1st Feb 2016 08:25
LONDON (Alliance News) - UK shares prices opened firm Monday, as telecommunications firm BT and budget airline Ryannair issued positive quarterly earnings reports and despite a mixed-to-negative set of Chinese economic data.
The US presidential election gets underway for real on Monday with the Iowa caucuses, while the next 24 hours were said to be crucial for the reforms the UK is demanding from the EU ahead of its in-out referendum.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 6,089.36
FTSE 250: up 0.4% at 16,560.46
AIM ALL-SHARE: up 0.2% at 694.94
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Hang Seng: closed down 0.5% at 19,595.50
Nikkei 225: closed up 2.0% at 17,865.23
DJIA: closed up 2.5% at 16,466.30
S&P 500: closed up 2.5% at 1,940.24
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GBP: up at USD1.4258 (USD1.4171)
EUR: firm at USD1.0847 (USD1.0820)
GOLD: up at USD1,122.20 per ounce (USD1,116.20)
OIL (Brent): soft at USD35.03 a barrel (USD35.24)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
(all times in GMT)
08:45 Italy Markit Manufacturing PMI
08:50 France Markit Manufacturing PMI
08:55 Germany Markit Manufacturing PMI
09:00 EU Markit Manufacturing PMI
09:30 UK Net Lending to Individuals
09:30 UK Markit Manufacturing PMI
09:30 UK Mortgage Approvals, Consumer Credit and M4 Money Supply
12:00 Ireland Consumer Confidence
13:30 US Personal Income and Spending
13:30 US Personal Consumption Expenditures - Price Index
14:30 Canada RBC Manufacturing PMI
14:45 US Markit Manufacturing PMI
15:00 US ISM Manufacturing PMI and Prices Paid
15:00 US Construction Spending
16:00 EU ECB President Draghi's Speech
18:00 US Fed's Stanley Fischer speech
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Britain and the EU have agreed the terms of an "emergency brake" to restrict EU migrants' rights to welfare benefits, but there is "still more hard work required" to negotiate other reforms, Prime Minister David Cameron said. "On welfare, the [European] Commission have tabled a text making clear that the UK's current circumstances meet the criteria for triggering the emergency brake," his spokesperson said after Cameron met EU President Donald Tusk over dinner. "This is a significant breakthrough, meaning the prime minister can deliver on his commitment to restrict in-work benefits to EU migrants for four years. Tusk said he would oversee another 24 hours of talks on Britain's demands before releasing draft proposals for the EU's response to the demands on Tuesday. "No deal yet," Tusk wrote on Twitter, noting that "intensive work" is needed in the next 24 hours.
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UK economic growth weakened in the three months to January but outlook for the next three months improved slightly, the latest growth indicator from the Confederation of British Industry showed. The balance of firms reporting rise in output fell to 6%, the slowest pace of growth since May 2013. The outlook for the next three months was more positive, with an above average rise in output to +13% expected. "The overall domestic outlook still looks fairly secure, and a rise in output across all sectors is expected in the coming three months," Rain Newton-Smith, CBI Director of Economics, said.
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Chinese manufacturers signalled deterioration in operating conditions at the start of 2016 but the pace of contraction slowed slightly from December, the results of a private survey showed. However, official data released by the government showed that the manufacturing sector underwent a faster contraction than seen at the end of 2015. The Caixin Purchasing Managers' Index rose to 48.4 in January from 48.2 in December, Markit said. Nonetheless, activity has been contracting for the eleventh successive month. At the same time, the official manufacturing PMI fell to 49.4 in January from 49.7 in December.
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The Irish manufacturing sector expanded solidly at the start of 2016, survey results from Markit showed. The Investec Purchasing Managers' Index rose marginally to a 6-month high of 54.3 in January from 54.2 in December.
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Bank of Italy Governor Ignazio Visco called for an amendment to recently-introduced EU rules on bank bailouts whose implementation has created problems and market tensions in his home country. The legislation, adopted in the wake of costly public bank rescues following the 2008 global financial crash, establishes "bail-in" principles for banks, meaning that shareholders and investors should pay when lenders run into trouble, rather than taxpayers. But the "delicate changeover" from state-funded bailouts to private bail-ins has been too sudden, Visco argued in a speech in the northern city of Turin.
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The government of Nigeria is in talks for concessionary loans worth USD3.5 billion from the World Bank and African Development Bank to help finance a planned record budget this year, according to reports citing Finance Minister Kemi Adeosun. While discussions are going on, a formal request hasn't yet been made to the World Bank for USD2.5 billion and the African Development Bank for USD1 billion. The government plans to tie them to specific capital projects. A request hasn't been made for assistance from the International Monetary Fund.
