18th Oct 2019 08:03
(Alliance News) - London Stock Exchange Group on Friday reported a strong third quarter, with the Capital Markets unit - the stock exchange part of the group - doing well despite "challenging" market conditions, as it prepares to merge with market data firm Refinitiv.
LSEG, which earlier October rebuffed a GBP30 billion bid from Hong Kong Exchanges & Clearing, posted a 12% increase in total income for the three months to September to GBP587 million.
On a nine-month basis, LSEG's total income has risen 9% to GBP1.73 billion.
"The group continues to perform well and has delivered a strong third-quarter performance. LCH's OTC clearing services saw continued strong volumes during the period in both member and client clearing," said Chief Executive David Schwimmer.
"In Information Services, FTSE Russell reported 10% growth as subscription revenues remained strong. Capital Markets also produced a good overall performance against a backdrop of continued challenging market conditions."
LSEG is in the midst of a USD27 billion takeover of market data and terminal provider Refinitiv, and said on Friday that good progress is being made. It is on track for completion in the second half of 2019.
LSEG has appointed David Shalders as chief integration officer as part of the move, with Shalders joining in November. His most recent role was as operations & technology director at insurance firm Willis Towers Watson, leading the merger of Willis and Towers Watson in 2015.
Shalders also is a non-executive director at TP ICAP. Interdealer broker TP ICAP said that Shalders will be leaving the TP ICAP board at the end of October to take up the new role.
LSEG also said Chief Financial Officer David Warren will be leaving by the end of 2020. He will stay on through the close of the Refinitiv deal and to help "smooth" the transition to a new CFO.
LSEG also made some organisational changes. As of the start of 2020, its Post Trade units will be combined into one division, which will be led by Daniel Maguire, who currently heads LCH Group.
The new Post Trade division will include LCH Group and the Italian post trade businesses Monte Titoli and CC&G, as well as trade reporting business UnaVista, which is currently part of LSEG's Information Services division.
LSEG shares were up 0.7% in early trade Friday.
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 7,163.71
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Hang Seng: down 0.6% at 26,700.90
Nikkei 225: closed up 0.2% at 22,492.68
DJIA: closed up 23.90 points, 0.1%, at 27,025.88
S&P 500: closed up 0.3% at 2,997.95
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GBP: up at USD1.2868 (USD1.2831)
EUR: flat at USD1.1117 (USD1.1114)
Gold: soft at USD1,490.20 per ounce (USD1,491.00)
Oil (Brent): flat at USD59.74 a barrel (USD59.82)
(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
1000 CEST EU euro area balance of payments
0830 EDT US weekly export sales
1000 EDT US leading indicators
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Boris Johnson will face a race against time to sell his last-minute deal to MPs before a crunch vote as he returns from Brussels in a "very confident" mood. The prime minister said there is a "very good case" for MPs to vote in his favour in what is expected to be a dramatic and historic House of Commons showdown on Saturday. But with significant opposition lining up to thwart it, he faces an uphill battle to get the deal through in the extraordinary sitting of Parliament – the first on a weekend since April 1982. Johnson's key and influential allies in the DUP have already rejected his departure agreement, while the SNP has tabled an amendment to reject the deal demanding an immediate extension to the October 31 deadline and a general election.
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The US imposed tariffs on a record USD7.5 billion worth of EU goods, despite threats of retaliation, with Airbus, French wine and Scottish whiskies among the high-profile targets. The tariffs, which took effect just after midnight in Washington, came after talks between European officials and US trade representatives failed to win a last-minute reprieve. The WTO-endorsed onslaught from US President Donald Trump also comes as Washington is mired in a trade war with China and could risk destabilising the global economy further. In the line of fire are civilian aircraft from Britain, France, Germany and Spain – the countries that formed Airbus – which will now cost 10% more when imported to the US. But the tariffs also target consumer products such as French wine, which Trump had vowed to attack in recent months. Wine from France, Spain and Germany will now face 25% tariffs.
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China's economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, data showed, with an official warning of "mounting downward pressure". Gross domestic product expanded 6.0% in July-September, down from 6.2% in the second quarter, according to the National Bureau of Statistics. The reading – in line with an AFP survey of 13 analysts – is the worst quarterly figure since 1992 but within the government's target range of 6.0-6.5% for the whole year. The economy grew 6.6% in 2018.
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Japan's consumer prices climbed 0.3% year-on-year in September, the slowest rate of increase in two years, the government said. The reading remained far off the 2% inflation target set by the central bank in April 2013. Higher energy prices had supported recent increases in the inflation rate, however, energy prices fell 1.9% year-on-year in September, said the Ministry of Internal Affairs & Communications.
