talks neared its end without tangible results. EU foreign policy chief Federica Mogherini travelled to Geneva, where she met the Syrian government and opposition delegations that have been holding indirect UN-brokered talks since last week. Mogherini said political change in Damascus would not only bring peace to Syrians but was also "the only way" to defeat the Islamic State extremist, who have claimed responsibility for the attacks in Brussels.
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Energy costs could "rocket" by half a billion pounds a year if the UK quits the European Union, Energy and Climate Change Secretary Amber Rudd will warn on Thursday. Pointing to a report by National Grid on the consequences of leaving the EU, she will say that the "massive electric shock" of Brexit could push up British bills by the equivalent of around GBP1.5 million a day.
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The Easter getaway is set to begin with millions of people setting off for UK breaks and holidays overseas. The roads will be busiest on Thursday when 55% of drivers intend to take their car out, according to an AA poll of more than 24,000 drivers. Holidaymakers heading overseas have been advised to allow extra time for security checks at transport hubs in the wake of the Brussels attacks. Travel organisation Abta estimates that two million Britons will go abroad over the four-day weekend.
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In a largely party-line vote, the US House of Representatives approved legislation to eliminate differences in the merger and acquisition review processes by the Federal Trade Commission and the Department of Justice. The House voted 235 to 171 in favour of the bill, known as the Standard Merger and Acquisition Reviews Through Equal Rules Act or the SMARTER Act. The SMARTER Act requires the FTC and the Justice Department to abide by the same merger standards when reviewing proposed mergers for compliance with antitrust laws.
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BROKER RATING CHANGES
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TRADERS: MERRILL LYNCH CUTS HSBC TO 'UNDERPERFORM' ('NEUTRAL')
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EXANE BNP STARTS PRUDENTIAL WITH 'OUTPERFORM' - PRICE TARGET 1800 PENCE
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HSBC CUTS UNITED UTILITIES TO 'HOLD' ('BUY') - TARGET 980 (1,000) PENCE
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SOCGEN RAISES KINGFISHER TO 'HOLD' ('SELL') - TARGET 359 (333) PENCE
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GOLDMAN CUTS LONMIN TO 'SELL' ('NEUTRAL') - TARGET 110 (361.92) PENCE
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GOLDMAN CUTS FRESNILLO TO 'SELL' ('BUY') - TARGET 700 (770) PENCE
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TRADERS: JPMORGAN INITIATES COUNTRYSIDE PROPERTIES WITH 'OVERWEIGHT'
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COMPANIES - FTSE 100
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Next reported growth in profit in its recently ended financial year, as it grew sales in both the directory and retail businesses, but noted that 2016 will be a challenging year due to an uncertain global economic environment. The fashion and homewares retailer said pretax profit in the year to January grew to GBP836.1 million from GBP794.8 million the year before, as revenue rose to GBP4.18 billion from GBP4.0 billion. Next will pay a total dividend of 158 pence for the year, which is a 5% increase on the prior year.
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SSE said it expects adjusted earnings per share to have fallen in the current financial year and said those earnings continue to face "significant uncertainties", but said it will raise its dividend. The utility firm said it expects to report adjusted earnings per share, which excludes certain exceptional items, to be in the range of 117.0 to 119.0 pence for the financial year to the end of March, which would be down from the 124.1p reported in the previous year. On a more positive note, SSE said the increase in its dividend for the year is expected to be "at least" equal to RPI inflation, which is currently expected to be around 1%.
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COMPANIES - FTSE 250
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Construction and infrastructure company Balfour Beatty said it has secured a two-year, GBP170.0 million extension to its Track Partnership contract for London Underground. The partnership handles essential track renewal work across the London Underground network, Balfour said.
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Outsourcer Mitie Group said profit for the full year will meet market expectations, but revenue will fall short following a softer second half. Mitie said it has seen some revenue shortfalls emerge in the second half of the financial year to the end of March, meaning revenue will miss market expectations. The company has been cutting costs to preserve margins, which will mean profit will be "within the range" of current market expectations, it said.
