26th Jul 2016 07:23
LONDON (Alliance News) - Investors in BT breathed a sigh of relief early Tuesday, after the UK telecommunications industry regulator decided the company will not have to sell off its Openreach broadband infrastructure division, only separate it legally within the group.
The stock was up 2.7% in early trade. Fellow FTSE 100 constituents GKN, Mondi and Provident Financial also were rising, following confident trading updates. Shares in BP were down 1.0% after the oil major reported that underlying profit in the first half of 2016 fell by more than two thirds from a year before.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,737.61
FTSE 250: down 0.2% at 17,062.17
AIM ALL-SHARE: flat at 744.62
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Hang Seng: up 0.8% at 22,158.13
Nikkei 225: closed down 1.4% at 16,383.04
DJIA: closed down 0.4% at 18,493.06
S&P 500: closed down 0.3% at 2,168.48
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GBP: down at USD1.3073 (USD1.3121)
EUR: up at USD1.1006 (USD1.0977)
GOLD: flat at USD1,318.30 per ounce (USD1,318.62)
OIL (Brent): flat at USD44.86 a barrel (USD44.81)
(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 BST)
US Fed begins two-day policy meeting
09:30 UK BBA mortgage approvals
13:55 US Redbook index
14:00 US S&P/Case-Shiller home price indices
14:45 US Markit services and composite PMI preliminary
15:00 US consumer confidence
15:00 US new home sales
15:00 US Richmond Fed manufacturing index
21:30 US API weekly crude oil stock
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UK Prime Minister Theresa May will hold talks on Tuesday with Irish Premier Enda Kenny in the latest meetings on how Brexit will unfold. Kenny, who last week met French President Francois Hollande on the issue, said his trip to London offers a chance for constructive discussions.
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Ex-BHS boss Philip Green has insisted he is "trying to find a solution" for the collapsed firm's pension fund and apologised to staff caught up in the "horrid story". He acknowledged that selling the high street chain to Dominic Chappell's Retail Acquisitions firm was "a very bad choice" and he felt "badly let down". But he lashed out at the parliamentary committees which produced a damning report into the collapse of the firm, insisting that it was a "predetermined and inaccurate output of a biased and unfair process".
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Producer prices in Japan were up 0.2% on year in June, the Bank of Japan said. That was unchanged from the previous month, and it topped forecasts for an increase of 0.1%. On a monthly basis, producer prices were flat for the second straight month.
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At least 19 people were killed and 25 others wounded in a knife rampage at a facility for the mentally disabled near Tokyo Tuesday, local media reported. Police responded to a call at around 2:30 am local time from an employee saying a knife-wielding man broke into the facility in the city of Sagamihara in Kanagawa prefecture and went on a stabbing spree, Kyodo News agency reported. 20 of the victims were seriously injured. The man, named as Satoshi Uematsu by Kyodo, afterwards drove himself to the local police station at 3 am and admitted to the attack.
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Bernie Sanders's grassroots US presidential campaign wound down Monday at the Democratic National Convention, going out with a bang, not a whimper. Cheered wildly by thousands of delegates gathered for the four-day convention in Philadelphia, Sanders presented himself as a great reconciler amid angry protests by his supporters who still held out hope. "Hillary Clinton must become the next president of the United States," Sanders declared, pledging to do all he can to make sure Clinton and other Democrats are elected in November. "I am proud to stand with her tonight."
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The fallout from this month's coup attempt in Turkey claimed yet more scalps, with dozens of journalists, academics, soldiers, diplomats and airline employees targeted for possible links to the July 15 putsch. Monday saw 42 soldiers arrested, with reports that some were high-ranking officers. Additionally, three elite soldiers who stormed the hotel where President Recep Tayyip Erdogan was staying the night of the coup attempt have been detained. Also, 42 reporters - including prominent regime critic Nazli Ilicak - and 31 academics were the target of the latest phase of the post-coup investigation.
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Senior diplomats from the US and Russia are set to meet Tuesday in Geneva to revive the stalled UN-brokered Syria peace talks, spokespeople of both countries confirmed in the Swiss UN city.
Moscow and Washington have been instrumental for these talks, as Russia backs the Syrian government while the US supports rebel groups.
