1st Dec 2015 08:19
LONDON (Alliance News) - Share prices in London started the last month of 2015 on the front foot Tuesday, with the Bank of England providing reassurance on the strength of the UK banking system.
The central bank said the UK banking system is strong enough to continue lending in the event of a global economic downturn, although its stress tests showed that Royal Bank of Scotland Group and Standard Chartered had capital inadequacies at the end of 2014.
However, because of actions taken to raise capital since the end of 2014, the Bank of England’s Prudential Regulation Authority did not require either RBS or Standard Chartered to submit revised capital plans. The stress tests did not show capital inadequacies for Barclays, HSBC Holdings, Lloyds Banking Group, Nationwide Building Society, or Santander UK.
RBS shares were up 2.1%, while Standard Chartered shares were 1.9% better.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.7% at 6,398.54
FTSE 250: up 0.3% at 17,468.59
AIM ALL-SHARE: up 0.2% at 738.49
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Hang Seng: up 1.8% at 22,381.35
Nikkei 225: closed up 1.3% at 20,012.40
DJIA: closed down 0.4% at 17,719.92
S&P 500: closed down 0.5% at 2,080.41
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GBP: up at USD1.5095 (USD1.5051)
EUR: up at USD1.0581 (USD1.0566)
GOLD: up at USD1,070.13 per ounce (USD1,062.47)
OIL (Brent): down at USD44.73 a barrel (USD45.32)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in GMT)
08:30 Switzerland SVME Purchasing Managers' Index
08:45 Italy Markit Manufacturing PMI
08:50 France Markit Manufacturing PMI
08:55 Germany Unemployment Rate
08:55 Germany Markit Manufacturing PMI
09:00 UK BOE Governor Carney speech
09:00 Italy Unemployment Rate
09:00 EU Markit Manufacturing PMI
09:30 UK Markit Manufacturing PMI
09:30 UK Financial Stability Report
10:00 Italy Gross Domestic Product
10:00 EU Unemployment Rate
13:30 Canada Gross Domestic Product
13:55 US Redbook index
14:30 Canada RBC Manufacturing PMI
14:45 US Markit Manufacturing PMI
15:00 US ISM Manufacturing PMI and ISM Prices Paid
15:00 US Construction Spending
17:45 US Fed's Evans Speech
21:00 US Total Vehicle Sales
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The Chinese renminbi has claimed its pride of position as one of the world's powerful currencies, underlining China's clout in the global scheme of things. The International Monetary Fund added Chinese renminbi as the fifth currency in its Special Drawing Rights basket, giving the yuan an international status. The yuan will be included into to the basket effective October 1, 2016. IMF chief Christine Lagarde said it is a recognition of the progress that the Chinese authorities have made in the past years in reforming China's monetary and financial systems.
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China's manufacturing sector activity continued to shrink in November but the pace of deterioration was the weakest since June, survey results published by Caixin and Markit Economics showed. However, the official Purchasing Managers' survey revealed that the manufacturing sector contracted the most in three years. The Caixin manufacturing Purchasing Managers' Index rose to 48.6 in November from 48.3 in October. Economists had forecast the score to remain unchanged at 48.3 in November. The official PMI fell to 49.6 in November, the lowest since 2012, from 49.8 in October. The expected score was 49.8. The non-manufacturing PMI rose to 53.6 from 53.1 a month ago.
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The manufacturing sector in Japan continued to expand in November and at a faster pace, the latest survey from Nikkei showed with a PMI score of 52.6. That's up from 52.4 in October, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. It also marks the strongest reading for the index since March 2014.
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Ireland's manufacturing activity continued to expand strongly in November, albeit the rate growth was the weakest in twenty one months, survey figures showed. The seasonally adjusted purchasing managers' index dropped slightly to 53.3 in November from 53.6 in October. However, any reading above 50 indicates expansion in the sector. Moreover, business conditions have now strengthened in each of the past 30 months. New orders grew for the twenty-fifth successive month in November. New export order also rose sharply, with the rate of inflation little-changed from that seen in the prior month.
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Turkish Prime Minister Ahmet Davutoglu urged Moscow to reconsider economic sanctions imposed after Turkey shot down a Russian fighter plane last week, while refusing to apologise for the incident. "We hope that Russia will reconsider these reactions, these measures, which will be against our interests both," Davutoglu told journalists during a visit to NATO headquarters in Brussels. Russian President Vladimir Putin on Saturday ordered the sanctions, including bans on some Turkish exports, a prohibition on hiring Turkish nationals starting next year and suspension of visa-free travel for Turkish citizens.