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Engineer Renishaw trimmed its profit and revenue guidance for its financial year to the end of June due to weaker trading conditions in the second half. Renishaw has consistently warned profit and revenue for the current financial year would fall against the prior year owing to large one-off orders not repeating. On Thursday, however, Renishaw said trading conditions have weakened in the second half, leaving it now expecting pretax profit of GBP67.0 million to GBP83.0 million for the full year, down from its previous guidance of GBP85.0 million to GBP105.0 million.
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Defence services company QinetiQ Group affirmed it is on course to meet its expectations for the full year. QinetiQ said its EMEA Services division has traded in line in the fourth quarter to the end of March thus far, with a boost coming from its Australian arm winning a five-year follow-on deal to provide aircraft structural integrity services to the Australian Defence Force's Directorate General Technical Airworthiness. Trading in QinetiQ's Global Products arm also was trading in line with expectations, with its US arm winning small robot contracts and survivability orders secured both in the US and internationally.
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Galliford Try said its building division will be involved in a major framework in the North of England and has also secured two public sector contracts in Croydon, south of London. The house builder and construction group said it has secured a place on the construction framework, YORbuild2, a collaborative framework covering 91 local authorities in the north of the country. Galliford also has secured a contract from Education Funding Agency to build the GBP21.7 million Harris Invictus Academy in Croydon. The other public sector contract has been secured from Croydon Health Services NHS Trust to build the new GBP21.3 million Accident and Emergency facility for Croydon University Hospital.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Premier Foods said Nissin Foods Holdings will buy a 17% stake in Premier from an existing shareholder for an undisclosed amount. Based on Premier's current market capitalisation, the stake is worth around GBP68.8 million. The news comes after Premier Foods, which makes Bisto gravy and Mr Kipling cakes, said on Wednesday it had entered into a cooperation agreement with Nissin, which invented instant noodles in 1958. Premier Foods had also said it had rejected a takeover offer from US spices and herbs manufacturer McCormick & Co.
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Petra Diamonds said it has recovered and sold an exceptional 32.33 carat pink diamond from the Williamson mine in Tanzania for USD15 million. Petra also retains an interest in the polished proceeds, receiving 10% of the value uplift. The diamond was bought by Golden Yellow Diamonds on behalf of MA Anavi Diamond Group, a specialist manufacturer in large and unique coloured diamonds.
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fastjet reiterated it is taking legal advice about a letter it was sent by its shareholder easyGroup Holdings on Tuesday, which easyGroup made public on the same day, and said it intends to provide a formal response in due course. easyGroup, owned by billionaire investor Stelios Haji-Ioannou and holder of a 13% stake in fastjet, sent a letter to fastjet in which it alleged that the African low-cost airline had breached the brand licence agreement between the pair. easyGroup requested a response from fastjet answering the points raised in the letter by 12 noon on March 31. If answers are not provided by that time, easyGroup said it will issue a notice to terminate the brand licence and may seek injunctive relief if that termination notice is not complied with.
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COMPANIES - INTERNATIONAL
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As per media reports, Yum! Brands is holding discussions with private equity firms, including KKR & Co, and Hopu Investments, regarding a possible sale of 20% stake in Yum! China. Yum! Brands is the leading retail developer in China with more than 7,100 restaurants in over 1,100 cities. KFC is the number one Western QSR brand in China with more than 5,000 restaurants in over 1,100 cities.
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The US Securities and Exchange Commission said Novartis agreed to pay USD25 million to settle a US SEC civil charges that claimed the Swiss drugmaker paid bribes to health professionals in China to increase sales from 2009 to 2013.
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The clock is ticking down ahead of a Thursday deadline for Volkswagen to tell a US court whether it has reached an agreement with regulators over how to bring emissions from 580,000 diesel cars on US roads within legal limits. Germany's largest automobile company is facing hundreds of civil claims over fraud, breach of contract and violations of environmental laws in the US in the wake of the emissions-cheating scandal known as Dieselgate. Charles Breyer, the judge overseeing the cases, ordered Volkswagen last month to tell him by March 24 whether they had found a fix for the polluting cars acceptable to environmental and air quality agencies.
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Thursday's Scheduled AGMs/EGMs
Beazley
Jarvis Securities
Independent Investment Trust
ICAP (re acquisition of voice broking business by Tullett Prebon)
Tullett Prebon
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
