28th Apr 2016 07:17
LONDON (Alliance News) - Decisions by the US and Japanese central banks to hold monetary policy steady knocked Tokyo shares and left London with a weak open on Thursday. The US Fed's decision was as expected, but less so the Bank of Japan's reticence, sending the yen higher against the dollar, which also slipped against the euro and pound.
Miner Anglo-American topped a short list of FTSE 100 gainers, up 2.5%, after agreeing to sell its niobium and phosphates businesses to China Molybdenum for USD1.50 billion in cash.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.8% at 6,271.09
FTSE 250: down 0.4% at 17,023.04
AIM ALL-SHARE: up 0.1% at 730.05
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Hang Seng: flat at 21,365.75
Nikkei 225: closed down 3.6% at 16,666.05
DJIA: closed up 0.3% at 18,041.55
S&P 500: closed up 0.2% at 2,095.15
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GBP: up at USD1.4581 (USD1.4544)
EUR: up at USD1.1344 (USD1.1308)
GOLD: up at USD1,255.03 per ounce (USD1,247.60)
OIL (Brent): up at USD46.82 a barrel (USD46.12)
(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 BST)
08:55 Germany unemployment rate
09:00 Italy wage inflation
09:00 Ireland retail sales
10:00 EU economic sentiment indicators
13:00 Germany consumer price index preliminary
13:30 US initial and continuing jobless slaims
13:30 US gross domestic product price index preliminary
13:30 US personal consumption expenditures prices preliminary
15:30 US EIA natural gas storage
16:00 US Kansas Fed manufacturing activity
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The US Federal Reserve left its benchmark interest rate unchanged after a two-day meeting in Washington. The Fed's Open Market Committee voted 9-1 to keep the rate at a range of 0.25% to 0.50%, according to a statement. The statement appeared to leave open the possibility that there might be a rise in interest rates in June. The committee reiterated its intention to raise rates at a gradual pace. The last time it raised rates was after its December meeting. References in Wednesday's statement to the improvement in US unemployment coupled with the omission of language contained in previous statements referring to risks posed by global economic and financial developments has been interpreted as meaning a rate hike is coming in June.
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The Bank of Japan refrained from increasing its monetary stimulus and kept its negative interest rate unchanged, though it cut its growth and inflation outlook. The policy board governed by Haruhiko Kuroda decided by an 8-1 majority vote to hold its target of raising the monetary base at an annual pace of about JPY80 trillion. Policymakers voted 7-2 to maintain -0.1% interest rate on current accounts that financial institutions maintain at the bank. The bank revised down its economic growth outlook to 1.2% for the current financial year from the 1.5% estimated three months ago. The banks also downgraded its inflation forecast for the year through March 2017, expecting the consumer price index to rise 0.5%, compared with the 0.8% increase predicted in January.
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Japan's consumer prices decreased unexpectedly in March, after rising in the previous month, the Ministry of Internal Affairs and Communications said. The overall consumer price index edged down 0.1% year-over-year in March, reversing a 0.3% increase in February. Economists had expected prices to remain flat during the month.
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Japan's unemployment rate decreased unexpectedly in March, though slightly, the Ministry of Communications and Internal Affairs said. The seasonally adjusted jobless rate dropped to 3.2% in March from 3.2% in prior month. Economists had expected the rate to remain stable at 3.3%.
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UK workers would be hit by a "triple threat" to jobs, wages and prices in shops if the country votes to leave the European Union, David Cameron and former trade union leader Brendan Barber have warned. The Prime Minister and the ex-Trades Union Congress general secretary acknowledged they were unlikely allies but the "special circumstances" of the EU referendum meant the "rules of conventional politics" could be temporarily set aside. They warned that Brexit would leave the UK "a poorer country in every sense" but a vote to remain in the EU on June 23 would result in a "bright future" with more jobs, higher pay and lower prices.
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UK house prices growth slowed more than expected in April, the Nationwide Building Society showed. House prices increased 4.9% year-on-year in April, slower than the 5.7% expansion seen in March and 5% rise forecast by economists. "It may be that the surge in house purchase activity resulting from the increase in stamp duty on second homes from 1 April provided a temporary boost to prices in March," Robert Gardner, Nationwide's chief economist, said. House purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions, Gardner added.
