3rd May 2016 07:20
LONDON (Alliance News) - London shares opened flat to slightly higher Tuesday, after a positive close in New York while the UK was on holiday Monday.
The results of big banks dominated financial news at the start of the new week. HSBC, the last of the large London-listed banks to report first-quarter earnings, said its business was "resilient" amid "extreme" market volatility at the start of 2016 but still suffered a 14% decline in pretax profit.
HSBC shares were up 2.6%, the third best performer in the FTSE 100.
Elsewhere, UBS, BNP Paribas and Commerzbank also provided first-quarter results and cited similar market pressures.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: flat at 16,835.80
FTSE 250: up 0.2% at 16,835.80
AIM ALL-SHARE: up 0.2% at 729.24
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Hang Seng: down 1.2% at 20,808.48
Nikkei 225: market closed for holiday
DJIA: closed up 0.7% at 17,891.16
S&P 500: closed up 0.8% at 2,081.43
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GBP: up at USD1.4727 (USD1.4630)
EUR: up at USD1.1569 (USD1.1445)
GOLD: up at USD1,299.64 per ounce (USD1,293.27)
OIL (Brent): down at USD46.35 a barrel (USD47.68)
(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)
holiday Japan Constitution Day
European Commission releases economic growth forecasts
09:30 UK Markit manufacturing PMI
10:00 EU producer price index
12:00 Ireland Consumer Confidence
13:55 US Redbook inde
14:45 US ISM New York index
15:00 US IBD/TIPP economic optimism
15:30 US FOMC member Mester speech
17:30 Canada BoC Governor Poloz speech
21:30 US API weekly crude oil stocks
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The UK economy could face a GBP250 billion hit in lost trade if the country votes to leave the European Union, Remain campaigners have claimed. The Britain Stronger in Europe analysis suggests that trade to the European Union would be GBP224 billion lower if there was no deal in place after a Brexit. There would also be a GBP9 billion fall in trade with the wider European Economic Area and GBP14 billion in lost trade with countries which have deals with the EU.
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Ireland's two largest political parties, Fine Gael and Fianna Fail, agreed Friday on the formation of a Fine Gael-led minority government expected to last for three years, potentially breaking an impasse since an election in February produced a hung parliament.
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The manufacturing sector in China remained in contraction in April, and at an accelerated pace, the latest survey from Caixin revealed, with a Performance of Manufacturing Index score of 49.4. That missed forecasts for 49.8, and it was down from 49.7 in March. It also moved further beneath the line of 50 that separates expansion from contraction.
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The EU and US rejected claims that a trade agreement they are negotiating would lower consumer protection in Europe, arguing that newly leaked documents do not reflect the final deal. The environmental group Greenpeace published 248 pages of confidential documents on the Transatlantic Trade and Investment Partnership, claiming they showed US efforts to circumvent EU consumer protections and calling for negotiations to be scrapped. If finalized, TTIP would create the world's largest free trade area with 800 million people.
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BROKER RATING CHANGES
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Investec Maintains Hold Recommendation On HSBC, Says HSBC Q1 Much Better Than Expected
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Societe Generale Reiterates Hold, 260p Price Target On RBS
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BARCLAYS RAISES RSA INSURANCE TO 'OVERWEIGHT' ('EQUAL W.'); TARGET 545 (457) PENCE
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COMPANIES - FTSE 100
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HSBC Holdings said its first-quarter pretax profit fell by 14%, hurt by tough conditions in the banking sector at the start of 2016. Pretax profit fell to USD6.11 billion in the three months ended March 31, HSBC said in a statement, from USD7.06 billion the corresponding quarter a year earlier. The quarterly profit marked an improvement on the USD858 million pretax loss in the three months ended December 31. Loan impairment charges, adjusted for currency translation, jumped to USD1.16 billion from USD469 million. HSBC maintained its first-quarter dividend at USD0.10. Its common equity tier one ratio, a measure of financial strength and the ability to pay dividends, was unchanged when compared to the end of 2015, at 11.9%.
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Aviva said it completed the acquisition of an additional 23% stake in its Indian life insurance joint venture from partner Dabur Invest Corp, taking the FTSE 100 life insurer's holding up to 49%. The move follows regulatory changes allowing Aviva to take a stake of up to 49%, the maximum allowed under India's foreign direct investment limits. The joint venture, formed in 2001, contributed GBP36 million to Aviva's net assets in 2015, and the transaction with Dabur is expected to have a "neutral impact" on Aviva's net assets.
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The UK Competition & Markets Authority approved the joint venture between Severn Trent and United Utilities Group for their non-household water and waste-water retail businesses. The blue-chip utilities struck the agreement in March, with the combined business, to be called Water Plus, primarily comprising of billing and customer service activities and located in Stoke-on-Trent.
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Barclays is facing allegations of money laundering risk and mis-selling failures at its French operations, The Financial Times reported. The report cited a letter dated April 5 from Philippe Hebert, chief risk officer of Barclays France, to Tony Blanco, chief executive of Barclays France.
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Royal Bank of Scotland is set to rebrand its retail branches in a bid to shed its image as a global company and reduce associations with its troubled past, the Financial Times reported.The move will see the 'RBS' brand disappear from UK high streets, the newspaper said, replaced by 'Royal Bank of Scotland' in Scotland and NatWest in England and Wales.
