14th Dec 2016 08:24
LONDON (Alliance News) - UK company news was in focus in London early Wednesday before market attention shifts entirely to the US Federal Reserve interest rate decision at 1900 GMT.
The two biggest London-listed companies to report, Micro Focus and Dixons Carphone, were moving in opposite directions, with Micro Focus leading the FTSE 100 gainers, up 2.1%, and Dixons Carphone the losers, down 3.9%.
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 6,948.34
FTSE 250: down 0.3% at 17,665.65
AIM ALL-SHARE: up 0.3% at 823.87
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Hang Seng: closed flat at 22,456.62
Nikkei 225: closed flat at 19,253.61
DJIA: closed up 0.6% at 19,911.21
S&P 500: closed up 0.7% at 2,271.72
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GBP: soft at USD1.2666 (USD1.2691)
EUR: flat at USD1.0637 (USD1.0649)
GOLD: up at USD1,162.49 per ounce (USD1,158.53)
OIL (Brent): down at USD55.09 a barrel (USD55.48)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
(all times in GMT)
09:00 Italy consumer price index
09:30 UK ILO unemployment rate, claimant count and average earnings
10:00 EU industrial production
10:00 Switzerland ZEW survey
12:00 US MBA mortgage applications
13:30 US retail sales
13:30 US producer price index
14:15 US industrial production and capacity utilization
15:00 US business inventories
15:30 US EIA crude oil stocks
19:00 US Fed interest rate decision, monetary policy statement and economic projections
19:30 US Fed press conference
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Talks aimed at resolving the Southern Railway drivers' dispute will be held at the conciliation service Acas on Wednesday as thousands of UK commuters remain stranded for another day. The move followed informal discussions on Tuesday on the first day of a 48-hour walkout by members of Aslef, which halted all the company's services. The strike is still set to go ahead, as well as another 24-hour stoppage planned on Friday, in a long-running row over driver-only trains. UK Transport Secretary Chris Grayling refused to rule out taking action to prevent future stoppages like the one which brought all Southern Railway services to a halt.
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Britain is "languishing in the digital slow lane" with 4G connectivity lagging behind the networks of countries such as Romania, Albania, Panama and Peru, the government's official infrastructure advisers said. Market provision of mobile services has left too many "digital deserts" and "not spots" where users cannot get 4G signals, even within major city centres, the National Infrastructure Commission found.
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UK Prime Minister Theresa May is meeting backbench Tory MPs on Wednesday opposed to a hard Brexit as the British government moves to present a united front on EU withdrawal. The prime minister is talking to a group of Conservatives in Downing Street on Wednesday who fear the economic consequences of a "hard" break with Brussels. Some of the MPs will be pressing May to publish a white paper setting out the government's policy stance ahead of triggering the Article 50 mechanism that formally launches "divorce talks" with the UK in the spring, according to reports.
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Italy's new government, led by former foreign minister Paolo Gentiloni, won its first vote of confidence in parliament on Tuesday, lining it up to rule the country for at least the next few months. The government received 368 votes in its favour, while 105 were against the government. Most observers see Gentiloni as a stopgap leader, called upon to clear-up urgent business, like a reform of dysfunctional voting rules and the possible state rescue of troubled bank Monte dei Paschi di Siena, before standing aside for elections in early 2017.
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The European Central Bank has turned down an Italian request for more time to complete a rescue plan for the troubled bank Monte dei Paschi di Siena. The bank was informed of the ECB's decision on Tuesday, the bank said in a statement. MPS was due to complete a EUR5.00 billion recapitalisation by the end of the year, but its management had asked for an extension until January 20, citing difficulties created by Italy's political crisis.
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Japan's industrial production remained unchanged in October instead of an increase estimated initially, final figures from the Ministry of Economy, Trade and Industry said. Industrial production showed no variations in October, revised down from a 0.1% gain reported earlier. This was followed by a 0.6% rise in September.
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An index monitoring business sentiment in Japan was unchanged in the fourth quarter of 2016, the Bank of Japan said in its quarterly Tankan business survey. The large manufacturers' index came in with a score of +10, in line with expectations and up from +6 in the previous quarter. The outlook came in at +8, shy of expectations for +9 but up from +6 in the three months prior. The survey is closely watched by the Bank of Japan for formulating policies.
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The evacuations of rebels and civilians from eastern Aleppo are delayed but will likely still go ahead, says the Syrian Observatory for Human Rights, a monitoring group. The monitor says there are some disagreements between Russia and the Syrian government. A Syrian opposition figure blames the government for delays in carrying out the evacuation of rebels from the enclave in Aleppo, indicating there is a dispute over whether the fighters can take their personal weapons with them.
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The US Energy Department has denied a request by president-elect Donald Trump's transition team to provide lists of employees and contractors who have worked on the issue of climate change, local media reported Tuesday. The department will "be forthcoming with all publicly-available information" but will "not be providing any individual names", department spokesman Eben Burnham-Snyder was quoted by The Washington Post as saying.
