21st Jul 2016 07:24
LONDON (Alliance News) - The pound was firm but stock prices saw a soft open Thursday. Ahead of a monetary policy decision by the European Central Bank at midday, a policy maker for the Bank of England said there is no need to rush into easing UK monetary policy in the wake of Brexit.
Meanwhile, a number of large UK companies provided trading updates, with revenue declines at actual currency rates reported by the likes of easyJet, Unilever and SABMiller.
easyJet let FTSE 100 decliners, down 5.9%, having been hit by a toxic combination of terrorist attacks, labour strikes and bad weather. It was followed by fellow travel stocks IAG, down 3.4% and TUI, down 1.2%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,706.69
FTSE 250: down 0.3% at 16,963.40
AIM ALL-SHARE: flat at 736.99
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Hang Seng: up 0.6% at 22,022.52
Nikkei 225: closed up 0.8% at 16,810.22
DJIA: closed up 0.2% at 18,595.03
S&P 500: closed up 0.4% at 2,173.02
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GBP: up at USD1.3246 (USD1.3172)
EUR: firm at USD1.1029 (USD1.1007)
GOLD: flat at USD1,317.09 per ounce (USD1,318.57)
OIL (Brent): firm at USD47.33 a barrel (USD47.11)
(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)
09:30 UK retail sales
09:30 UK public sector net borrowing
12:45 EU ECB interest rate decision
13:30 US Chicago Fed national activity index
13:30 US initial and continuing jobless claims
13:30 US Philadelphia Fed manufacturing survey
13:30 EU ECB monetary policy statement and press conference
13:30 Canada wholesale sales
14:00 US housing price index
15:00 US existing home sales
15:00 US Conference Board leading indicator
15:30 US EIA natural gas storage
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UK Prime Minister Theresa May and French President Francois Hollande will discuss Britain's plans to quit the European Union when they meet for talks in Paris on Thursday. After swiftly issuing an invitation to the Prime Minister when she took office last week, Hollande will host a working dinner at the Elysee Palace. It comes just a day after May met with German Chancellor Angela Merkel. At discussions in Berlin, Merkel said Britain should "take a moment" over its plans to sever its ties with Brussels but warned against leaving the negotiations "up in the air".
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The Bank of England should wait for more hard evidence on the state of UK economy following the Brexit vote before easing monetary policy wrote Monetary Policy Committee member Kristin Forbes in the Telegraph on Wednesday. Forbes highlighted that the UK's vote to leave the European Union was not a "Lehman moment", when markets and financial systems were crashing. This means the Bank of England does not need to pre-emptively ease its policy stance before more evidence on the economy is revealed.
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UK Labour leader Jeremy Corbyn will launch his fight to hold on to party leadership with a vow to tackle discrimination in the workplace by forcing firms to publish details of the pay and conditions of workers. Corbyn, who is facing a challenge from former shadow cabinet minister Owen Smith after a revolt by his MPs, will warn companies with more than 21 staff they could be fined unless they publish equality pay audits. Corbyn will use the leadership contest to set out how a Labour government will tackle the "five ills" of 21st century Britain - inequality, neglect, insecurity, prejudice and discrimination.
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Japan's all industry activity dropped for the first time in three months in May, the Ministry of Economy, Trade and Industry reported. The all industry activity index slid 1% month-on-month in May, reversing a 0.8% rise in April. This was the first increase in three months but slightly slower than the expected drop of 1.1%.
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Turkey woke up to its first full day under a state of emergency Thursday, imposed by the government the previous night. "Everything is looking normal" in the streets of Istanbul, a resident told dpa at 8 am (0500 GMT), with people commuting to work or taking coffees in the city's cafes. The three-month nationwide state of emergency was aimed at pursuing a "parallel structure" of exiled cleric Fethullah Gulen, blamed for the coup, government spokesman Numan Kurtulmus said Wednesday. Gulen has denied any involvement in Friday's attempted coup, which left more than 260 people dead and 1,500 injured.
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US Senator Ted Cruz was loudly booed by the Republican National Convention as he declined to endorse the party's nominee and his former rival Donald Trump. Cruz congratulated Trump on his nomination after beating 16 other candidates in the party primaries. He initially was received warmly, but the boos came when it became clear he wasn't going to endorse Trump as he had pledged to do. Instead, Cruz delivered a speech outlining the conservative principles he believes underpin the party that only once mentioned Trump by name. He urged voters not to stay home on election day in November but did not say for whom they should vote.
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An in-house staff writer for Donald Trump's company has claimed responsibility for the copied phrases included in Melania Trump's speech to the Republican National Convention. Meredith McIver said she offered to resign over the controversy but her offer was rejected. McIver, a former ballet dancer who helped Trump write some of his books, said Melania mentioned First Lady Michelle Obama as someone she liked as they worked on the speech.
