3rd Dec 2015 08:26
LONDON (Alliance News) - The pound was trading below USD1.50 and the gold price was sinking toward USD1,050 an ounce early Thursday, after Federal Reserve Chair Janet Yellen gave a strong hint that US interest rates are set to rise this month.
The market now is awaiting an early afternoon monetary policy announcement by the European Central Bank, which is expected to move further in the opposite direction with more easing measures.
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 6,423.10
FTSE 250: flat at 17,551.49
AIM ALL-SHARE: up 0.1% at 742.38
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Hang Seng: closed down 0.3% at 22,417.01
Nikkei 225: closed flat at 19,939.90
DJIA: closed down 0.9% at 17,729.68
S&P 500: closed down 1.1% at 2,079.51
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GBP: down at USD1.4926 (USD1.4938)
EUR: down at USD1.0574 (USD1.0578)
GOLD: down at USD1,051.83 per ounce (USD1,055.60)
OIL (Brent): down at USD43.16 a barrel (USD43.29)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times in GMT)
08:45 Italy Markit Services PMI
08:50 France Markit Services and Composite PMI
08:55 Germany Markit Services and Composite PMI
09:00 EU Markit Services and Composite PMI
09:30 UK Markit Services PMI
10:00 EU Retail Sales
12:30 US Challenger Job Cuts
12:45 ECB Interest Rate Decision
13:30 US Initial and Continuing Jobless Claims
13:30 US FOMC Member Mester speech
13:30 ECB monetary policy statement and press conference
14:45 US Markit Services and Composite PMI
15:00 US Fed Chair Yellen testifies
15:00 US ISM Non-Manufacturing PMI
15:00 US Factory Orders
15:30 US EIA Natural Gas Storage
17:00 US Fed's Stanley Fischer speech
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British air force jets attacked Islamic State targets in Syria for the first time, the government said early Thursday, just hours after the strikes were given parliamentary approval. The strikes mean that Britain joins countries including the United States, France and Russia in attacking the extremist group in Syrian territory. The Royal Air Force was already taking part in operations against Islamic State in Iraq. Four RAF Tornado jets equipped with guided missiles took off from the Akrotiri base in Cyprus, the Ministry of Defence said.
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The Federal Reserve is on track to raise US interest rates at its December 15-16 meeting, Fed Chair Janet Yellen signalled in a speech to the Economic Club in Washington. Yellen stopped short of explicitly saying the Fed will hike rates this month, but acknowledged that conditions for tightening are on the verge of being met. "I currently judge that US economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market," Yellen said. "Ongoing gains in the labor market, coupled with my judgement that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2% as the disinflationary effects of declines in energy and import prices wane," she added.
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The US consumer remains in an upbeat mood heading into the holidays, according to the Federal Reserve's Beige Book. That's good news for the broader economy that has suffered slowdowns during the previous two winters. Respondents to the Fed's Beige Book survey indicated that economic activity increased at a modest pace in most regions of the country since the previous report. Consumer spending increased in nearly all twelve Fed districts, with the pace of sales ranging from sluggish in New York to moderate in Minneapolis and San Francisco.
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A man and a woman suspected in a shooting spree Wednesday were dead after a car chase and shootout with police, according to authorities in San Bernardino, California. The earlier massacre, which apparently targeted a party held in a rented conference room inside a local government centre, left 14 people dead and 17 wounded, several critically, police said. FBI Assistant Director David Bowdich refrained from calling the shooting spree terrorism, but said there were "a few potential things" that raise suspicions.
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China's private sector activity expanded for the first time in four months in November driven by services growth, survey data showed. The Caixin composite output index rose to 50.5 in November from 49.9 in October. The score exceeded the neutral 50 mark for the first time in four months. "This shows that the macro economy has moved further toward stable growth and the economic structure is improving," He Fan, chief economist at Caixin Insight Group, said.
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The services sector in Japan continued to expand in November, albeit at a slower rate, the latest survey from Nikkei revealed on Thursday with a PMI score of 51.6. That's down from 52.2 in October.
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Ireland's service sector activity expanded at the fastest pace in nearly twelve years in November, and employment increased at the sharpest rate in the survey history, figures from Markit Economics showed. The seasonally adjusted Investec services purchasing managers' index climbed to 63.6 in November from 60.1 in October.
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The French unemployment rate increased in the third quarter, figures from the statistical office Insee showed. The jobless rate, measured according to International Labor Organization, or ILO, standards increased to 10.6% from revised 10.4% in the second quarter. It was expected to rise to 10.4% from the second quarter's originally estimated 10.3%.
