3rd Feb 2017 08:19
LONDON (Alliance News) - Share prices in London opened firm on Friday, as the Chinese central bank surprised markets with an interest rate hike. The tightening measure is set to control the over-leveraging of Chinese corporates.
Also Friday, survey results from IHS Markit showed that China's manufacturing activity growth slowed slightly at the start of 2017 as output and new orders expanded at weaker rates.
The Caixin Purchasing Managers' Index for the Chinese factory sector dropped more-than-expected to 51.0 in January from December's 47-month record of 51.9. The score was forecast to ease marginally to 51.8.
Still ahead in the economic calendar are the Markit services PMI reading for the UK and the US nonfarm payrolls report.
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 7,147.67
FTSE 250: up 0.3% at 18,320.20
AIM ALL-SHARE: up 0.1% at 890.52
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Hang Seng: closed down 0.2% at 23,135.70
Nikkei 225: closed flat at 18,918.20
DJIA: closed flat at 19,884.91
S&P 500: closed up 0.1% at 2,280.85
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GBP: soft at USD1.2522 (USD1.2539)
EUR: down at USD1.0758 (USD1.0800)
GOLD: soft at USD1,214.12 per ounce (USD1,217.43)
OIL (Brent): flat at USD56.96 a barrel (USD56.88)
(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)
0845 Italy Markit services PMI
0850 France Markit services and composite PMI
0855 Germany Markit services and composite PMI
0900 EU Markit services and composite PMI
0930 UK Markit services PMI
1000 Italy consumer price index preliminary
1000 EU retail sales
1330 US nonfarm payrolls, unemployment rate, average earnings
1415 US Fed's Evans dpeech
1445 US Markit PMI services and composite
1500 US ISM non-manufacturing PMI
1500 US factory orders
1500 Canada Ivey purchasing managers index
1800 US Baker Hughes US oil rig count
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People's Bank of China unexpectedly lifted its interest rates on open market operations and funds provided through Standing Lending Facility. The bank raised the 7-day reverse repo rate by 10 basis points to 2.35%. Similarly, the 14-day reverse repo rate was lifted to 2.5%. The 28-day repo rate was also increased by 10 basis points. All new rates take effect on February 3. The overnight rate for the Standing Lending Facility loan was hiked to 3.1% from 2.75%.
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Members of the Bank of Japan's monetary policy board believe that the country's economic recovery remains on a moderate recovery path, minutes from the board's December 19 and 20 meeting revealed. Inflation expectations continue to be in a weakening phase, hampering the central bank's stated goal of ending deflation.
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The services sector in Japan continued to expand in January, although at a slower pace, the latest survey from Nikkei showed with a PMI score of 51.9. That's down from 52.3 in December, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. The composite PMI came in at 52.3, down from 52.8 in December.
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UK Prime Minister Theresa May plans to brief EU leaders on her meeting last week with US President Donald Trump, who gave her a "guarantee that he was 100% supportive of NATO," British officials said. Trump's guarantee and the "recognition of NATO as the bulwark of our collective defence" reflect the importance of strong cooperation on defence and security, May's office said ahead of Friday's informal summit of EU leaders in Malta. It said May would encourage other leaders to "deliver on their commitments" to NATO to spend 2% of their GDP on defence, "so that the burden is more fairly shared".
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Strong winds reaching up to 70mph and heavy rain are expected to batter parts of the UK on Friday. Yellow warnings for wind covering the south and south east of England and southern Wales have been issued by the Met Office from 1100 GMT on Friday to 0300 GMT on Saturday. Despite reports suggesting the storm would be called Doris, the Met Office said the front is not a "named storm", but could still bring down some trees and cause travel disruption.
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Ireland's services sector expanded at a strong pace for a third straight month in January, as new order gains hit a one-year high, survey results from IHS Markit showed. The Investec Services Purchasing Managers' Index climbed to 61.0 from 59.1 in December. A score above 50 suggests growth in the sector, which has now expanded for 54 consecutive months. The latest expansion was the fastest since June last year, which panelists attributed to improved customer confidence, the launch of new products and higher new orders.
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Russia is "weaponising misinformation" in a sustained campaign of destabilisation against the West, UK Defence Secretary Michael Fallon has warned. In a hard-hitting speech, Fallon accused Moscow of using cyber weaponry to "disrupt critical infrastructure and disable democratic machinery" in a series of attacks on western countries. He said that it was vital that Nato strengthened its cyber defences while doing more to tackle the "false reality" being propagated by the Kremlin.