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Sunderland's Sam Allardyce will be named the new England manager, according to media reports. Allardyce will replace Roy Hodgson, who resigned after England were eliminated by minnows Iceland at Euro 2016 last month. The 61-year-old spoke with the Football Association in the past week and was selected over Hull's Steve Bruce, who also met with FA officials, the BBC said. Allardyce took over at Sunderland last October and led the team as they avoided relegation from the Premier League.
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BROKER RATING CHANGES
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GOLDMAN CUTS SCHRODERS TO 'NEUTRAL' ('BUY') - TARGET 2930 (2800) PENCE
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Liberum Initiates Berkeley Energia At Buy, 60p Price Target
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COMPANIES - FTSE 100
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Unilever reported growth in profit in the first half of 2016, but sales fell due to negative movements in foreign exchange rates, and the company warned on tough market conditions for the remainder of the year. The consumer goods giant said pretax profit in the first half grew by 0.8% to EUR3.64 billion from EUR3.61 billion a year before, but sales fell by 2.6% to EUR26.28 billion from EUR27.0 billion. Unilever will pay a dividend of EUR0.3201 for the second quarter.
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easyJet reported a fall in revenue in the third quarter of its financial year as flight cancellations resulting from terrorist attacks, bad weather and air traffic control strikes offset a rise in seat capacity. The low-cost airline said total revenue in the quarter ended June 30 fell by 2.6% year-on-year to GBP1.20 billion, as revenue per seat declined by 7.7% to GBP54.54, despite the number of passengers carried rising by 5.8% to 20.2 million and load factor increasing by 0.3 percentage point to 92%.
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SABMiller reported a decline in net producer revenue in the first quarter of its financial year due to the strong dollar, but said growth on an underlying basis was achieved in most of its markets. The drinks giant, which is in the process of being taken over by its even bigger rival Anheuser-Busch InBev, said total reported NPR fell by 4% year-on-year in the quarter ended June 30, due to the depreciation of its key operating currencies against the US dollar. On a constant currency basis, however, total NPR grew by 2%, as 5% growth in Latin America, 6% growth in Africa and 6% growth in Europe, offset a 2% decline in Asia Pacific and 3% fall in North America.
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Anheuser-Busch InBev said it has entered into a consent decree with the US Department of Justice, which clears the way for US approval of its acquisition of SABMiller. The Budweiser brewer reaffirmed its expectation to close the deal in the second half of 2016. In order to secure the US approval, AB InBev agreed to divest SABMiller's US interest in MillerCoors to Molson Coors. This divestment, which was previously announced by AB InBev and Molson Coors, is conditional on the successful closing of the takeover.
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SSE reiterated its aim to return to growth in the current financial year and to deliver a small rise in adjusted earnings and a lift to the dividend as the utility firm reported further falls in customer numbers in the first quarter. SSE is aiming to deliver adjusted earnings per share, which excludes certain items, of 120.0 pence in the current financial year that will end in March 2017 alongside a increase to the dividend payment that is in line with RPI inflation. That means SSE is hoping to deliver a very small, 0.4% lift in adjusted earnings from the 199.5 pence reported last year. The dividend last year was up 1.1% to 89.4 pence, and a similar rise can be expected in the current year.
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Defence support services company Babcock International Group said its new financial year has started well, and it continues to have confidence in the fundamentals of its business post-Brexit. The group said its current financial year to the end of March 2017 has been in line with its expectations so far, with good demand for its critical services operations in the UK and overseas and with progress made on business development activity in key markets. Babcock said its order book and bid pipeline have remained stable since it published annual results in May. It said around 85% of its projected revenue for the current financial year is now in place, along with 56% for the following financial year.
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Commercial property investor Land Securities Group said it anticipates uncertainty in the business world will persist until some clarity emerges on a post-Brexit UK. Robert Noel, the chief executive of the FTSE 100 constituent, speaking ahead of Land Securities' annual general meeting, said that until clarity is provided on the timing and terms of the UK's exit from the European Union, uncertainty will persist. He added he anticipates this could "take some time".
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Hikma Pharmaceuticals said US regulatory approval of the company's Colchicine gout treatment was upheld. The US Court of Appeals for the District of Columbia Circuit affirmed an earlier decision of the US District Court for the District of Columbia, finding Hikma in favour. The Food & Drug Administration's regulatory approval of Hikma's Colchicine 0.6 mg capsule was upheld. Hikma can now continue marketing Colchicine capsules, used to prevent flares of gout, under the brand name Mitigare, as well as its authorised generic.
