9th Oct 2015 07:22
LONDON (Alliance News) - Doveish comments contained in the minutes of the most recent US Federal Reserve policy-making meeting were supporting shares prices around the world Friday.
Federal Open Market Committee members considered it "prudent" to wait for signs that problems outside the US, especially in China, would dissipate before raising US interest rates, while also expressing concern about weak US inflation.
Miners again led FTSE 100 gainers, with Glencore topping the list, up 5.7%, after announcing a 500,000 tonne per year reduction of contained zinc metal mine production across its operations in Australia, South America and Kazakhstan.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 17,126.81
FTSE 250: up 0.7% at 17,126.81
AIM ALL-SHARE: up 0.3% at 735.14
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Hang Seng: up 0.7% at 22,503.57
Nikkei 225: closed up 1.6% at 18,438.67
DJIA: closed up 0.8% at 17,050.75
S&P 500: closed up 0.9% at 2,013.43
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GBP: up at USD1.5373
EUR: up at USD1.1307
GOLD: up at USD1,146.18 per ounce
OIL (Brent): up at USD53.55 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times in BST)
IMF Meeting in Lima, Peru
09:00 Italy Industrial Output
09:30 UK Trade Balance
13:30 US Export and Import Price Indices
13:30 Canada Unemployment Rate
15:00 US Wholesale Inventories
15:30 Canada Bank of Canada Business Outlook Survey
18:30 US Fed's Evans Speech
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Downside risks to economic growth prevented the Federal Reserve from raising US interest rates in September, the minutes from the central bank's meeting confirmed. Most officials decided it would be "prudent" to wait for signs that problems overseas, especially in China, would dissipate. The Fed voted 9 to 1 to hold rates steady. Members were also concerned about anaemic inflation, which remains well below the Fed's 2% annual target rate. The Fed said it will consider raising interest rates before year's end, as policy makers "agreed that developments over the inter-meeting period had not materially altered the committee's economic outlook." However, the meeting took place September 16-17, a few weeks before the release of a disappointing jobs report.
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A group of MPs from the Conservative, Labour and UKIP parties and business leaders has formed to launch a new campaign aimed at taking the UK out of the European Union, dubbed 'Vote Leave', the BBC reported. Prominent figures include Labour's Kate Hoey, UKIP's Douglas Carswell, Tory donor Peter Cruddas, Labour backer John Mills and former UKIP treasurer Stuart Wheeler. It is the second eurosceptic campaign to launch ahead of referendum on a potential 'Brexit', which is due by 2017 at the latest.
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Christine Lagarde indicated for the first time that she is open to a second term as the head of the International Monetary Fund. "I'm certainly open to the fact that it would not be my last annual meeting," Lagarde said at a press conference in Lima, Peru, where this year's meeting is being held. But the decision is not for her to make, "it's for the membership," she said. Lagarde's term runs out in mid-2016. She previously had said she would make a decision on a second term toward the end of this year.
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The Trans-Pacific Partnership trade deal is "bound to be beneficial" for global economic growth, IMF chief Lagarde said. The deal, announced Monday by 12 Pacific Rim countries after five years of negotiations, is meant to lift most duties on trade and investment, set new business standards and protect intellectual property rights. Lagarde, speaking in Lima, said the Washington-based crisis lender is waiting to see still unreleased details of the 30-chapter pact, which will cover 800 million people with 40% of the world's gross domestic product. "As a matter of principle, such a trade agreement is bound to unleash some potential, is bound to create some value, is bound to open up more borders," she said.
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BROKER RATING CHANGES
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MERRILL LYNCH CUTS NATIONAL GRID TO 'NEUTRAL' ('BUY') - TARGET 965 PENCE
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Liberum Ups Informa To Hold From Sell, Lifts Price Target To 570p From 450p
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COMPANIES - FTSE 100
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The UK government has sold a further 1% shareholding in Lloyds Banking Group through the trading plan it launched in December, which it said took the total raised so far to GBP15.5 billion. This reduced the government's shareholding to below 11% to 10.97%. Retail Broker Hargreaves Lansdown said that some 120,000 people have expressed interest in buying shares in Lloyds in the three days since the government announced the retail sale of shares in the bank, the Times reported. The broker said the level of interest was 'tremendous' and exceeded the 100,000 who bought Royal Mail shares through it in 2013.
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The Royal Bank of Scotland Group said it received a notice from the UK government to convert 51.00 billion series 1 B shares the Treasury holds into 5.10 billion new RBS ordinary shares. Following this conversion, the UK government will hold 72.88% of the company's issued ordinary share capital. This will have no impact on RBS's retained earnings, the company said. The Dividend Access Share owned by the UK government remains outstanding, RBS said. The new ordinary shares will start trading October 14.
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The London Stock Exchange Group late Thursday said it has agreed to sell Frank Russell Co's asset management business, Russell Investments, to TA Associates for USD1.15 billion. The sale is subject to regulatory and other approvals. The LSE had originally announced it planned to sell the business in February. The LSE said that Reverence Capital Partners partnered with TA Associates, and will make a significant minority investment in Russell Investments.
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Glencore announced a 500,000 tonne per year reduction of contained zinc metal mine production across its operations in Australia, South America and Kazakhstan, in order to preserve the value of its reserves in the ground "at a time of low zinc and lead prices". This represents around a third of Glencore's annual zinc production, it said, and will reduce fourth quarter 2015 mine production by around 100,000 tonnes of contained zinc metal.