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US President Barack Obama met with Putin on the sidelines of the COP21 climate conference in Paris on Monday. A statement from the Kremlin said Obama and Putin had a detailed exchange of views on the situation in Syria, where both countries have been conducting airstrikes. The Kremlin said the two leaders expressed support for moving towards a political settlement, which the US claims must include the removal of Syrian President Bashar al-Assad. During the meeting, Obama expressed regret over the shooting down of the Russian warplane by the Turkish air force in Syria.
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The US is "aggressively" strengthening its visa waiver programme in light of the terrorist attacks in Paris, the White House said. The visa waiver programme permits visa-free travel to the US for citizens of 38 countries, most of them in Europe. An estimated 20 million people, or about 40% of all overseas visitors, use it annually to enter the US without a visa for business or pleasure for up to 90 days. The White House said the changes implemented Monday include several steps to bolster the relationships between the US and the 38 visa waiver countries. Among them are a change in the application process to capture information about an applicant's past travel to countries believed to provide a safe haven to terrorists.
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BROKER RATING CHANGES
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GOLDMAN RAISES HAMMERSON TO 'BUY' ('NEUTRAL') - TARGET 770 (750) PENCE
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LIBERUM INITIATES HAMMERSON WITH 'BUY' - TARGET 704 PENCE
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GOLDMAN RAISES G4S TO 'NEUTRAL' ('SELL') - TARGET 222 (260) PENCE
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BARCLAYS CUTS SSP GROUP TO 'EQUAL WEIGHT' ('OVERWEIGHT') - TARGET 300 (320)P
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HSBC RAISES SMITHS GROUP TO 'HOLD' ('REDUCE') - TARGET 1000 PENCE
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TRADERS: CITIGROUP CUTS BABCOCK TO 'SELL' ('NEUTRAL')
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HSBC CUTS WEIR GROUP TO 'REDUCE' ('HOLD') - TARGET 1000 (1300) PENCE
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COMPANIES - FTSE 100
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Theme parks and attractions operator Merlin Entertainments said trading has remained in line with its expectations and it is on track for the year to December 27, despite continued tough trading in its Resort Theme Parks operating division. Merlin said like-for-like revenue growth for its Legoland Parks division has remained robust in the 47 weeks to November 21, while its Midway Attractions business has seen growth, albeit at lower levels due to challenging markets in London and Hong Kong, which has been offset by strength elsewhere in Asia. For the Resort Theme Parks operating arm, however, trading at Alton Towers has remained significantly weaker year-on-year, though the year-on-year declines have eased in recent weeks.
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The US Senate said it will hold a hearing next week into the proposed takeover of SABMiller by rival Anheuser-Busch InBev. The Senate Judiciary Committee said its antitrust subcommittee will hold a meeting on the proposed merger of the two largest beer companies in the world on December 8.
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Anti-smoking campaigners are calling for an inquiry to be launched into whether employees of British American Tobacco paid bribes to politicians and civil servants in east Africa, The Times reported. According to a documentary aired by the BBC's Panorama, BAT, which owns the Dunhill and Lucky Strike cigarette brands, paid bribes to officials in east Africa, based on evidence from former employee Paul Hopkins, who was based in Kenya and worked for the tobacco giant for 13 years. Hopkins said he was planning to meet with the Serious Fraud Office this week and said he was told bribery was the way of doing business in Africa, adding some BAT managers were aware of his activities.
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COMPANIES - FTSE 250
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Specialty chemicals company Croda International said it has struck a deal to acquire Netherlands-based Incotec Group BV for EUR155.0 million, including debt. Incotec, based in Enkhuizen, develops and supplies technologies for vegetable seeds and field crops. In the financial year ended September 30, it had revenue of EUR71 million.
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St Modwen Properties said its pretax profit for the year to end-November is "likely to be in line with market expectations". The property regeneration company said that activity across its commercial portfolio is progressing in line with regional market recovery. It disposed of a number of mature assets during the year, and used the sale proceeds to fund strategic acquisitions across the UK.
