20th Jan 2017 08:27
LONDON (Alliance News) - Friday looks to be dominated by the inauguration of Donald Trump as US president. The official inauguration is expected at noon in Washington, with Trump speaking ahead of that time.
The London market opened slightly weaker. The main economic event overnight was GDP figures from China, which showed the country achieving the economic growth target set by Beijing in 2016. Despite 6.7% growth, a pace out of reach of other large countries, this was still the slowest for the world's second largest economy in over a quarter century.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,201.22
FTSE 250: down 0.1% at 18,209.22
AIM ALL-SHARE: up 0.1% at 873.43
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Hang Seng: down 0.7% at 22,885.91
Nikkei 225: closed up 0.3% at 19,137.91
DJIA: closed down 0.4% at 2,263.69
S&P 500: closed down 0.4% at 2,263.69
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GBP: flat at USD1.2328 (USD1.2320)
EUR: up at USD1.0675 (USD1.0633)
GOLD: firm at USD1,205.18 per ounce (USD1,201.52)
OIL (Brent): firm at USD54.42 a barrel (USD54.15)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times in GMT)
World Economic Forum - Davos, Switzerland
0930 UK retail sales
1330 Canada retail sales
1330 Canada consumer price index
1400 US President Trump speech
1400 US FOMC member Harker speech
1800 US Baker Hughes US oil rig count
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China's economy expanded at a faster pace in the fourth quarter on spending, while the full-year growth hit the weakest in 26 years, data from the National Bureau of Statistics revealed. Gross domestic product grew 6.8% in the fourth quarter, while economists expected the rate to stabilize again at 6.7%. In 2016 as a whole, the economy expanded 6.7%, which was within the government's target of 6.5 to 7%. However, this was the weakest growth in 26 years.
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Donald Trump pledged to make America "greater than ever before" in remarks delivered at a Washington rally on the eve of his inauguration to be the 45th US president. "What we've done is so special," Trump said, standing before the iconic Lincoln Memorial. "All over the world they're talking about it." The president-elect said he was "just the messenger" for a movement that wanted change in the country. "I promise you, it's going to change," Trump said.
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US President Barack Obama used his final day in office to blast Congress for leaving him with unfinished business in closing the military prison at Guantanamo Bay and to commute the sentences of 330 people serving prison terms on drug charges. Obama sent a letter to Congress on Thursday blaming lawmakers for his failure to close the prison in Cuba. Obama had pledged to shutter the facility, ordering its closure just days after taking office in 2009. His administration however ran up against frequent road blocks, including public opposition, difficulty in finding third countries to accept detainees and legal prohibitions put in place by Congress.
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US forces carried out overnight airstrikes on two camps operated by Islamic State militants inside Libya, killing more than 80 fighters, the Pentagon said. Outgoing US Defence Secretary Ashton Carter said the numbers were based upon initial estimates while adding that the strikes "were directed against some of [Islamic State's] external plotters, who were actively planning operations against our allies in Europe." Pentagon spokesman Peter Cook said the bombings were authorized by President Barack Obama and carried out "in conjunction with the Libyan Government of National Accord" against two camps about 45 kilometres south-west of Sirte.
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Trump's nomination of billionaire Woody Johnson as ambassador to the UK has been welcomed as a "stylish" choice. Trump revealed that he wants the owner of the New York Jets American football team to get the prestigious diplomatic posting - known as ambassador to the Court of St James's - in characteristically unorthodox circumstances. Speaking at a luncheon in Washington DC the day before he is sworn in as US president, Trump introduced a guest as "sitting next to the ambassador Woody Johnson, going to Saint James".
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UK Chancellor Philip Hammond has launched an attack on populist politics, warning that there was "no sustainable future" in protectionism, subsidies and high debt. His comments may be seen as a criticism of positions set out by US president-elect Trump during his election campaign, when he promised to implement protectionist tariffs and borrow for infrastructure investment as part of his mission to "make America great again". Speaking at a business lunch at the World Economic Forum in Davos, Switzerland, Hammond said it would be wrong to respond by retreating from the free trade system. "Politicians who take the populist route will find it a very short road," said the Chancellor.
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Germany's producer prices increased at the fastest pace in almost four years in December, Destatis reported. Producer prices rose 1% year-on-year in December as expected, the fastest since January 2013, when prices climbed 1.5%. This was the second consecutive increase in prices. In November, prices had advanced only 0.1%.
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BROKER RATING CHANGES
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BERENBERG RAISES NATIONAL GRID TO 'BUY' ('HOLD') - TARGET 1050 (970) PENCE
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TRADERS: UBS CUTS ITV TO 'SELL' ('NEUTRAL')
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TRADERS: LIBERUM CUTS GKN TO 'SELL' ('HOLD')
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TRADERS: BARCLAYS RAISES WHITBREAD TO 'EQUAL WEIGHT' ('UNDERWEIGHT')
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TRADERS: EXANE BNP CUTS TESCO TO 'UNDERPERFORM' ('NEUTRAL')
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COMPANIES - FTSE 100
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Antofagasta said it has agreed to transfer its 40% stake in the Alto Maipo hydroelectric project in Chile to the project's controlling shareholder, AES Gener. Antofagasta's subsidiary Minera Los Pelambres had been reviewing its options with regards to its 40% stake in the project, following a forecast of a 10% to 20% total cost overrun at the project, along with an expected significant decrease in long-term energy prices in Chile. It was negotiating with AES Gener and lenders, and subject to final approval by the lenders, Los Pelambres now has agreed to transfer its stake to Gener and also a reduction in the electricity price applicable to the power purchase agreement with Alto Maipo for its mine.