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The president of Brazil's lower house has given the green light to impeachment proceedings against President Dilma Rousseff. Eduardo Cunha said she was suspected of falsification of state accounts, the news website G1 reported. Rousseff denied any wrongdoing and said she was indignant at the accusation.
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Progress on the sticking points to a global agreement to fight climate change must be speeded up, negotiators said Wednesday, three days into formal negotiations. French Foreign Minister Laurent Fabius, who is overseeing the talks, said progress is coming along but negotiators should pick up the pace. He called on them to put forward a new draft by Saturday, six days before the talks are due to end. Key issues being debated include financing to help poorer countries transition to a low-carbon economy and cope with the effects of climate change that are already being felt and a review process under which countries can regularly update their commitments to capping greenhouse gas emissions.
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Swiss police carried out raids early Thursday against FIFA officials in connection with corruption investigations, football's international governing body said. A New York Times report earlier said more than a dozen people were arrested during the raids in the Swiss city of Zurich. Some of the pre-dawn arrests were made at the same hotel where other FIFA officials were seized in May, the report said. The FIFA executive committee began a two-day meeting in Zurich on Wednesday ahead of a February congress to elect a successor to suspended president Joseph Blatter.
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BROKER RATING CHANGES
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GOLDMAN RAISES NEXT PLC TO 'BUY' ('NEUTRAL') - TARGET 8700 (7400) PENCE
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GOLDMAN CUTS DEBENHAMS TO 'SELL' ('NEUTRAL') - TARGET 83 (82) PENCE
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GOLDMAN CUTS AB FOODS TO 'SELL' ('BUY') - TARGET 3700 (3320) PENCE
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EXANE BNP CUTS ASHTEAD GROUP TO 'NEUTRAL' ('OUT-PERFORM') - TARGET 1100 (1200) PENCE
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COMPANIES - FTSE 100
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Royal Dutch Shell's GBP47.0 billion takeover of BG Group has received final regulatory clearance in Australia, BG said in a statement. The Australian Treasurer has now given approval for the deal through the Foreign Investment Review Board, providing final clearance for the deal following the unconditional approval secured from the Australian Competition and Consumer Commission on November 19. BG said the Australian approval is the fourth of five regulatory clearances required for the deal, leaving it only seeking approval from the Chinese Ministry of Commerce.
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SABMiller and Anheuser-Busch InBev confirmed that AB InBev is looking to sell off some of SABMiller's premium brands in Europe, including its Peroni and Grolsch lagers, confirming earlier reports. AB InBev said it is planning to approach potential suitors in coming weeks to gauge their interest in buying the Peroni and Grolsch brands and their associated businesses in Italy, the Netherlands and the UK. In addition, it is considering selling Meantime, the Greenwich-based craft brewer SABMiller had just bought earlier this year.
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Barclays said it has struck a deal to sell its Italian retail branch network to CheBanca, a unit of Italian investment bank Mediobanca Group. Confirming a report by Reuters, the bank said the sale will comprise 89 bank branches in the country. It said the financial impact of the sale will be dependent on the balance sheet of the business at completion of the deal, due to occur in the second quarter of 2016. At present, the company expects the sale to result in a fall in risk-weighted assets of around GBP800.0 million, along with a post-tax loss on the sale of GBP200.0 million, which it will book in the fourth quarter of 2015.
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Reuters also reported that Jes Staley, the newly-installed chief executive of Barclays, has approached his former JPMorgan Chase colleague Blythe Masters about running the UK group's investment banking business.
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Broadcaster Sky said it has invested USD300,000 via convertible debt security in LA-based TV4 Entertainment, which owns a portfolio of a dozen niche channels. The company has current channels including 'DocComTV', focused on documentaries, 'Motorland' for automotive programs and the 'Ultimate Champion Network' for combat sports shows, amongst others. It has more than 30 new channels in development, Sky said.
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The chairman of British American Tobacco has denied claims that non-executive directors of the tobacco giant failed to act on claims the group was involved in bribing African officials, The Times reported. Richard Burrows told The Times: "I can assure you that the board takes very seriously its role in establishing appropriate systems of corporate governance and, through our committee structure, reviewing its internal control systems, governance framework and issues that arise."
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GlaxoSmithKline announced that the European Commission has granted marketing authorisation for Nucala or mepolizumab as an add-on treatment for severe refractory eosinophilic asthma in adult patients. As a result Nucala is now approved for use in the 31 European countries covered by the European Medicines Agency or EMA.
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Following the quarterly FTSE index review, Meggitt, G4S and Wm Morrison Supermarkets will drop out of the FTSE 100, to be replaced by payments company Worldpay Group, logistics company DCC and lender Provident Financial.