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Candidates in the race for US president criss-crossed Iowa, speaking at rallies and meeting voters in a final push to win support ahead of all-important caucuses on Monday. The 11 Republican and three Democratic candidates made their last appeals for votes before Iowa kicks off the state-by-state nominating process leading up to national party conventions in July and ultimately to the general election on November 8. Former US secretary of state Hillary Clinton, once considered the clear front-runner among the candidates seeking the Democratic nomination, spent the day defending herself against charges that she mishandled emails while she served as the top US diplomat. The scandal resurfaced this week after the US State Department said it would not make public 22 emails that it says are top secret.
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Despite the scandal Clinton is the top pick of 45% of likely Democratic voters in Monday's caucuses, according to a poll published Saturday by the Des Moines Register. Her main opponent, US Senator Bernie Sanders of Vermont, received 42%. On the Republican side, front-runner Donald Trump had the support of 28% in the poll, conducted with Bloomberg news. Second among the field of Republicans was US Senator Ted Cruz of Texas with 23%; third was Senator Marco Rubio of Florida with 13%.
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The Syrian opposition bloc threatened Sunday to boycott UN-sponsored peace talks in Geneva aimed at ending the country's civil war, while in Syria 63 people were reported killed in suicide attacks in a Damascus suburb. The radical Sunni Islamic State group carried out the double suicide attack in southern Damascus in the mainly Shiite district of Sayyida Zeinab, the Syrian Observatory for Human Rights said.
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A Russian jet has violated Turkish airspace, Ankara and NATO said Saturday, adding to recent strains in the traditionally friendly relationship between the two countries. The SU-34 fighter jet violated Turkish airspace on Friday, according to a statement from the Turkish Foreign Ministry. Ankara said it had summoned the Russian ambassador for talks.
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BROKER RATING CHANGES
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UBS RAISES DERWENT LONDON TO 'BUY' ('NEUTRAL') - TARGET 3750 (4000) PENCE
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NOMURA RAISES PREMIER OIL TO 'BUY' ('NEUTRAL') - TARGET 80 (75) PENCE
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UBS INITIATES JUST EAT WITH 'SELL' - TARGET 330 PENCE
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UBS INITIATES DOMINO'S PIZZA WITH 'NEUTRAL' - TARGET 975 PENCE
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GOLDMAN INITIATES WIZZ AIR WITH 'NEUTRAL' - TARGET 1932 PENCE
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GOLDMAN RESUMES NMC HEALTH WITH 'BUY' - TARGET 1172 PENCE
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COMPANIES - FTSE 100
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BT Group reaffirmed its outlook for the full financial year in its current guise, as it reported a rise in pretax profit in its third quarter and year to date and outlined a new organisational structure following its acquisition of mobile network EE. For the quarter to end-December the telecommunications and pay-TV company reported a pretax profit of GBP862 million, up from GBP694 million a year before, as revenue rose to GBP4.64 billion from GBP4.48 billion. BT said that, following its acquisition of EE, it will have a new organisation structure with effect from April. Under the new structure, it will have six lines of business, Consumer, EE, Business and Public Sector, Global Services, Wholesale and Ventures and Openreach.
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Engine maker Rolls-Royce Holdings said it won a USD2.7 billion contract with Norwegian, the Norwegian airline, for Trent 1000 engines and TotalCare long-term service support. The order will cover service support for 19 new Boeing 787 Dreamliner aircraft, along with services for Trent 1000s which will power 11 further leased Boeing 787s that have yet to enter service for the airline.
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Medical devices manufacturer Smith & Nephew said Chief Executive Olivier Bohuon has been diagnosed with a treatable form of cancer. The company said Bohuon will continue to handle his CEO duties during the majority of his treatment period, which is due to start later this month and be completed by the late autumn. The group has, however, approved provisional governance procedures to ensure the group operates effectively during his treatment period, including Robert Quarta, Smith & Nephew's chairman, taking on executive oversight if required.
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J Sainsbury is facing pressure to increase its bid for Home Retail Group in order to secure an agreement to buy the Argos and Homebase owner, the Financial Times reported. According to the newspaper, people close to the matter said Sainsbury's met with Schroders and Toscafund, the two biggest shareholders in Home Retail, last week, with the pair indicating Sainsbury's would have to pay at least 160 pence per share, or preferably close to 165p, to get their support. A 160p per share deal would value Home Retail at around GBP1.3 billion. The stock closed on Friday at 136.70p. The pair are still discussing a deal and may request an extension to the deadline for Sainsbury's to make a firm offer. That deadline is on Tuesday.
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Credit Suisse Group and Barclays have agreed to pay USD154.3 million combined to settle allegations by the US Securities and Exchange Commission and New York Attorney General that they misled investors on how they managed their private trading platforms, according to media reports citing people familiar with matter. The reports indicated that Barclays will pay about USD70 million to settle charges that include those brought in a high-profile fraud case by the New York Attorney General against Barclays in connection with its dark pools in June 2014. In that case, the New York Attorney General alleged Barclays misled clients about the extent of high-frequency trading in its dark pool, called LX. Barclays is expected to admit it misled investors and violated securities laws. The London-based bank also agreed to install an independent monitor, the reports said.