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UK energy regulator Ofgem has warned the big six energy companies against raising prices in spring, the BBC reported, saying they have no excuse for increasing standard tariffs. This came despite new data showing that supplier's costs were considerably higher at the start of the year compared to a year earlier. Ofgem believes that large energy suppliers, such as SSE and Centrica's British Gas, should have protected themselves from recent rises by buying gas and electricity in advance.
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Shareholders of Pearson have called on the board to review the position of John Fallon as chief executive following the education publisher's significant profit warning on Wednesday, the Financial Times reported. Fallon has started a series of meetings with leading shareholders this week to examine the company's performance, according to the report.
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The chief executive of Barclays told Bloomberg that no more large-scale job cuts are expected at the bank after the completion of asset disposals in 2017. "We will close non-core in 2017. Once that non-core is done, we are done with massive layoffs," said Jes Staley, Barclays CEO, in an interview with Bloomberg TV at the World Economic Forum in Davos, Switzerland on Thursday. The disposal of assets that Barclays has deemed 'non-core' has been the bank's major focus since 2014 and is expected to result in around 19,000 job cuts in total.
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COMPANIES - FTSE 250
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Merchant bank Close Brothers Group said it is confident ahead of its interim results and on its full-year outlook. Close Brothers said in the five month period to December 31, 2016, its loan book grew by 2.3% to GBP6.60 billion from GBP6.40 billion. That puts the loan book up by 9.3% year-on-year. Close Brothers said its market-making business Winterflood also delivered a "good performance" in the period, seeing strong retail trading throughout.
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National Express Group appointed Matthew Ashley as chief executive officer of its North America division, and Chris Davies to succeed Ashley in his former role as finance director. Ashley has been finance director for two and a half years, whilst Davies joins the company from vehicle retailer Inchcape, where has been financial controller and treasurer since 2013, including a stint as interim chief financial officer.
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Synthomer said it expects its pretax profit for 2016 to be ahead of 2015 and of market expectations, boosted by a better-than-expected performance across its divisions and a boost from the weak pound. The speciality chemical firm said positive trends it had seen in Europe and North America in the first three quarters of the year had continued into the fourth quarter, leading to an overall performance ahead of its original expectations.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Bonmarche Holdings reported growth in sales in the third quarter of its financial year, although sales fell over both the Christmas trading period and in the year so far. The women's value clothing retailer said total sales in the third quarter, comprising the 13 weeks to December 24, grew by 3.3% year-on-year, with 0.8% growth in store like-for-likes but a 3.8% decline in online sales. However, in the key Christmas trading period, comprising five weeks to the same date, total sales fell by 1.5%, with a 3.4% decrease in store like-for-likes and a 14% drop in online sales. Bonmarche said sales volumes were hit by fewer promotions in the period, with the winter sales beginning on Boxing Day rather than before Christmas, but the retailer noted that this did strengthen product gross margin, which improved by 2.2 percentage points year-on-year in the third quarter.
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Currency manager Record said assets under management equivalent grew in its financial third quarter to the end of 2016, with positive net inflows. Record reported its assets under manager equivalents grew by 2.9% over the quarter to USD56.60 billion from USD55.0 billion. The growth in assets was driven by USD2.20 billion in positive net client inflows. This was offset by a net USD600.0 million hit to assets caused by exchange rate movements, notably the strong US dollar which affected the conversion of non-dollar mandates. This outweighed positive market performance.
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COMPANIES - INTERNATIONAL
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The head of US investment bank Goldman Sachs said New York is already benefiting from the UK's vote to leave the European Union, as banks reconsider their investment in London, reported the Independent. Lloyd Blankfein, chief executive of Goldman Sachs, speaking at the World Economic Forum in Davos, Switzerland, according to the report, said New York is "already a bit of a gainer" from Brexit. Blankfein said Goldman Sachs was slowing down its previous policy of moving operations to London a it considers the impact of Brexit.
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The US Department of Defense and Lockheed Martin are reportedly nearing a deal worth USD9 billion for F-35 fighter planes. President-elect Trump had earlier heavily criticized the Pentagon for overspending on defense contracts. He had specifically noted the F-35 as an example on how Lockheed takes advantage of the defense budget. Trump even asked Boeing to explore pricing for an alternative to the costly fighter jet. The news of the new deal was first reported by Reuters. According to the report, the deal would lead to a drop in the price of each F-35 to below USD100 million.
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International Business Machines reported an increase in profit for the fourth quarter, that also trumped Wall Street estimates. Armonk, New York-based IBM's fourth-quarter profit rose to USD4.50 billion or USD4.72 per share from USD4.46 billion or USD4.59 per share last year. IBM's fourth-quarter revenues dropped to USD21.77 billion from USD22.06 billion last year. This marks the 19th straight quarter the company has reported lower revenues.
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Wells Fargo said that it will merge its international business with its Wholesale Banking unit. Richard Yorke has been appointed as chief operating officer for Wholesale Banking group. Through its International Group, Wells Fargo provides middle market, large corporate and financial institution customers with a range of international solutions, including treasury management, credit, payments, financing, foreign exchange, and trade services. These services will now be integrated into the Wholesale Banking group.
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Apple is willing to start making iPhones in India, but it wants a big helping hand from the Indian government first, according to reports. The Cupertino, California-based company is scheduled to meet with officials in New Delhi next week to discuss the prospects for setting up manufacturing facilities in the country this year. Apple is asking for a long list of financial concessions from India. Among the requests, the company is seeking a 15-year tax holiday on imports of components and equipment, the reports said.
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Friday's Shareholder Meetings
Character Group
Avacta Group
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By Tom Waite; [email protected]; @thomaslwaite
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