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The US tweaked sanctions with Russia to allow the sale of some technology that had been impacted by measures taken against Moscow over its alleged election-related hacking. The Treasury Department's sanctions cleared US companies to conduct limited transactions with the Russian intelligence agency Federal Security Service because it provides licenses for importing information technology, such as computers and mobile phones. The White House stressed that the move was part of a common review of sanctions and not a change in policy.
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The US Senate voted to undo a rule approved under former president Barack Obama aimed at keeping coal mining waste out of waterways. The upper chamber of Congress voted 54-45 to roll back the stream protection rule under a measure that grants congressional review of regulations. A handful of Democrats from energy-producing states joined Republicans in the move. The lower House of Representatives had approved similar action a day earlier, and the move now heads to President Donald Trump's desk.
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US House Speaker Paul Ryan said Republicans remain committed to tax reform and boosting infrastructure spending but noted that the issues will have to wait until the spring. Ryan told Fox News the GOP has prioritised repealing and replacing the healthcare reform law known as Obamacare because he said the system is collapsing.
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Any nuclear attack on the US or its allies would be met with an "effective and overwhelming" response, new US Defence Secretary James Mattis has warned North Korea. "America's commitments to defending our allies and to upholding our extended deterrence guarantees remain ironclad," he was quoted as saying by the Yonhap news agency at a joint press conference with his South Korean counterpart Han Min Koo in Seoul.
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Australian Prime Minister Malcolm Turnbull said the refugee resettlement agreement between Australia and the US would be honoured, despite President Donald Trump calling it a "dumb deal" after a reportedly hostile phone conversation between the pair. "It is very important that [the deal] goes ahead because it will enable us to secure resettlement options for people," Turnbull told reporters outside his Sydney home.
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US President Trump made clear that military action was not "off the table" after the White House warned Tehran over its weekend missile launch. "Nothing's off the table," Trump told reporters when asked about military action, a day after his national security advisor had issued the warning. Michael Flynn said Wednesday the White House was "officially putting Iran on notice" and criticised the country's "destabilizing behaviour across the Middle East". The Iranian Foreign Ministry called the US warning "baseless and provocative".
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BROKER RATING CHANGES
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TRADERS: MORGAN STANLEY RAISES WILLIAM HILL TO 'EQUAL-WEIGHT' ('UNDERWEIGHT')
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UBS INITIATES PAYSAFE WITH 'BUY' - TARGET 465 PENCE
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BERENBERG INITIATES KEYWORDS STUDIOS WITH 'BUY' - TARGET 760 PENCE
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COMPANIES - FTSE 100
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Sage Group said it has appointed Soni Jiandani, formerly senior vice president of marketing at US technology firm Cisco Systems, as a non-executive director. Jiandani worked at Cisco for 22 years, and prior to that was a marketing executive at UB Networks, which was acquired by Newbridge Networks Corp in 1997.
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COMPANIES - FTSE 250
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Zoopla Property Group said it has changed its registered name to ZPG PLC in order to reflect "the evolution and diversity of the business". The name change, which was approved by ZPG's shareholders at its annual general meeting on Thursday, was effective immediately. Of the shareholders who voted, 99.99% voted in favour of the name change. ZPG said it made the decision to change its name from Zoopla Property Group as it is the owner of a number of digital platforms including Zoopla, uSwitch, PrimeLocation and Property Software Group.
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Home emergency cover provider Homeserve said it has acquired shareholdings in UK-based Checkatrade and Spanish firm Habitissimo for a total of GBP37.0 million. HomeServe bought a 40% stake in Checkatrade, an online directory for tradespeople which attracts around 1.0 million unique users per month. Homeserve also acquired a 70% holding in Habitissimo, with an option to acquire the remaining 30% of the business within five years. Habitissimo is a Spanish equivalent to Checkatrade, connecting home owners and consumers with tradespeople in Spain.
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Electra Private Equity said it will receive GBP203.0 million in proceeds from the sale of Audiotonix by its investment manager. Electra said Epiris, its investment manager, has agreed the sale of the audio mixing console manufacturer to European private equity firm Astorg. Electra's proceeds from the sale represent an uplift of GBP62.0 million, or 44%, from the carrying value of its Audiotonix investment as at September 30. This equates to a pro-forma increase of 133 pence in net asset value per share.