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Turkey and the US agreed to a five-day ceasefire in Syria, Vice President Mike Pence said, more than a week after Ankara launched its incursion against Syrian Kurdish militias. Turkey will pause its offensive to allow Syrian Kurdish fighters to withdraw from a "safe zone" over 120 hours, Pence told reporters in the Turkish capital. After this, the operation will "be halted entirely," he added. The temporary ceasefire will mean there will be no additional sanctions on Turkey, and after a permanent halt to the fighting, measures imposed last week by the US will be lifted.
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Trump said Energy Secretary Rick Perry, who has been caught up in the impeachment probe engulfing the US president, was standing down, marking the latest departure of a senior administration figure. "Rick has done a fantastic job at Energy but it was time – three years is a long time," Trump said, speaking in Texas. "We already have his replacement." The announcement came a day after the publication of an interview in which Perry said that, on Trump's orders, he had communicated with the president's personal lawyer Rudy Giuliani over alleged corruption in Ukraine.
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BROKER RATING CHANGES
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GOLDMAN CUTS FRESNILLO TO 'NEUTRAL' ('CONVICTION BUY LIST') - TARGET 670 (1030) PENCE
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CREDIT SUISSE CUTS SEVERN TRENT TO 'NEUTRAL' ('OUTPERFORM') - TARGET 2160 (2100) PENCE
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JPMORGAN RAISES RBS TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 280 (210) PENCE
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COMPANIES - FTSE 100
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InterContinental Hotels Group reported a 4.7% yearly rise in net system size to 865,000 rooms for the third quarter of 2019, despite what it said was a strong comparable. However, revenue per available room, a key hotel industry metric, fell 0.8%, and was flat for the first nine months of the year. Greater China RevPar fell 6.1% in the quarter amid unrest in Hong Kong, while in the Americas it dipped 0.6%. However, in Europe, the Middle East, Asia & Africa, RevPar rose 0.2%. "Despite the weaker RevPAR environment, and the challenges some of our markets are currently experiencing, we remain confident in our financial outcome for the rest of the year," said Chief Executive Keith Barr.
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Steelmaker Evraz said the effect on earnings before interest, tax, depreciation and amortisation from an efficiency programme will be USD350 million in 2019, and it wants around USD300 million per year from it going forward. The firm is also mulling three "major" investment projects in 2020 to 2023, without naming them, which will lead to capital expenditure of around USD1 billion a year in that timeframe. In 2019, capex is seen at USD850 million.
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COMPANIES - FTSE 250
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Cybersecurity firm Avast reported a 5.0% rise in adjusted revenue for the third quarter to USD220.3 million. Excluding discontinued operations, this rose 7.3% to USD218.3 million. Adjusted Ebita rose 8.7% to USD121.9 million, and is 6.6% higher in the first nine months. Avast has reiterated 2019 guidance, and Chief Executive Ondrej Vlcek said the firm had a good quarter, meeting expectations.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Eddie Stobart Logistics and Wincanton said the latter is conducting due diligence on Eddie Stobart to "assess the potential merits of a combination".
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Elegant Hotels has agreed a GBP100.8 million takeover by Marriott International. Marriott has offered 110 pence per Elegant share, a 57% premium to Elegant's closing price on Thursday in London. The two stressed no proposal has been made, and gave no other details.
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COMPANIES - INTERNATIONAL
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French media firm Vivendi reported solid third quarter growth, driven by Universal Music Group. Third quarter revenue amounted to EUR3.97 billion, up 17% year-on-year. For the first nine months of the year, revenue grew 15% to EUR11.32 billion.
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Groupe Renault downgraded its annual guidance on a more difficult than expected backdrop and "ever-increasing" costs related to regulation. Revenue is now expected to decline between 3% and 4%, having previously been seen close to last year's level at constant exchange rates. The car maker's operating margin should be around 5%, previously guided to 6%. Automotive operating free cash flow should be positive in the second half, though this is "not guaranteed" for the full year. The company blamed the guidance cut on "an economic environment less favourable than expected and in a regulatory context requiring everÂ-increasing costs."
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Consumer electronics retailer Ceconomy said Chief Executive Jorn Werner will be leaving with immediate effect. This move was with mutual consent between him and the Ceconomy supervisory board at an extraordinary meeting. At the same time, Bernhard Duttmann, a member of the board, was appointed as CEO for twelve months. Werner had only taken up the CEO role at the Germany company in March this year.
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Facing pressure from US health regulators alarmed at the popularity of e-cigarettes among youths, one of the leading makers of vaping products suspended the sale of non-tobacco vaping flavours. The company Juul - in which Altria Group holds a 35% stake - said its decision affects the non-menthol-based flavours mango, creme, fruit and cucumber, products that until now have been sold only in the US market. The move follows an announcement last month by the US Food & Drug Administration, which said it was preparing to issue a ban on flavoured e-cigarettes over concerns about their appeal to young people and after an outbreak of a mysterious and deadly lung ailment.
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Friday's Shareholder Meetings
Ashmore Group
Dechra Pharmaceuticals
BigDish
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By Tom Waite; [email protected]
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