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COMPANIES - FTSE 250
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Transport operator Go-Ahead Group said its 65%-owned London Midland arm has secured an extension of the franchise to run the West Midlands passenger train service in the UK until October 2017. The direct award by the UK's Department of Transport has been agreed, the company said, and will include schemes to benefit passengers throughout the new franchise, including two extra evening services on weekdays between London and the Trent Valley, earlier services to Birmingham on Sunday mornings and free WiFi on long-distance journeys.
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Scottish soft drinks maker AG Barr said trading remains in line with its expectations for the full year, with an improvement in sales in the third quarter following a tough first half. The maker of Irn-Bru, Rockstar energy drinks and Rubicon fruit juices said revenue from its ongoing businesses in the 18 weeks to November 28 was up 3.9% year-on-year, while financial year to date revenue from its ongoing business at November 28 was down 2.2% on a reported basis.
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Packaging company DS Smith said its pretax profit dipped in the first half due to restructuring costs, and revenue also was held back by the weak euro, though the group's underlying performance was solid. DS Smith said its pretax profit for the six months to the end of October was GBP91.0 million, down from GBP123.0 million a year earlier, as the group booked GBP48.0 million in exceptional costs, mostly related to closing its Wansborough paper mill and other restructuring activity in the UK and northern Europe. It will pay an interim dividend of 4.0 pence per share, up from 3.7p.
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Oil services company John Wood Group said it has struck a deal to acquire a family-owned contractor in Texas for up to USD192.0 million. The Infinity Group is an industrial construction and maintenance contractor serving the petrochemical, refining and gas processing sectors and has seven locations along the Texas Gulf coast. John Wood has paid an initial USD150.0 million, with further payments possible in the future.
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Low-cost European airlines Ryanair Holdings and Wizz Air Holdings both reported a rise in passenger numbers in November. Ryanair saw customer numbers rise 21% to 7.71 million in November, compared to 6.35 million a year before. It reported a five-percentage-point rise in load factor to 93% from 88% in the previous year. Wizz Air, which is focused on Central and Eastern Europe, reported a 25.5% rise in booked passenger numbers to 1.5 million, up from 1.2 million a year before, and a 0.6 point rise in load factor to 83.6% from 82.9%.
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ARRIS Group, a provider of media entertainment and data communications solutions, announced that its proposed acquisition of Pace has received preliminary approval from Brazil's competition authority CADE. The company noted that the clearance is expected to become final on December 19, following Brazil's mandatory appeals period. When finalised, the approval in Brazil will complete the merger-control clearances required for the transaction.
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Ladbrokes has been blocked from reclaiming GBP54.0 million in tax after a tribunal ruled that an avoidance scheme the bookmaker used in 2008 breached rules, the Financial Times reported. The case related to a tax planning scheme promoted by accountancy Deloitte which exploited a loophole in part of the tax code relating to the taxation of loans. The tribunal sided with HMRC, which argued that rules are in place that prevented Ladbrokes from being able to exploit the loophole.
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Joining the FTSE 250 in the latest review are Hastings Group Holdings, Assura, Ibstock and The Renewables Infrastructure Group. Dropping out are Premier Oil, Petra Diamonds, Kaz Minerals, Foxtons Group and Hunting. One more stock drops out of the FTSE 250 than enters, as recent IPO WordPay went straight into the FTSE 100.
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COMPANIES - INTERNATIONAL
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Several potential suitors are emerging for Yahoo!'s core Internet business, from media and telecommunications giants to private-equity firms, as Yahoo weighs whether to put it up for sale, the Wall Street Journal reported citing people familiar with the matter. Among the companies that would likely explore a purchase are Verizon Communications and Barry Diller's IAC/InterActive.
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EU antitrust regulators are likely to open an in-depth probe into fast food giant McDonald's tax deal with Luxembourg, according to media reports. The European Commission, the EU's top antitrust regulator, is reportedly expected to announce Thursday that it has opened a probe into whether McDonald's tax arrangements in Luxembourg violate EU law.
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Target agreed to reimburse MasterCard and other US financial institutions a total of about USD39.4 million to settle claims brought against the retailer in connection with its massive 2013 data breach. The agreement includes a payment of up to USD20.3 million to settlement class members who aren't covered by other pacts. The remaining USD19.1 million will fund MasterCard's Account Data Compromise program relating to the data breach.
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Thursday's Scheduled AGMs/EGMs
ASOS
Egdon Resources
Sanditon Investment Trust
Jupiter European Opportunities Trust (re share issue)
PowerHouse Energy Group
AXA Property Trust
Haydale Graphene Industries
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By Tom Waite; [email protected]; @thomaslwaite
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