19th Jul 2016 07:28
LONDON (Alliance News) - Stocks in London opened lower Tuesday ahead of inflation data due for the UK at 0930 BST.
In the FTSE 100, Anglo-Australian miner Rio Tinto opened lower despite reporting a rise in production in the second quarter of 2016, while shares in mid-cap Russian steel and mining group Evraz declined after it reported a fall in production for all its operating units in the first half.
Amongst other blue-chips, postal service operator Royal Mail said trading in the first quarter was in line with its expectations, with the familiar trend of higher parcels volumes and lower letters volumes continuing.
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 6,678.15
FTSE 250: down 0.2% at 16,828.42
AIM ALL-SHARE: up 0.1% at 727.66
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Hang Seng: down 0.6% at 21,674.16
Nikkei 225: closed up 1.4% at 16,723.31
DJIA: closed up 0.1% at 18,533.05
S&P 500: closed up 0.2% at 2,166.89
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GBP: down at USD1.3218 (USD1.3304)
EUR: up at USD1.1070 (USD1.1080)
GOLD: up at USD1,329.50 per ounce (USD1,328.10)
OIL (Brent): up at USD46.96 a barrel (USD46.71)
(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)
0930 UK consumer, retail and producer price indices
0930 UK DCLG house price index
1000 Germany ZEW survey
1000 EU construction output
1000 EU ZEW survey
1330 US housing starts and building permits
1355 US Redbook index
1505 UK MPC member Broadbent speech
2130 US API weekly crude oil stocks
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The UK's House of Commons voted overwhelmingly to renew the Trident nuclear deterrent system on Monday evening, as Labour leader Jeremy Corbyn was angrily condemned by his own MPs for opposing the measure. MPs voted by 472 votes to 117 in support of a government motion to replace the ageing Vanguard submarine fleet carrying the missiles with four new vessels. The overwhelming victory came after Theresa May, in her first Commons speech as Prime Minister, confirmed she would be prepared to authorise a nuclear strike if necessary. Corbyn, a long-standing opponent of nuclear weapons, came under fire from his backbenchers over his opposition to Trident and the replacement of the Vanguard boats.
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A legal challenge over Brexit is coming before the High Court for the first time. The case is being brought by British citizen Deir Dos Santos in a bid to prevent the government from triggering Article 50 of the Lisbon Treaty without the prior authorisation of Parliament. Two senior judges in London are expected to set down a timetable on Tuesday for a judicial review hearing later in the year on Article 50, which will start the formal process for Britain's departure from the EU. The application has been described by lawyers involved as "the most important constitutional law case in living memory".
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Turkish President Recep Tayyip Erdogan's retribution against those accused of plotting a failed coup against him this past weekend picked up pace as his EU allies warned him not to go too far, matching talk of reintroducing the death penalty with threats to suspend the path to EU membership. Less than two days after the attempted coup was defeated, government officials reported thousands of arrests and detentions, hollowing out parts of the armed forces and the civil service. Turkish Prime Minister Binali Yildirim said Monday that the most recent tally for the coup-related roundup was 7,543 arrests: 6,038 soldiers, 100 police officers, 755 judges and prosecutors and 650 civilians.
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The World Anti-Doping Agency issued a damning report on state-controlled doping in Russia which benefited athletes at summer and winter Olympics over at least a four-year period. An investigation by WADA "independent person" Richard McLaren uncovered a state-run system of cheating in which doping samples were tampered with and positive drugs tests turned into negative results by doping laboratories. Both the ministry of sport and the domestic intelligence service were involved in the doping programme, according to the report released in Toronto, Canada. No explicit recommendations were made in the report, but after the publication WADA's executive committee called on the International Olympic Committee to consider barring all Russian athletes from the Rio Olympics and Paralympics.
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Donald Trump made a surprise appearance on the first night of the Republican Party convention, one day before he was to be formally nominated as the party's presidential candidate. "We're going to win, we're going to win so big," Trump said, basking in cheers from the delegates as he appeared on a darkened stage silhouetted against a lighted doorway. Trump appeared to introduce wife Melania, who was giving the main speech on the first night of the four-day convention. Melania Trump declared her husband "ready to serve and lead this country as the next president of the US." She was the first of several family members to speak as the campaign seeks to reintroduce its presidential candidate to voters both inside and outside the conservative party.
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A 17-year-old Afghan refugee was shot dead by police after injuring four passengers in a slashing attack aboard a train late Monday near Wuerzburg in the southern German state of Bavaria, authorities said. Three of the victims were critically wounded. An initial investigation found that the attacker, who wielded a knife and an axe, came to Germany as an unaccompanied minor, Bavarian Interior Minister Joachim Herrmann told German broadcasters. Asked if the violence was fueled by Islamist motivations, Herrmann said the suspect had shouted something in connection with the attack, but that the investigation was still underway.