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Vehicle hire company Northgate said its pretax profit dipped in the first half due to weaker margins and a hit from the euro to its Spanish business, along with a change in revenue mix. Northgate's pretax profit for the half to the end of October was GBP42.8 million, down from GBP46.9 million, as its gross margins deteriorated year-on-year and it was hit by higher vehicle depreciation rates and by the weakness of the euro. The group will pay an interim dividend of 5.1 pence per share, up from 4.3p.
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Pentagon Lock said it sold 60 million shares in Sophos Group, or around a 13.3% stake, at a price of 265 pence each Tuesday, or a total of GBP159.0 million. This was a discount to the IT security and software company' closing price Monday of 283.60 pence. Following the sale the sellers, Pentagon Lock Sarl, Pentagon Lock 7-A Sarl, Pentagon Lock US Sarl, and Pentagon Lock 6-A Sarl, hold an around 21.8% stake in Sophos.
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The retail executive responsible for turning around the Garden Centre Group is understood to be preparing a bid to buy the Homebase DIY and garden centre business from Home Retail Group, the Financial Times reported. Nicholas Marshall told the FT he has been looking at Homebase for the past couple of years and was holding talks with private equity companies, though no approach has yet been made to Home Retail, which also owns the Argos retail chain. People close to the situation said Marshall would likely seek to transform Homebase from a DIY centre into a more family-friendly retailer, with more extensive garden and pet products.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Exhibition and conferences company ITE Group expressed confidence in its future prospects and it maintained its total dividend, as it reported a fall in pretax profit for its recently ended financial year, hit by market conditions in Russia and the fall in the oil price. The company noted that whilst it has seen some stabilisation in trading conditions in Russia, a hit from lower oil prices and domestic currency weakness has hampered its forward bookings for the first half of 2016. Group revenue already booked for its current financial year are GBP77 million, which represents around 57% of market expectations for the full year.
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Topps Tiles said its pretax profit edged higher in its last financial year thanks to good revenue growth, though like-for-like sales slowed over the course of the year and has continued this trajectory in the first weeks of its current year. The tiles specialist said its pretax profit for the 53 weeks to October 3 was GBP17.0 million, compared to a GBP16.7 million profit for the 52 weeks to September 27, 2014. Topps will pay a final dividend of 2.25 pence per share, up from 1.60p, taking its total dividend payout to 3.00p from 2.25p.
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COMPANIES - INTERNATIONAL
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Morgan Stanley plans to reduce as much as a quarter of its fixed-income staff after years of revenue declines and insufficient returns, Bloomberg reported citing people familiar with the matter. The cuts will be across all regions and are set to take place in the next two weeks, the report said.
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Anadarko Petroleum was ordered to pay USD159.5 million for its role as part-owner of the doomed Gulf of Mexico well that in 2010 caused the biggest offshore oil spill in US history. The order comes after the government asked US District Judge Carl Barbier in New Orleans that the company should be fined more than USD1 billion for its role in the well's blowout, which killed 11 people and spewed oil for almost three months. Anadarko, which had a 25% stake in the Macondo well, said that it is pleased that the penalty is far less than the amount sought by the government. BP agreed in July to pay USD5.5 billion in pollution fines as a part of a USD20.8 billion settlement with the US and five Gulf states.
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Samsung Electronics replaced the executive overseeing its mobile-phone business as the company tries to protect a declining sales lead against Apple and Chinese makers. Koh Dong Jin, who helped develop the latest Galaxy S6 and Galaxy Note 5 devices, takes over as president of the mobile communications business as Samsung heads toward its lowest profit in four years. He replaces Shin Jong Kyun, who remains a president and co-chief executive officer of the electronics business, Samsung Group said.
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Adobe released its 2015 online shopping data for Cyber Monday. A record USD2.98 billion, 12% more than in 2014, will be spent online by the end of the day, marking the largest online sales day in history. Thanksgiving Day through Cyber Monday will drive a total of USD11 billion in online sales, a 15% increase year-over-year and 30% of all online sales in November. Brick-and-click retailers saw the strongest growth in sales year-over-year with 18% reversing the trend of Cyber Monday being an online-only retailer day.
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Tuesday's Scheduled AGMs/EGMs
Wolseley
UTV Media (re sales of assets to ITV)
London & St Lawrence Investment Co
Aberdeen Asian Smaller Companies Investment Trust
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
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