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BROKER RATING CHANGES
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TRADERS: EXANE BNP CUTS BARCLAYS TO 'NEUTRAL' (OUTPERFORM)
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TRADERS: DEUTSCHE BANK RAISES BANK OF IRELAND TO 'BUY'
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TRADERS: DEUTSCHE BANK CUTS CENTRICA TO SELL
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TRADERS: JEFFERIES CUTS CAPITA GROUP TO 'HOLD'
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TRADERS: CANACCORD CUTS UBM TO 'HOLD' ('BUY')
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TRADERS: JPMORGAN RAISES BIG YELLOW GROUP TO 'OVERWEIGHT' ('UW')
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JPMORGAN RAISES KAZ MINERALS TO 'NEUTRAL' (UNDERWEIGHT) - TP 465 (220) PENCE
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JPMORGAN CUTS GEM DIAMONDS TO 'NEUTRAL' ('OVERWEIGHT') - TP 115 (145) PENCE
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JPMORGAN CUTS ANTOFAGASTA TO 'UNDERWEIGHT' ('NEUTRAL') - TP 430 (390) PENCE
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COMPANIES - FTSE 100
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Business software provider Micro Focus International said its pretax profit and revenue grew in the first half ahead of its reverse takover of the software arm of Hewlett Packard Enterprise. Micro Focus agreed in September a USD8.80 billion reverse takeover deal for the software arm of HP Enterprise. On Wednesday, the company said the HP unit acquisition is on track to complete in the third quarter of 2017. For the half-year to the end of October, Micro Focus reported pretax profit of USD113.2 million, up 15% from USD98.8 million a year before, as revenue grew 13% to USD684.7 million from USD604.5 million. Like-for-like revenue, in constant currencies and stripping out any acquisition effects, rose 1.2% Micro Focus declared an interim dividend of 29.73 US cents per share, 76% higher than the 16.94 cents paid a year before.
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Dixons Carphone reported growth in profit in the first half of its financial year, as revenue grew across all divisions and it reiterated that it has not seen any lack in consumer demand following the UK's vote to leave the European Union. The mobile phone and electronics retailer said pretax profit in the 26 weeks ended October 29 grew to GBP104 million from GBP78 million the year before, as revenue rose to GBP4.87 billion from GBP4.39 billion and like-for-like sales increased by 4%. Dixons Carphone will pay an interim dividend of 3.5 pence, which is an 8% increase year-on-year.
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Old Mutual said it has priced the public offering and private repurchase of shares in its asset management arm. The Anglo-South African financial services group will make a public offering of 13.0 million shares in its Old Mutual Asset Management arm at USD14.25 per share. In total, the purchase will be worth USD185.3 million. OM Asset Management also has agreed to repurchase 6.0 million of its own shares from Old Mutual's OM Group (UK) unit at the same price.
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COMPANIES - FTSE 250
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John Wood Group said it remains on track to hit market expectations for 2016, despite ongoing challenges in its oil and gas end markets. The oil field services group said lower crude prices have endured and activity has fallen across the oil and gas sector. To mitigate the impact of this, the company has cut costs, improved efficiency in its operations and refined its structure, John Wood said. The group anticipates it will hit market expectations for 2016 and said its balance sheet remains strong, supporting its plan to increase its dividend payout for the year by a double-digit percentage.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Software provider IDOX said it has agreed to buy Malta-listed 6PM Holdings in a deal funded by a share placing, as IDOX reported growth in pretax profit for its financial year that ended in October. 6PM, founded in 2004, provides software and services, mainly to the UK National Health Service. IDOX said it will pay a total of GBP18.5 million to acquire 6PM, with the consideration partly in cash and partly in shares. IDOX will pay 44.00 pence per share for 6PM in cash, plus 0.6542 new IDOX shares per 6PM share under the deal. In order to fund the purchase, IDOX is seeking raise GBP20.5 million via a placing. The funds will be raised via an accelerated bookbuild launched Wednesday by N+1 Singer.
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boohoo.com upgraded its full-year sales guidance following a strong Black Friday event, as it announced the acquisition of fellow online fashion retailer PrettyLittleThing for GBP3.3 million. Since reporting its first-half results at the end of September, boohoo said it has continued to perform well, with strong trading across the Black Friday weekend last month and encouraging peak season trading in the run up to Christmas. As a result, boohoo now expects full-year revenue to grow by between 38% and 42% year-on-year, against its previous guidance of growth between 30% and 35%.
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Equipment rental firm Lavendon Group said it is recommending a cash takeover offer from French company Loxam, ahead of a previous offer from Belgium's TVH Group. Loxam has made an offer of 220.0 pence per Lavendon share, valuing the entire company at approximately GBP374.0 million. The offer is higher than the 205.0p per share final cash offer made by TVH in September, which Lavendon rejected after the offer failed to obtain shareholder support.
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COMPANIES - INTERNATIONAL
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French drug giant Sanofi is in talks to buy Swiss biotechnology firm Actelion Pharmaceuticals, the Wall Street Journal reported citing people familiar with the matter. It's not clear what price Sanofi is discussing paying or what structure is envisioned, but the report said a deal could value Actelion at as much as USD30 billion, the paper said. On Tuesday, Johnson & Johnson said that it ended discussions with Swiss biotechnology firm Actelion Pharmaceuticals regarding a potential transaction. Johnson & Johnson said it was not able to reach an agreement that it believed would create adequate value for its shareholders.
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Walt Disney is in talks with other major Hollywood studios to join its Disney Movies Anywhere service, which lets customers buy, watch and store their online film purchases at a single site, Bloomberg reported citing people familiar with the matter. Disney is trying to add content from other studios to boost the appeal of its offering, which was introduced in 2014.
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Spanish fashion retailer Industria de Diseño Textil, known as Inditex, reported its nine-month net profit increased 9% to EUR2.21 billion from EUR2.02 billion last year. EBIT went up 9.0% year-on-year to EUR2.82 billion, and earnings before interest, taxation, depreciation and amortisation, a key earnings metric, grew 8.0% from last year to EUR3.61 billion. Inditex's net sales rose 11% in the first nine months to EUR16.4 billion from EUR14.74 billion a year ago. In constant-currency terms, top line growth was 15%, underpinned by solid same-store sales growth.
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Wednesday's Shareholder Meetings
Powerflute (EGM re Nordic Packaging & Container takeover offer)
Mobile Streams
Northamber
Bowleven
Orchard Funding Group
Schroder Oriental Income Fund
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By Tom Waite; [email protected]; @thomaslwaite
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