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BROKER RATING CHANGES
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BERENBERG CUTS ARM HOLDINGS TO 'HOLD' (BUY) - PRICE TARGET 1700 (1400) PENCE
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BERENBERG RAISES LLOYDS BANKING TO 'HOLD' (SELL) - PRICE TARGET 55 PENCE
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Investec Raises PZ Cussons To Buy From Add, Target To 361p From 343p
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COMPANIES - FTSE 100
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UK media and communications industry watchdog Ofcom tabled plans to reform the regulation of telecommunications operator BT Group, including a proposal for BT's Openreach network infrastructure arm to become a separate legal entity. Ofcom said Openreach should become a "distinct company" from BT with its own board, though still owned by BT. Executives in the unit would become accountable to the new board rather than to BT's management, and Openreach would be obliged to consult formally with its customers, notably rival broadband providers such as Sky and TalkTalk Telecom Group, on large investment plans. Openreach would own its own physical network and would run a separate strategy to BT, with control over its budget allocation. It also would have its own brand, not affiliated with BT. In response, BT said it will establish an independent board for Openreach.
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BP said its underlying profit in the first half of 2016 was down by more than two thirds amid a steep decline in revenue, as the oil and gas major said it should add around 500,000 barrels to daily production by the end of 2017. The FTSE 100 heavyweight said underlying replacement cost profit, which excludes certain exceptional items, plummeted 68% in the first half of the year to USD1.25 billion from USD3.89 billion a year earlier, as revenue fell 28% to USD84.95 billion from USD117.57 billion. BP kept its second quarter dividend flat at 10.0 cents per share, making a first half interim payment of 20.0 cents per share.
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Anglo American said the underlying earnings contribution from Kumba Iron Ore has dropped by almost 26% in the first half of 2016 as the company shuffled its management within the iron ore and coal businesses in South Africa. Kumba Iron Ore, which holds and operates three mines and some other assets, will contribute USD143.0 million to Anglo American's underlying earnings in the first half of the year, compared to the USD192.0 million contribution a year earlier. The drop in earnings from the operation comes a day after Anglo American said underlying earnings from its platinum mining arm dropped by over 60% in the first half of the year to USD68.0 million from USD175.0 million.
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Engineer GKN reported acquisition-driven growth in revenue but lower pretax profit for the first half of 2016 and said it will book a charge in the second half as it seeks to cut costs in the business. The group said pretax profit for the six months to the end of June fell to GBP182.0 million from GBP212.0 million a year prior, down 14% year-on-year primarily due to mark-to-market valuations of foreign exchange contracts. Revenue grew to GBP4.24 billion from GBP3.62 billion, helped by 2.0% organic sales growth and by the contribution from Fokker, the Dutch aerostructures business that GKN bought a year ago. GKN said it will pay an interim dividend of 2.95 pence per share, up from 2.90p a year before.
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Anglo-South African paper and packaging company Mondi said its underlying operating profit for the first half of 2016 will rise year-on-year. Mondi said it has booked no special items in the first half, compared to a EUR36.0 million charge recognised a year earlier. As a result, it anticipates underlying operating profit will be higher than the EUR490.0 million it posted for the first half of 2015.
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Sub-prime lender Provident Financial reported a surge in interim pretax profit amid strong growth in its Vanquis, Moneybarn and Consumer Credit units. Provident said pretax profit in the half to the end of June was GBP165.4 million, up 49% from the GBP111.1 million made a year prior. Adjusted pretax profit was GBP148.9 million, up 18% from GBP126.6 million. Thanks to the growth in profit, Provident declared an interim dividend of 43.20 pence, up 10% year-on-year from 39.20p.
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COMPANIES - FTSE 250
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Drax Group said full-year earnings are now likely to be at the lower end of the company's guidance range as the company drastically cut its interim dividend by reducing the payout by almost 60% following a drop in underlying earnings. Drax will pay a dividend of 2.1 pence for the first half of 2016 compared to the 5.1 pence paid in the previous year.
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Man Group said acquisition-related charges sent its interim profit lower as funds under management declined, and the group trimmed its dividend. The hedge fund manager said pretax profit for the half-year to the end of June was USD55.0 million, a big fall on the USD163.0 million posted a year prior. Funds under management at the end of June slipped to USD76.40 billion from USD78.80 billion a year earlier and from USD78.70 billion at the end of December. Man Group said it will pay an interim dividend of 4.5 US cents per share, down from 5.4 cents a year before.