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The US Justice Department on Wednesday said one current and one former employee of HSBC Holdings have been charged with attempting to defraud an unnamed client of the bank through a scheme known as "front running". The US DoJ said the head of global foreign exchange cash trading at HSBC Holdings's HSBC Bank subsidiary, Mark Johnson, and the bank's former head of foreign exchange cash trading for Europe, the Middle East and Africa, Stuart Scott, have both been charged by complaint with conspiracy to commit wire fraud. Johnson was arrested at New York's John F Kennedy International Airport on Wednesday.
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COMPANIES - FTSE 250
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Bookmaker William Hill said Chief Executive James Henderson has stepped down from his role with immediate effect. Chief Financial Officer Philip Bowcock will step in as interim CEO, William Hill said, adding it has started a search for a permanent replacement for Henderson. Henderson took up the role of chief executive in August 2014.
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The investigation being conducted by HM Revenue & Customs into Sports Direct International's failure to pay warehouse staff the minimum wage is understood to have been widened to include its retail workers, The Guardian reported. The Guardian said investigators from the UK tax authority are examining whether the sports clothing and equipment retailer's 13,000 shop workers, in addition to the 3,000 it employees at its Shirebrook warehouse in Derbyshire, have been paid less than the legal minimum.
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COMPANIES - INTERNATIONAL
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French advertising and communications company Publicis Groupe reported its first-half group net income increased 5% to EUR381 million from last year's EUR363 million. Revenue for the period grew 4.6% to EUR4.75 billion from EUR4.54 billion last year. Organic revenue growth was 2.8%.
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Swiss engineering firm ABB reported its net income for the second-quarter of 2016 decreased 31% to USD406 million from last year's USD588 million, impacted by restructuring and restructuring-related expenses of USD367 million. Operational net income, which excludes the large restructuring and restructuring-related expense and certain other amounts, increased 12%. Revenue for the quarter declined 5% to USD8.677 billion, primarily due to lower short-cycle volumes and timing of order backlog execution.
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Swiss drug maker Roche Holdings reported its first-half net income on IFRS basis increased 4% to CHF5.467 billion from last year's CHF5.249 billion. Group sales increased 6% to CHF25.02 billion from CHF23.59 billion a year ago. Group sales grew 5% at constant exchange rates. Pharmaceuticals Division sales were up 6%, driven by oncology and immunology medicines. Looking ahead, for fiscal 2016, Roche continues to expect sales to grow low- to mid-single digit at constant exchange rates in 2016.
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Deutsche Lufthansa reported preliminary Adjusted EBIT for the first half of 2016 rose to EUR529 million from the prior-year's EUR468 million. But revenue for the period declined to EUR15.0 billion from EUR15.4 billion last year. Advance bookings, especially on long-haul routes to Europe, have declined significantly, in particular due to repeated terrorist attacks in Europe and to greater political and economic uncertainty since the original forecast was made in March. As of today, Lufthansa said it regards a complete recovery as not likely anymore, lowering its full-year earnings guidance.
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Intel, the world's biggest chipmaker, reported a drop in profit for the second quarter, hurt largely by restructuring charges related to cost cutting efforts. Santa Clara, California-based Intel's second-quarter profit dropped to USD1.33 billion or USD0.27 per share from USD2.71 billion or USD0.55 per share last year. In April, Intel announced it will be laying off about 12,000 jobs or about 11% of its global workforce as part of its restructuring. Intel said it recorded USD1.41 billion worth of restructuring and other charges during the quarter.
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eBay reported a second-quarter profit that increased from last year, driven largely by revenue growth. Shares of the company gained 6% in the extended hours after its earnings and revenues trumped estimates. The company also lifted its full year guidance. eBay's second-quarter profit surged to USD435 million or USD0.38 per share from USD83 million or USD0.07 per share last year. Revenue for the quarter rose to USD2.23 billion from last year's revenues of USD2.11 billion.
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American Express reported a surge in second-quarter profit, driven largely by a hefty gain from sale of Costco portfolio. New York-based American Express' second-quarter profit rose to USD2.02 billion or USD2.10 per share from USD1.47 billion or USD1.42 per share a year ago.
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Thursday's Shareholder Meetings
Royal Mail Group
SABMiller
Land Securities
Babcock International Group
SSE
AO World
Tate & Lyle
Premier Foods
Kibo Mining
Dee Valley Group
De La Rue
Halma
Active Energy Group
Paragon Entertainment
Breedon Aggregates (re name change to Breedon Group)
Intermediate Capital Group
Caledonia Investments
Wincanton
Gabelli Value Plus+ Trust
Caffyns
Fuller Smith & Turner
Personal Assets Trust
Creightons
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
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