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HSBC Holdings will impose a hiring and pay freeze globally in 2016 as part of its drive to cut as much as USD5 billion in costs by the end of 2017, according to reports. The actions were outlined in a memorandum received by employees on Friday, the reports said. Akin to other global banks, HSBC is in the midst of a cost-cutting drive to boost its profitability and returns to shareholders. The group is also due soon to make a decision on whether it will move its headquarters out of London to Asia or elsewhere.
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COMPANIES - FTSE 250
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Residential landlord Grainger said it has acquired the Clippers Quay property in Salford Quays, near Manchester, for GBP98.7 million to boost its private rented sector portfolio. The company, which last week outlined plans to sell its non-core businesses and focus on the private rented sector, said the new property will deliver 600 new homes, along with further commercial space. Once fully let, it should deliver more than GBP7.5 million in gross rent per year, Grainger said.
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McCarthy & Stone reiterated its expectations for its full financial year following a very strong first half as the retirement housebuilder benefited from the buoyant conditions in the UK property market. The company said its weekly net reservation rate for the 22 weeks to January 29 was 27% higher year-on-year, pushing its forward sales order book up to GBP354.0 million at January 29, from GBP252.0 million a year earlier.
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Online property portal Zoopla Property Group said it has appointed Andy Botha as its chief financial officer, effective from April 18. He will join from online fashion retailer Notonthehighstreet.com, where he has been chief commercial and financial officer for the past three years.
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Allied Minds said it now owns a 73% stake in Federated Wireless Inc after a recent fundraising round in which Federated Wireless raised USD22 million. The fundraising values Federated Wireless as USD82 million, increased from USD10 million, and Allied Minds' stake in the company is now valued at USD60 million, up from USD9 million.
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Builders' merchant and DIY group Grafton Group said it has acquired builders' merchant Allsand Supplies. No financial details were provided on the deal, but Grafton said Allsand, based in Kent, generated revenue of GBP6.0 million for the year to the end of March 2015.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Ryanair Holdings said its post-tax profit, revenue and customer numbers all increased in the third quarter to the end of December, and it affirmed its guidance for its full financial year, albeit saying the outcome would be dependent on no unforeseen events hitting operations. The Irish low-cost airline said its profit after tax for the three months to the end of December was EUR103.0 million, more than double the EUR49.0 million it made a year earlier. Revenue rose to EUR1.33 billion from EUR1.13 billion, as the number of passengers carried increased to 24.9 million from 20.8 million. The group will launch a EUR800.0 million share buyback, which will start later this week and last about nine months. Ryanair said the buyback will raise the total amount it has returned to shareholders to over EUR4.0 billion in the past eight years.
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Premier Oil shares resumed trading in London on Monday after the terms of its deal to acquire the UK North Sea assets of Germany energy group E.ON SE were changed, meaning the deal is no longer classified as a reverse takeover. Premier Oil struck a deal in January to buy E.ON's assets for USD120.0 million net, plus completion adjustments. At the time, the value of the completion adjustments was sufficient for the deal to be classed as a reverse takeover.
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Engineering services company Costain Group said it has won a GBP110.0 million contract from Lancashire County Council for the Preston West Distributor and other associated link roads project. The scheme will link the A583/A584 to a new junction on the M55 via a 4 kilometre dual carriageway. It will also include link roads to Cottam and north west Preston.
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COMPANIES - INTERNATIONAL
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PetroChina said it expects its net profit attributable to equity holders of the company for the year of 2015 to decrease by 60% to 70% from the previous year. The company attributed its lower earnings expectation for 2015 to the factors such as significant decline of price of international crude oil and the lower price of domestic natural gas. For the full-year 2014, the company had reported net profit attributable to equity holders of RMB107.17 billion or RMB 0.59 per share. In addition, the company forecast the market for international oil and gas to continue to slump in 2016 and the market competition to be further intensified.
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The US government is in the process of renewing Air Force One, revealing this week that US aviation giant Boeing has won an initial contract toward building the next presidential planes. The Seattle, Washington, company won the 25-million-dollar contract, which is aimed at making the programme more affordable and efficient, the Pentagon said in announcing the award. Boeing, which has built every president's jet since Dwight Eisenhower in the 1950s, was the only bidder. The two Boeing 747-8 jets must undergo extensive modification, including being outfitted with sophisticated communications equipment and other security upgrades.
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The Coca-Cola Co announced it has bought 40% stake in Nigeria's Chi Ltd from Tropical General Investments Group for undisclosed terms. Coca-Cola intends to increase ownership to 100% within three years, subject to regulatory approvals, while working on other long-term commercial structures. Additionally, the parties have agreed to jointly discuss and explore other opportunities in the region to further develop this relationship.
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Monday's Scheduled AGMs/EGMs
No Events Scheduled
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By Tom Waite; [email protected]; @thomaslwaite
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