25th Oct 2016 07:15
LONDON (Alliance News) - The pound and London share prices were firm early Tuesday, with the UK government due to announce a decision about airport expansion at midday.
Miner Anglo American and wealth manager St James's Place led large-cap gainers, up 3.2% and 3.1%, respectively, after positive trading updates. The same from GKN, Whitbread and Intu Properties were less well received, with those three stocks down by 1.1% to 2.7%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 7,012.40
FTSE 250: up 0.1% at 17,876.32
AIM ALL-SHARE: up 0.3% at 827.70
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Hang Seng: down 0.1% at 23,577.47
Nikkei 225: closed up 0.8% at 17,365.25
DJIA: closed up 0.4% at 18,223.03
S&P 500: closed up 0.5% at 2,151.33
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GBP: up at USD1.2224 (USD1.2199)
EUR: flat at USD1.0879 (USD1.0882)
GOLD: firm at USD1,267.02 per ounce (USD1,262.17)
OIL (Brent): firm at USD51.49 a barrel (USD51.13)
(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)
0900 Germany IFO survey
0900 Italy industrial orders and sales
1355 US Redbook index
1400 US S&P/Case-Shiller home price indices
1400 US housing price index
1500 US consumer confidence
1500 US IBD/TIPP economic optimism
1500 US Richmond Fed manufacturing index
1530 UK BOE Governor Carney speech
1630 EU ECB President Draghi speech
2130 US API weekly crude oil stocks
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The long-awaited decision on which airport expansion scheme should get the go-ahead in the UK is to be finally made on Tuesday. The UK government will choose which project to back, ending more than a year of uncertainty since the Davies Commission came out in favour of a third runway at Heathrow. Other short-listed options are extending an existing runway at Heathrow or building a second runway at Gatwick. Prime Minister Theresa May will chair a meeting of the airport sub-committee - made up of key Cabinet ministers including Chancellor Philip Hammond, Business Secretary Greg Clark and Environment Secretary Andrea Leadsom - on Tuesday morning as well as the regular meeting of the Cabinet. Transport Secretary Chris Grayling will then make a statement to MPs at around 1230 BST announcing the decision.
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UK Health Secretary Jeremy Hunt has accused pharmaceutical companies of "unethical and unacceptable" pricing strategies which cost the NHS millions. The UK government has moved to tighten up its regulation of medicine prices, with some companies having hiked prices by thousands of percent over just a few years. Introducing the Health Service Medical Supplies (Costs) Bill for its second reading, Hunt told MPs the price of one product had increased by 12,000% between 2008 and 2016. If the price had stayed the same the NHS would have spent GBP58 million less, Hunt said.
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UK Independence Party leadership candidate Bill Etheridge has withdrawn from the contest and called on rivals to back current deputy leader Paul Nuttall, according to reports. The West Midlands MEP said Nuttall's declaration on Sunday had prompted him to step down, as he was the only candidate who could unite the party as it dealt with "recent well publicised problems".
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French authorities started the process of clearing thousands of migrants from a makeshift camp near the northern city of Calais on Monday, with hundreds of people lining up to be registered and driven to accommodation centres throughout the country. A total of 1,918 adults left Calais in 45 busses heading towards 80 different reception centres on Monday, French Interior Minister Bernard Cazeneuve said. Another 400 unaccompanied minors were also brought to a temporary centre, he added.
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Canadian Prime Minister Justin Trudeau will travel to Brussels for an EU-Canada summit despite resistance in the bloc to a landmark free trade deal with his country. "I will be there with Mr Trudeau, absolutely," Canada's Trade Minister Chrystia Freeland told reporters in Ottawa, referring to the summit scheduled for later this week. Belgium's federal government failed to sway the country's French-speaking Wallonia region to support the Comprehensive Economic and Trade Agreement, which is supposed to be signed by Trudeau and EU officials at the summit in Brussels on Thursday.
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US presidential candidate Hillary Clinton leads opponent Donald Trump by 5 percentage points in a nationwide poll released Monday. As the campaign heads into its final two weeks, other recent polls taken in key battleground states also show the former US secretary of state ahead of the real estate mogul. Clinton tops Trump 49% to 44%, with just 3% backing Libertarian Gary Johnson and 2% behind Green Party nominee Jill Stein, according to the poll released Monday by CNN/ORC International.
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Japanese Prime Minister Shinzo Abe is expected to ask Philippine President Rodrigo Duterte to repair soured relations with the US when the two meet in Tokyo, local media reported. Duterte, who is due to arrive in Japan Tuesday for a three-day visit, is scheduled to hold talks with Abe on Wednesday. A planned statement will express Japan's concern over the strained relationship between the US and the Philippines, caused by a string of anti-US remarks made by Duterte, the Kyodo News agency reported, citing unnamed Japanese government sources.