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Germany's unemployment rate dropped slightly in March, preliminary figures from Destatis showed. The adjusted jobless rate fell to 4.2% in March from 4.3% in the preceding month. In the corresponding month last year, the unemployment rate was 4.8%.
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Republican US presidential hopeful Ted Cruz said former Hewlett-Packard executive Carly Fiorina would be his vice presidential running mate if he wins the party's nomination, in a move that rival Donald Trump dismissed as a "waste of time". Cruz is seeking to prevent front-runner Trump from securing the centre-right party's nomination for November elections and hopes pairing up with Fiorina, who ended her own presidential bid in February, will bolster his campaign.
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BROKER RATING CHANGES
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GOLDMAN RAISES INTU PROPERTIES TO 'NEUTRAL' ('SELL') - TARGET 350 (335) PENCE
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GOLDMAN CUTS NEXT TO 'SELL' ('NEUTRAL') - TARGET 5000 (6400) PENCE
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Jefferies Initiates United Utilities Group With Hold, Target At 890p
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COMPANIES - FTSE 100
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Lloyds Banking Group said its first-quarter pretax profit fell by almost half, hit by market volatility and the cost of redeeming expensive debt with the aim of boosting interest margins. Pretax profit fell to GBP654 million in the three months ended March 31, Lloyds said in a statement, from GBP1.21 billion the corresponding quarter a year earlier. Underlying profit, which excludes costs related to redeeming the so-called enhanced capital notes and market volatility, fell by 5.7% to GBP2.05 billion.
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Advertising and marketing giant WPP said reported billings and revenue both increased year-on-year in the first quarter, with trading in line with forecasts. The FTSE 100-listed group said revenue grew 11% year-on-year in the quarter to the end of March to GBP3.08 billion and grew 4.6% in dollar terms to USD4.40 billion. Reported billings for the quarter grew 8.3% year-on-year to GBP11.92 billion. In constant currencies, revenue grew 9.0% and by 5.1% on a like-for-like basis, WPP said.
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Anglo American said it has struck a deal to sell its niobium and phosphates businesses to China Molybdenum for a total cash consideration of USD1.50 billion. The phosphates business is based in Brazil and consists of a mine, beneficiation plant, two chemical complexes and two further mineral deposits, whilst the niobium business consists of one mine and three processing facilities, two non-operating mines, two further mineral deposits, and sales and marketing operations in the UK and Singapore.
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Travel and tourism group TUI said it has reached an agreement to sell its Hotelbeds business to GNVA Acquisitions Ltd for EUR1.19 billion in cash. GNVA is owned by funds managed or advised by private equity investor Cinven and Canada Pension Plan Investment Board. TUI said proceeds from the sale will be used to invest in future growth opportunities and strengthen TUI's balance sheet.
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Schroders said assets under management grew over the course of the first three months of 2016, bolstered by net inflows of GBP2.7 billion and investment returns of GBP8.7 billion. Assets under management grew to GBP324.9 billion from GBP313.5 billion during the three months ended March 31, Schroders said in a statement. Pretax profit fell to GBP137.9 million in the three months ended March 31 from GBP141.7 million the corresponding quarter a year earlier.
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Taylor Wimpey signalled further growth in profit in 2016 as customer demand for its homes and good access to mortgages drives strong sales rates, whilst noting the upcoming UK referendum on EU membership is not hurting trading. The housebuilder said in the first four months of 2016 customer demand was up 14% in comparison to the same period last year, whilst average private net reservation rates were 0.80 sales per outlet per week from 0.76 the previous year. Taylor Wimpey said its total order book currently stands at 8,811 homes, up from 8,200 homes, excluding legal completions, and the housebuilder said it has increased the total order book value by 17% to GBP2.17 billion from GBP1.86 billion the previous year.
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COMPANIES - FTSE 250
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Fidessa Group, which provides trading, investment and information software and services to the financial community, said "opportunity" could be coming back to the capital markets, and that closures among its client base will reduce with the return of stability. Fidessa reiterated that it still expects constant currency growth in 2016 to be at a similar level to what was achieved in 2015, with "good single-digit" growth in core-equities and continued double-digit growth in recurring derivatives revenue. Fidessa said it expects to make strong progress with its multi-asset initiative, and believes it is on track to achieve profitability within its derivatives business within the next three years.