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BROKER RATING CHANGES
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COMMERZBANK CUTS EASYJET PRICE TARGET TO 1350 (1600) PENCE - 'HOLD'
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RBC CAPITAL RAISES SKY TO OUTPERFORM (UNDERPERFORM) - PRICE TARGET 1100 (1000) PENCE
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COMPANIES - FTSE 100
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Postal service and logistics operator Royal Mail said trading in the first quarter of its financial year was in line with its expectations. In the three months to June 26, group revenue for the FTSE 100-listed company grew 1.0% year-on-year. Revenue in its UK parcels and letters business declined 1.0%, with parcel revenue rising 2.0% but letter revenue down 3.0%. Parcels volumes grew 2.0% in the quarter, helped by growth in import and account parcels business and improving trends in the consumer and SME segments. Letters volumes were down 2.0%, reflecting the timing of direct delivery volumes in the quarter the prior year and mailings associated with the UK's European Union referendum. Excluding these effects, letters volumes fell around 4.0% the quarter.
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Anglo-Australian mining giant Rio Tinto said that Pilbara iron ore production for the second-quarter increased 8%, while shipments rose 6%. Rio Tinto, the world's second-largest iron-ore producer, said its Pilbara iron ore production for the second quarter increased 8% to 80.9 million tons. Pilbara iron ore shipments rose 6% to 82.2 million tonnes. Rio Tinto chief executive Jean-Sebastien Jacques said "Rio Tinto has delivered another robust quarter of operational performance. We continue to focus on value and maximising cash flow from our assets, through both commercial and operational excellence while maintaining capital discipline. This will ensure that Rio Tinto is well-positioned to generate compelling and consistent returns for our shareholders."
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Property developer Hammerson said it has sold the Manor Walks Shopping Centre in Cramlington in Northumberland for GBP78.0 million. The centre adjoins the Westmorland Retail Park, of which Hammerson will retain ownership. The sale price represents a net initial yield of 7.0%. Hammerson added it has sold a 4,000 square metre property in Folkestone for GBP7.0 million. Hammerson noted both disposals were exchange on terms agreed prior to the UK's EU referendum.
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COMPANIES - FTSE 250
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Online financial trading provider IG Group Holdings reported growth in annual revenue and profit, as it saw a good performance across its markets. The FTSE 250 company said it will pay a final dividend of 22.95 pence, taking its total payout up to 31.40p, a 12% year-on-year hike. IG reported a pretax profit of GBP207.9 million in its financial year to the end of May, up from GBP169.5 million the year earlier. Trading revenue for the year grew to GBP487.9 million from GBP422.1 million, with growth seen in all the company's geographic regions. IG said new clients on its books, defined by those undertaking their first trades, rose 29% year-on-year and said its offices in Switzerland and Dubai are both trading ahead of expectations.
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Russian steel company and miner Evraz said all of its units reported a drop in production during the first half of 2016 as the Russian company produced less steel, steel products and coking coal concentrate. Crude steel production in the first half of this year was down 7.6% to 6.7 million tonnes from 7.3 million a year earlier, whilst production of steel products, net of re-rolled volumes, fell 8.0% to 6.2 million tonnes from 6.7 million. Evraz said production was down due to a planned maintenance shutdown at one of the furnaces in Russia, hitting both steel and steel product production.
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Healthcare property investor Assura said it has continued to make good progress on its strategy and said it has seen no direct impact thus far from the UK's vote to leave the European Union. Assura said it completed the acquisition of 30 medical centres in its financial first quarter to the end of June for a total of GBP65.4 million, adding GBP4.1 million to its rent roll. Its pipeline of further acquisitions and developments currently stands at GBP105.0 million, it added. So far, Assura said it has seen no direct impact from Brexit but acknowledged the result could create both political and economic uncertainty in the UK, which may hit investment in primary care infrastructure in the country. However, Assura said the need for the UK to invest in primary care facilities is recognised as a priority by the National Health Service.
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Dairy products maker Dairy Crest said trading in the first quarter of its financial year was in line with its expectations. The company said combined sales volumes of the four key brands of Cathedral City, Clover, Country Life and Frylight in the three months ended June 30 were in line with the first quarter of the prior year. Its outlook for the full year therefore remains unchanged. "The year has started off as we expected. Our branded business continues to perform well. In cheese, we have successfully re-launched Cathedral City, the nation's favourite cheese, with new packaging and branding. This has been supported with a wide-reaching media and promotional campaign," Chief Executive Mark Allen said.