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Dozens of people have been killed in an attack on a police training college outside Quetta in north-western Pakistan, a local police official confirmed. "At least 60 people are dead and more than 120 are injured," said Quetta police official, Muhammad Khan. The injured included police recruits and security personnel.
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Some 14 people were killed in what appeared to be Russian airstrikes in northern Syria on Monday, a monitoring group said, while a Russian minister said that Moscow was not currently considering a new ceasefire in the northern city of Aleppo. The airstrikes hit the rebel-held towns of Khan Sheikhoun in north-central Syria and Kafr Takharim near the Turkish border west of Aleppo, the Syrian Observatory for Human Rights said. Fighting had intensified in Aleppo on Sunday, a day after a "humanitarian" pause announced by Russia ended.
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Kurdish forces said they fended off two attacks by Islamic State fighters in northern Iraq as Turkish and Iraqi officials again issued contradictory statements about whether Turkish forces were involved in the campaign to take Mosul. Peshmerga troops killed four Islamic State suicide bombers at Eski Mosul, north of the city, and a fifth blew himself up, a local Peshmerga commander, Colonel Mohammed Mam Eskander, said. The suicide bombings appeared to be the latest in a series of diversionary attacks mounted by Islamic State as it faces a coordinated Iraqi-Kurdish campaign to recapture Mosul, the only major Iraqi city it still controls.
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BROKER RATING CHANGES
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TRADERS: MERRILL LYNCH RESUMES RELX WITH 'BUY' - TARGET 1800 PENCE
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CREDIT SUISSE CUTS SHAWBROOK TO 'NEUTRAL' ('OUTPERFORM') - PT 255 (235) PENCE
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CREDIT SUISSE CUTS ALDERMORE TO 'NEUTRAL' ('OUTPERFORM') - PT 180 (185) PENCE
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UBS CUTS LAIRD TO 'NEUTRAL' ('BUY') - TARGET 171 (375) PENCE
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BERENBERG CUTS HOWDEN JOINERY GROUP TO 'HOLD' ('BUY') - TARGET 450 (550) PENCE
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COMPANIES - FTSE 100
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Whitbread reported growth in profit in the first half of its financial year, boosted by sales growth at both Premier Inn and Costa, and said it is on track to meet expectations in the full year. Whitbread - which owns the Premier Inn hotel brand and Costa coffee shop chain - said its pretax profit in the six months ended September 1 grew to GBP263.6 million from GBP254.9 million the year before, as revenue rose to GBP1.56 billion from GBP1.44 billion. Whitbread will pay an interim dividend of 29.90 pence, up from 28.50p the year before.
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Anglo American tweaked some of its full-year production guidance and revealed year-on-year rises in output of most commodities in the third quarter of the year, but production since the start of the year is still mostly lower on 2015. Anglo American said production of diamonds, copper, metallurgical and thermal coal all fell in the first nine months of 2016 versus the previous year, whilst nickel and platinum production has risen. Iron ore production from Kumba was lower but iron ore output from Minas Rio has soared.
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GKN said sales increased in the first nine months of 2016 in line with its expectations, but the engineer issued a cautious outlook for the rest of the year. GKN said sales in the nine months to the end of September totalled GBP6.90 billion, up 21% from GBP5.68 billion a year before, thanks to the contribution from Fokker, the Dutch aerostructures company that GKN acquired last year and currency gains. On an organic basis, stripping out the acquisition and currency boosts, sales were up 2.0%, in line with the company's expectations.
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Wealth manager St James's Place said it continued to see robust inflows in the third quarter of 2016, with its funds under management at the end of September substantially higher than a year ago. St James's said it saw gross inflows of funds under management in the quarter to September 30 of GBP2.80 billion, compared to GBP2.32 billion of inflows in the same period a year earlier. Net inflows for the period were GBP1.66 billion, compared to GBP1.48 billion in the third quarter of 2015. Total group funds under management at the end of September hit GBP71.40 billion, up 31% from GBP54.50 billion at the same time a year earlier.
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Intu Properties said it sold its stake in the Intu Bromley shopping centre for GBP177.9 million, and reported active UK retailer demand since July 1. The property group said it sold its 63.525% stake in the shopping centre to Alaska Permanent Fund Corp at a slight premium to its June 30 valuation of GBP175.9 million. As part of the transaction, Intu noted Alaska Permanent also acquired Aviva Investors' 21.475% stake in the centre, though it said the London Borough of Bromley was retaining its 15% interest and the freehold. Aviva Investors is part of insurer Aviva.
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3i Group said it is selling its debt management business to Bahrain-based investment house Investcorp, generating cash proceeds of GBP222 million and an exceptional profit on disposal of GBP36 million for the blue-chip private equity firm. 3i said the transaction is expected to close by the end of March, with the proceeds to be reinvested in its Private Equity and Infrastructure divisions.