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Specialist insurer Beazley said it increased its pretax profit in 2016 following a year of strong growth in premiums written. Beazley reported pretax profit of USD293.2 million for 2016, up from USD284.0 million the prior year. Beazley noted the rise in profit was driven primarily by higher investment return, with net investment income rising to USD93.1 million from USD57.6 million. The rise in profit came despite a small worsening of Beazley's combined operating ratio to 89% from 87%. Beazley said gross premiums written in the year were 6% higher than in 2015, at USD2.20 billion from USD2.08 billion. Beazley declared a second interim dividend of 7.0 pence, bringing its full-year dividend to 10.5p, up from 9.9p the prior year. Beazley also announced a special dividend of 10.0p per share, less than the 18.4p declared in 2015.
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Fashion retailer French Connection revealed that Sports Direct International has acquired an 11% stake in the business. In a stock exchange filing, French Connection said Sports Direct, the mid-cap sports clothing and equipment retailer, has acquired 10.7 million shares, or an 11.16% stake in the company.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Irish budget airline Ryanair Holdings reported growth in customers carried and in its load factor for January. Ryanair said it carried 8.8 million customers in January, 17% higher than the 7.5 million carried in January 2016. On a rolling 12-month basis to January, overall traffic grew 15% year-on-year to 118.3 million customers. The group added its load factor in January improved two percentage points year-on-year, rising to 90% from 88%.
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Bank of Ireland said it intends to establish a new parent company of the group, as part of its contingency planning for a potential collapse. Bank of Ireland said the move comes in response to a decision from the European Banking Union's Single Resolution Board and the Bank of England. The regulatory authorities have advised the Irish lender their preferred resolution strategy for a potential failure is a "single point of entry" bail-in. Such a plan transfers subsidiary losses to a parent holding company, avoiding the complex break-up of a lender into healthy parts and 'bad banks'.
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Johnston Press said its trading in 2016 was broadly in line with expectations despite a "challenging" print market, with some improvement seen in the fourth quarter. The regional news and publishing firm said its total revenue, adjusted to include its acquisition of the 'i' newspaper in April and to exclude disposals and exceptional costs, fell 6.0% in 2016. Johnston Press said that, after a period of "difficult trading" in the summer caused by uncertainty surrounding the UK's vote to leave the European Union, conditions improved in the fourth quarter. Adjusted revenues in the fourth quarter were up 1.0% compared to the equivalent quarter the prior year, with a strong performance from the 'i' and other titles including the Yorkshire Post.
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Irish petrol forecourt retailer Applegreen said Chief Financial Officer Paul Lynch has decided to leave the company. Applegreen did not give a reason for Lynch's departure. He has been CFO since July 2014. The company said it will start the process of identifying a successor immediately and said Lynch will remain in the role until the end of June to facilitate an orderly transition.
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COMPANIES - INTERNATIONAL
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Amazon.com reported a fourth-quarter profit that increased from a year ago, driven largely by 22% growth in revenues, especially at Amazon Web services. However, shares of the online retailer dropped nearly 4% in extended session after its revenue for the holiday season quarter fell short of Wall Street expectations. Seattle, Washington-based Amazon reported fourth-quarter profit of USD749 million, up from USD482 million last year. Amazon's sales for the quarter climbed 22% to USD43.74 billion from USD35.74 billion a year ago. Analysts had a consensus revenue estimate of USD44.68 billion for the quarter.
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Snapchat's parent company Snap filed with the US Securities & Exchange Commission for an initial public offering. It has not yet disclose the terms of its offering. The company plans to list on the New York Stock Exchange under the proposed symbol "SNAP". Morgan Stanley, Goldman Sachs, JPMorgan and Deutsche Bank Securities are the lead underwriters on the offering. The social-media company reported revenue of USD404.5 million for 2016, up from USD58.7 million in 2015. Snap reported a net loss of USD514.6 million for 2016, wider than the USD372.9 million reported in the prior year.
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The chief executive of Uber has backed out of a business advisory council set up by Donald Trump, a week after the new US president issued an immigration order that raised concerns for the ride-hailing company and its employees. Travis Kalanick spoke briefly with Trump on Thursday about the order "and its issues for our community", and told the president he "would not be able to participate" in the council, he said in an email sent to employees and seen by dpa.
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German retail giant Metro reported its first-quarter attributable profit declined to EUR200 million from EUR549 million a year ago. The previous year's figure included the income from the sale of Metro Cash & Carry Vietnam. Adjusted attributable profit was EUR381 million, compared to EUR367 million. Sales edged down 0.6% to EUR16.99 billion from EUR17.09 billion last year.
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Friday's Shareholder Meetings
Brewin Dolphin Holdings
Scottish Investment Trust
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By Tom Waite; [email protected]; @thomaslwaite
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