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COMPANIES - FTSE 250
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Aberdeen Asset Management said first-half pretax profit almost halved amid fragile investor sentiment towards emerging markets, although the "strength" of the money manager's balance sheet allowed for investments such as bolt-on acquisitions. Pretax profit fell to GBP98.8 million in the six months ended March 31, Aberdeen said in a statement, from GBP185.4 million in the corresponding half a year earlier. Aberdeen's interim dividend of 7.5 pence per share was unchanged. Assets under management amounted to GBP292.8 billion as of March 31, up from GBP283.7 billion six months earlier.
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Just Eat raised its guidance for full-year revenue and earnings following a successful first quarter. The online takeaway delivery company said it achieved 57% growth in orders in the first quarter of 2016 year-on-year to 31.5 million, up 41% on a like-for-like basis. It said each of its segments delivered strong growth, particularly in the UK which saw a 40% increase in orders.
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Office provider Regus said it traded in line with management expectations in its first quarter, reporting improved margins, increased revenue and strong profit growth thanks to cost efficiencies and following the development of 554 locations in 2015. Regus said its revenue grew to GBP532.5 million for the three months to March 31, compared with GBP452.3 million for the same period a year earlier, representing an increase of 15% at constant currency rates or 18% at actual rates, as prevailing exchange rates provided a "modest tailwind".
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Interserve said its joint venture with engineering firm Doosan Enpure has been awarded a GBP46.0 million contract to upgrade the Horseley water treatment works in the Tyne Valley, Nothumberland. The support service and construction company said the 30-month project will involve the building of new treatment works alongside the current plant in the Tyne Valley. The project was awarded by water company Northumbrian Water.
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Centamin said gold production in the first quarter grew sequentially and year-on-year, resulting in the company leaving its guidance for the year unchanged. The miner said gold production in the quarter to the end of March was 125,268 ounces, up 6.0% on the fourth quarter of 2015 and 16% higher year-on-year. Cash cost of production in the quarter was USD603.00 per ounce, with all-in sustaining costs at USD758.00 per ounce, Centamin said. Costs came in lower than full-year guidance of USD680.00 per ounce and USD900.00 all-in. Centamin maintained its production guidance for the full year of 470,000 ounces of gold and kept its cost guidance on hold at USD680 per ounce, with a USD900 all-in cost.
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Engineer Smiths Group is understood to be among those planning a potential USD2.0 billion offer for the medical pumps unit of US pharmaceutical company Pfizer, The Daily Telegraph reported. Smiths is understood to be in early talks to acquire the pumps business, which Pfizer had acquired though its USD25.0 billion purchase of Hospira, a US drugmaker and medical devices firm.
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Sports Direct International founder Mike Ashley has resurrected plans to rescue collapsed department store retailer BHS, The Daily Telegraph reported, keeping open its store estate and saving thousands of jobs. The Telegraph said Ashley was in talks about an eleventh-hour rescue of the BHS business just prior to the chain calling in administrators. He was unable to agree a rescue deal, but said over the weekend the plans are still alive and his proposal envisages saving the entire BHS store chain.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Packaging and labels company Macfarlane Group said it has purchased packing business Edward McNeil for up to GBP1.8 million, strengthening its presence in Scotland. Edward McNeil, based in Glasgow, is a regional distributor of protective packaging materials with 12 employees and generated GBP3.6 million revenue in the year to December 31.
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COMPANIES - INTERNATIONAL
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Halliburton and Baker Hughes announced Sunday they terminated the merger agreement they entered into in November 2014. In connection with the termination of the merger agreement, Halliburton will pay Baker Hughes the termination fee of USD3.5 billion by Wednesday. "While both companies expected the proposed merger to result in compelling benefits to shareholders, customers and other stakeholders, challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics led to the conclusion that termination is the best course of action," said Dave Lesar, chairman and chief executive officer of Halliburton.
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Swiss financial services giant UBS reported first-quarter net profit attributable to shareholders declined sharply to CHF707 million from last year's CHF1.98 billion. The company delivered an adjusted profit before tax of CHF1.366 billion, with positive contributions from all business divisions and regions. Net interest income grew 5% to CHF1.71 billion from CHF1.637 billion a year ago. According to UBS, negative market performance, substantial volatility, as well as underlying macroeconomic and geopolitical uncertainty, led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter.
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German lender Commerzbank reported net profit for the first quarter of 2016 fell to EUR163 million from EUR338 million in the same quarter last year. Operating profit for the first-quarter dropped to EUR273 million from last year's EUR670 million burdened by difficult market environment.
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French lender BNP Paribas reported first-quarter net income group share increased 10% to EUR1.81 billion from EUR1.65 billion a year ago. Excluding one-off items, attributable net income was EUR1.607 billion, 4% higher than last year. The company said the result showed good revenue resilience despite a particularly unfavourable environment amid low interest rates, stock market crisis, and wait-and-see attitude by debt investors.
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A federal judge approved Goldman Sachs Group's USD272 million settlement with investors who claimed the bank misled them about the safety of billions of dollars worth of residential mortgage-backed securities, Bloomberg reported. US District Judge Loretta Preska in Manhattan on Monday allowed the settlement, reached in August, to go forward, finding it is fair, adequate and reasonable.
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Tuesday's Scheduled AGMs/EGMs
Stadium Group
Stratex International
SVG Capital
Starcom
DP Poland
Randgold Resources
Fresnillo
Atlantis Japan Growth Fund
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
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