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BT Group said it is vital for the digital health of the UK that its broadband infrastructure arm Openreach remains part of the wider BT Group. UK telecoms regulator Ofcom has put on the table the potential separation of Openreach amongst other options as part of its Digital Communications Review. It closed a consultation that formed part of the review on Thursday. BT's response comes after rivals including Sky, TalkTalk Telecom Group and Vodafone Group called for the separation of Openreach. However, the Country Land and Business Association, which represents rural land owners and businesses, has called on Ofcom to not separate Openreach from BT, as it believes this would distract from efforts to roll out broadband in rural areas.
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COMPANIES - FTSE 250
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Ladbrokes said it has signed a GBP1.35 billion lending facility with a syndicate of relationship banks to provide committed financing for its proposed merger with Gala Coral Group. The betting company said the new facility has three tranches and will be available for drawing subject to completion of the GBP2.1 billion merger.
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Petrofac said it has terminated the contract with ZPMC, the company that was constructing its Petrofac JSD 6000 deepwater multi-purpose offshore vessel. The oil and gas company said it had terminated its contract with ZPMC over "issues with ZPMC's performance in respect of the construction" of the vessel. "It is regrettable that it has become necessary for us to take this decision, and the board is now reviewing its options," said Chief Executive Ayman Asfari. ZPMC, or Shanghai Zhenhua Heavy Industry Co, is a heavy-duty equipment manufacturer listed on the Shanghai stock exchange.
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Vedanta Resources reported a rise in production across most of its commodities in the first half of its financial year and said its net debt is expected to be below the USD8.0 billion mark as of the end of September. The multi-commodity company said oil and gas production net to the company in the second quarter of 2015 rose 6% year-on-year to 205,361 barrels of oil equivalent per day from 194,508 barrels. Zinc production from India in the second quarter totalled 240,000 tonnes, up 13% year-on-year from 213,000 tonnes, and cost of production, excluding royalties, fell to USD771 per tonne from USD799 per tonne.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Renewable Energy Generation said it has received non-binding approaches for its subsidiary which holds all of the company's assets and operations, but said its management plans to spin off some of its assets into a new company if the deal goes through. The unnamed potential buyer is "highly credible" and "fully funded" to implement the offer, according to Renewable Energy Generation, which stressed the offer is not for the listed-company but for its trading subsidiaries. It also stressed that the bid is not formal and not guaranteed to go through.
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Balfour Beatty Infrastructure Partners, a fund in which construction firm Balfour Beatty invests, said its offer to acquire Alkane Energy had received valid acceptances of around 77.81%. Last month the investment firm agreed a 36 pence per share deal for AIM-listed Alkane, valuing the power generator at GBP61.4 million.
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Avon Rubber said it has bought the Argus thermal imaging camera systems business from e2v technologies for GBP3.5 million in cash. Argus designs and manufactures thermal imaging cameras for the first responder and fire markets, and made a revenue of GBP5 million in its last financial year. It is based in Chelmsford. Avon Rubber funded the acquisition from its existing debt facilities. e2v technologies said the disposal is part of its strategy to focus on its core customers, markets and opportunities, as it works to simplify its operations.
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High-street lender Metro Bank has hired advisers to handle an initial public offering that could take place as early as the first quarter of next year, Sky News reported. According to the report, Metro Bank has appointed Bank of America Merrill Lynch, Goldman Sachs and Royal Bank of Canada to work on the flotation, which will target around GBP300 million in fundraising proceeds. Metro Bank has more than 35 branches, most in London and the South East.
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COMPANIES - INTERNATIONAL
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Alcoa, the largest producer of aluminium in the US, reported a sharp decline in profit for the third quarter, as sales dropped 11% reflecting divestitures and currency headwinds. Both the earnings and revenues fell short of Wall Street analysts' estimates, sending its shares down a near 5% in the after-hours trading. New York-based Alcoa's third-quarter profit dropped to USD44 million or USD0.02 per share from USD149 million or USD0.12 per share last year. Sales for the quarter dropped 11% to USD5.57 billion from USD6.24 billion last year. Analysts had a consensus revenue estimate of USD5.68 billion for the quarter. Alcoa's earnings report are closely watched by investors as it's one of the first major companies to report quarterly results and unofficially kicks starts the earnings season. Last month, Alcoa announced its decision to separate into two companies-- a higher-margin manufacturing operations and a smelting and refining business. The split is expected to happen by the second half of next year.
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Social networking giant Facebook is launching a test of reactions feature to expand upon the "Like" button. The effort is expected to result in a more expressive "Like" button. In a Facebook post, CEO Mark Zuckerberg said: "Reactions gives you new ways to express love, awe, humor and sadness. It's not a dislike button, but it does give you the power to easily express sorrow and empathy -- in addition to delight and warmth." The company is starting to test Reactions in Ireland and Spain. Based on these experiences, Facebook will decide on expanding it to other regions.
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AliCloud, Alibaba Group's cloud computing arm, announced that it has launched its second data center based in the US's Silicon Valley, addressing increasing demand for affordable and secure, mission-critical cloud computing while creating an infrastructure for high availability and effective disaster recovery. The new facility is AliCloud's ninth globally and the fourth data center announced in 2015.
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Friday's Scheduled AGMs/EGMs
Henderson European Focus Trust
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By Tom Waite; [email protected]; @thomaslwaite
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