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John Wood Group has secured a new five-year contract worth around USD500.0 million to deliver services to eight facilities that are part of projects operated by oil major BP offshore Azerbaijan.
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Outsourcer Serco Group said its DMS Maritime division has signed a deal for a new icebreaker research and supply vessel for the Australian Antarctic Division of the country's Department of the Environment. Serco was named preferred bidder on the deal back in October. The total value of the contract to Serco will be around GBP160.0 million, covering its project management role in the four-year design and build phase, following by an initial ten-year operating contract.
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Industrial valve and pumps maker Weir Group said trading in the first quarter was slightly ahead of its expectations, boosted by cost cutting and a resilient performance from its minerals arm. The company, which has been hit hard by the turmoil in the oil and gas and mining markets, said its like-for-like order input in the first quarter was down 22% year-on-year, with revenue declining by a broadly similar amount.
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COMPANIES - INTERNATIONAL
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South Korean conglomerate Samsung Electronics reported its operating profit for the first quarter ended March 31 was KRW6.68 trillion, an increase of 12% from the same quarter last year. The first quarter saw overall earnings growth led by the early launch and successful sales of the flagship Galaxy S7 and S7 edge. Samsung's revenue for the quarter was KRW49.78 trillion, an increase of 5.7% from the prior year.
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Social networking giant Facebook reported a surge in first-quarter profit, driven largely by a 52% jump in revenues. Both earnings and revenues trounced Wall Street estimates, sending shares up by 6% in the after-hours trading. Facebook's first-quarter profit surged to USD1.51 billion or USD0.52 per share from USD512 million or USD0.18 per share last year. Revenue for the quarter surged to USD5.38 billion from USD3.54 billion last year. Daily active users rose 16% to 1.09 billion on average for March, while monthly active users increased 15% to 1.65 billion in March. Mobile daily users gained about 24% to 989 million on average for March, while mobile monthly users increased 21% to 1.51 billion.
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Airbus Group reported that its net income for the first quarter of 2016 declined 50% to EUR399 million from the previous year's EUR792 million, with earnings per share decreasing to EUR0.51 from EUR1.01 in the same quarter last year. "2016 turns out to be the challenging year we anticipated. Overall, we expect a stable financial performance but deliveries, cash and earnings will be heavily loaded towards the end of the year. And that already shows in our first quarter performance," said Tom Enders, Airbus Group Chief Executive Officer. Revenue was EUR12.2 billion, compared to EUR12.1 billion in the prior year.
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Deutsche Bank reported first-quarter net income of EUR236 million, down 58% from last year's EUR559 million. Net revenue was EUR8.07 billion, down 22% from EUR10.38 billion a year ago. The decline in results reflected a challenging environment and the impact of decisions to downsize and exit certain businesses, the German lender said. Provision for credit losses was EUR304 million, up 40% year-on-year.
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German stock exchange operator Deutsche Boerse reported a profit for the first-quarter that declined 7.6% from the prior year, reflecting higher costs for integrating recent acquisitions, and said its planned merger with the London Stock Exchange Group is progressing on schedule. It affirmed its profit outlook for 2016. Carsten Kengeter, chief executive officer, said: "Our planned merger with the London Stock Exchange Group is progressing on schedule, and we are working intensively on preparations for obtaining all necessary approvals."
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The US Department of Justice announced that pharmaceutical companies Wyeth and Pfizer Inc have agreed to pay USD784.6 million to resolve allegations that Wyeth knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor or PPI drugs, Protonix Oral and Protonix IV. Pfizer acquired New Jersey-based Wyeth in 2009, approximately three years after Wyeth had ended the conduct that gave rise to the settlement. PPI drugs are used to treat symptoms of, among other things, acid reflux.
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Thursday's Scheduled AGMs/EGMs
ARM Holdings
CRH
Admiral Group
Barclays
Taylor Wimpey
Tullow Oil
Synthomer
Gresham Computing
SpaceandPeople
AFC Energy
Sphere Medical Holding
7digital Group
Aggreko
Witan Investment Trust
Manx Financial Group
Berendsen
FDM Group
LSL Property Services
Capital Drilling
Cobham
Aberdeem UK Tracker
Pendragon
Servelec Group
Bank of Ireland
Schroders
Henderson High Income Trust
Shires Income
James Fisher & Sons
H&T Group
SDL
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
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