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Virgin Money Holdings posted a sharp rise in pretax profit in the first half of 2016 as it continued to grow its mortgage operations. The lender said its pretax profit for the half-year to the end of June was GBP93.7 million, a 70% jump against the GBP55.0 million reported a year earlier. Underlying pretax profit, stripping out one-offs, grew to GBP101.8 million, up 53% from GBP66.4 million a year prior. The company said it will pay an interim dividend of 1.6 pence per share.
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Warehouse property investor SEGRO said its pretax profit for its first half fell despite a rise in net asset value, as it announced it was poaching property developer Capital & Counties' Managing Director and Chief Financial Officer Soumen Das. SEGRO said its pretax profit dipped to GBP200.7 million for the six months ended June 30, down from GBP330.0 million for the same period a year earlier, primarily on the back of a lower valuation surplus on its investment properties. The company said it was offering an interim dividend of 5.20p per share, up 4.0% from 5.00p per share a year earlier. SEGRO said it was appointing Soumen Das as its chief financial officer, with Das expected to join the company in the new year and to succeed Justin Read who will retire at the end of 2016.
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PZ Cussons reported a slight decline in profit in its recently ended financial year, although revenue grew and the soap and shampoo company said its performance in the new financial year has been in line with expectations so far. PZ Cussons said pretax profit in the year ended May 31 slipped to GBP83.7 million from GBP84.0 million the year before, despite revenue rising to GBP821.2 million from GBP819.1 million. PZ Cussons will pay a total dividend of 8.11 pence, up from 8.00p the year before.
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COMPANIES - INTERNATIONAL
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Online retail giant Amazon.com announced a partnership with the UK government to explore the steps needed to make the delivery of parcels by small drones a reality, allowing Amazon to trial new methods of testing its delivery systems. A cross-government team supported by the UK Civil Aviation Authority has provided Amazon with permissions to explore three key innovations: beyond line of sight operations in rural and suburban areas, testing sensor performance to make sure the drones can identify and avoid obstacles, and flights where one person operates multiple highly-automated drones.
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Mobvoi, the Chinese AI startup backed by Google, intends to go toe-to-toe with Apple when it begins selling its smartwatches in the US in September, Bloomberg reported. The four-year-old startup founded by a coterie of former Googlers is hoping American consumers will take to the second generation of the Ticwatch, which made waves back home via voice-activated natural language search and innovative features like a touch-sensitive strip for scrolling. The new version responds to questions in English and will let US users order pizzas, hail Ubers and pick out restaurants on Yelp. The USD200 gadget will go for a fraction of the standard-issue Apple Watch.
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Goldman Sachs Group is facing a Federal Reserve enforcement action over the 2014 leak of confidential documents to the bank by one of the regulator's employees, the New York Times reported citing people familiar with the matter. Goldman Sachs is expected to pay a fine to settle the case, the Times reported Monday. The Fed is also considering action against a former Goldman Sachs executive who worked with the banker that received the leaked information, the newspaper said, adding the agreement could be announced in coming weeks.
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Commerzbank reported that, on the basis of preliminary figures, second-quarter net profit attributable to shareholders decreased to EUR209 million from EUR307 million euros in the previous year. Operating profit was EUR342 million compared to EUR419 million. CET 1 under full application of Basel 3 stood at 11.5% at the end of June 2016 based on preliminary figures.
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Air France cabin crew, represented by the SNPNC-FO and UNSA-PNC unions, have announced their plan to go on strike from July 27 to August 2. The strike is for a new labour agreement as well as to increase number of crew members and for better working conditions. Air France expects the strike to affect some of its flights and will have to cancel some flights. Internal and medium haul flights within Europe are expected to be the worst affected.
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French tire maker Michelin reported its first-half net income increased to EUR769 million from EUR707 million last year. Net sales dropped to EUR10.292 billion from EUR10.497 billion in the prior year. The company noted that passenger car and light truck tire markets rose over the period, with replacement sales levelling off in the second quarter.
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Tuesday's Shareholder Meetings
Halfords Group
Redcentric
Vp
Gresham House Strategic
Greka Drilling
Green Dragon Gas
Globalworth Real Estate Investments
Custodian REIT
Volex
Acal
GB Group
Red Leopard Holdings
SerVision
TR Property Investment Trust
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By Tom Waite; [email protected]; @thomaslwaite
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