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Russian miner Polymetal International said production fell in the first half of the year as had been expected, but the company is still on track to deliver its full year guidance through a significant improvement in production and cashflow in the second half of the year. Gold equivalent production was 8.0% lower in the first half of 2016 at 522,000 ounces compared to the 568,000 ounces produced a year ago. That was the result of gold production falling 10% year-on-year whilst silver production was down 7.0%. Polymetal said first half production was in line with its plan for the year, adding the second half should be "materially stronger" due to seasonal de-stocking of concentrate, the start up of the Svetloye heap leach at Okhotsk, and stronger grades at Dukat and Okhotsk, all in Russia.
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SSP Group, which operates food and drink outlets in travel locations, said its third-quarter performance was in line with expectations, as revenue benefited from the recent weakness in sterling. SSP said total revenue in the three months ended June 30 grew by 9.0% year-on-year, boosted by the weakening of sterling against major European currencies. On a constant currency basis, total revenue rose by 4.8% while like-for-like sales rose by 3.0%. SSP said sales in the UK were robust, continuing to benefit from passenger growth in the air sector. Continental Europe remained mixed, with a good performance from Spain but weaker trading in France and Belgium resulting from the recent terrorist attacks in Paris and Brussels.
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COMPANIES - LONDON MAIN MARKET AND AIM
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The AIM-listed companies involved in the Horse Hill project in southern England on Tuesday said new estimates have been carried out on the Upper Portland pay zone that have suggested there is almost three times as much oil in place than previously thought. The companies involved said there is now thought to be around 22.9 million barrels of oil-in-place per square mile within the Upper Portland pay zone, a huge rise from the previous estimate published last year of 7.7 million barrels per square mile.
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Distribution company John Menzies said Dermot Smurfit has been appointed independent chairman of the company. Smurfit is currently chairman of packaging company Powerflute and investment firm ML Capital. He is also a non-executive director of Timber Capital and The Forest Co. His appointment as chairman of John Menzies will be effective from the next meeting of the board on July 25. Dermot Jenkinson, who assumed the position of chairman on an interim basis following the retirement of previous chairman Iain Napier in May, will continue on the board as a non-executive director.
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COMPANIES - INTERNATIONAL
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Online movie and television streaming service Netflix reported an increase in profit for the second quarter, as revenue grew year-on-year. Earnings outpaced Wall Street estimates and revenue was in line, but subscriber growth slowed in the US and overseas. Netflix added 1.68 million subscribers globally in the quarter, to end the quarter with 83.18 million subscribers. However, the company was only able to add 160 thousand customers in the almost saturated US market, along with 1.52 million International subscriber additions. In April, Netflix projected to add 2.5 million subscriber additions, including 500,000 in the US and 2 million internationally. In previous quarter, Netflix added 6.74 million total subscriber additions, 2.23 million in the US and 4.51 million overseas.
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US computing giant International Business Machines reported a drop in profit for the second quarter, as revenue continued to decline, hurt largely by sharp drop in hardware sales. Nevertheless, the company's quarterly earnings trumped Wall Street estimates as did revenue, reflecting strong performance of its cloud business. IBM's second-quarter profit dropped to USD2.50 billion from USD3.53 billion the prior year. Second-quarter revenue declined 3% to USD20.24 billion from USD20.81 billion last year.
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Swiss pharmaceuticals company Novartis reported net income from continuing operations for the second quarter of 2016 declined 3% year-on-year to USD1.81 billion from USD1.86 billion a year earlier. Net sales from continuing operations declined 2% to USD12.47 billion from USD12.69 billion in the prior year and were flat in constant currencies. Novartis affirmed its net sales guidance for the year but said full-year core operating income is now expected to be broadly flat or down by a single-digit percentage in constant currencies. Earlier, the company had forecast core operating income to be broadly in line with the prior year.
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Dutch paints and coatings maker Akzo Nobel said second-quarter net income declined 6% to EUR312 million from EUR331 million a year before. Revenue declined 6% to EUR3.71 billion from prior year's EUR3.95 billion, mainly due to adverse currencies. Volumes were up 1%, driven by Decorative Paints and Performance Coatings. Looking ahead, the company said that the market environment remains uncertain with challenging conditions in several countries and segments. Deflationary pressures and currency headwinds are expected to continue.
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Tuesday's Shareholder Meetings
British Land Co
Wizz Air Holdings
Assura
FirstGroup
Dairy Crest Group
Blue Prism Group
Aquatic Foods Group
Scapa Group
Bloomsbury Publishing
JPMorgan European Investment Trust
HICL Infrastructure Co
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By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
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