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ITV will cut 120 jobs due to uncertainties surrounding the UK's vote to leave the European Union, the Guardian reported late Monday. This comes after the UK broadcaster announced plans to make GBP25 million in cost savings following the Brexit vote, amid fears about the impact of the UK's departure from the EU and a rapid softening of the UK advertising market. The company has 3,000 staff in the UK.
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COMPANIES - FTSE 250
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National Express Group said revenue and profit both have risen during 2016 and said the coach and bus operator continues to hunt for new acquisitions, stating it plans to enter one new market shortly. The said it remains on track to deliver at least GBP100.0 million of free cashflow over the course of 2016 and said it still expects to close the year with gearing that lies within its target range of 2.0 to 2.5 times earnings before interest, tax, depreciation and amortisation. National Express also said it plans to refinance its GBP350.0 million bond "shortly", subject to market conditions, and said this should lead to "significant savings in interest costs".
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COMPANIES - LONDON MAIN MARKET AND AIM
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The founder of French Connection Group has denied reports the fashion retailer has attracted interest from potential bidders, Reuters reported. A Daily Telegraph report on Saturday said French Connection had hired investment bank Moelis & Co to advise it, after potential buyers had started circling the company. The buyers, the Telegraph claimed, included a mix of European and US private equity firms. But Stephen Marks, French Connection's executive chairman, denied the report. "There's no comment as there's no story," he told Reuters.
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COMPANIES - INTERNATIONAL
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Responding to recent speculation on a possible offer for Rockwell Automation, Schneider Electric denied categorically the rumours. There were reports that Schneider Electric was looking to buy Rockwell Automation in a deal that could value the US automation giant at around USD18 billion.
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Julius Baer Group, DBS Group Holdings and LGT Bank are considering bids for ABN Amro Group's private-banking business in Asia, Bloomberg reported citing people with the matter. The banks have expressed interest in the ABN Amro unit and will study more detailed information on its business. ABN Amro hopes to announce a deal by year-end to minimize uncertainty for its private bankers and clients. The sale could fetch more than USD300 million, based on the valuations of other recent deals, the report said.
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Novartis reported third-quarter net income from continuing operations of USD1.9 billion, an increase of 7% year-over-year, up more than operating income mainly due to higher income from associated companies. Operating income was USD2.3 billion, an increase of 2%, or up 1% in constant currencies. Third-quarter net sales were USD12.1 billion, down 1%, as volume growth of 5 percentage points was more than offset by the negative impact of generic competition and pricing.
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Syngenta, an agriculture company, reported its third-quarter group sales were USD2.5 billion, down 3% on a reported basis and at constant exchange rates. Excluding the impact from the change in sales terms in Brazil, sales were up 2%. Looking ahead, Chief Executive Officer Erik Fyrwald said: "For the fourth quarter of 2016, we expect a continuation of the recovery in Asia Pacific and an improved performance in Latin America, with no further impact from the change in sales terms in Brazil."
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Air Liquide reported its third-quarter revenues totalled EUR5.08 billion, growth of 24% from last year, benefited by the inclusion of sales from recently acquired Airgas for the full quarter. Revenues grew 27%, excluding the currency and energy impact. Excluding Airgas and the currency and energy impact, group revenue fell 1.1%, hurt by slower sales in Engineering & Construction.
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Visa reported an increase in profit for the fourth quarter, as revenues jumped driven largely by increase in customer spending and inclusion of Europe business. Earnings and revenues trumped Wall Street expectations. Foster City, California-based Visa's fourth-quarter profit rose to USD1.93 billion from USD1.51 billion a year ago. Visa, the world's largest credit and debit card company, said revenue for the fourth quarter jumped 19% to USD4.26 billion from USD3.57 billion last year. Analysts had a consensus revenue estimate of USD4.23 billion.
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Alphabet's Google has acquired Eye-Tracking Company for Virtual Reality Efforts. Eyefluence, which is working to enable eye movements to control digital screens, wrote in a blog post that it is joining Google.
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Social media site Twitter, which is facing an uncertain future, is planning to cut around 8% of its total workforce, Bloomberg reported, citing people familiar with the matter. The company, which is trying cost control amid slowing sales growth, may announce the job cut of about 300 people as soon as this week. The announcement will be before Twitter releases third-quarter earnings on Thursday, according to the report.
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US newspaper publisher Gannett plans to cut 2% of jobs and invest in more acquisitions to transform its business, the Wall Street Journal reported citing a memo to staff. The report indicated that the layoffs may affect about 380 employees across the company. Over all, Gannett employs close to 19,000 people, about 4,000 of whom are journalists.
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The New York Times Co announced it has acquired The Wirecutter and The Sweethome, product-recommendation services that serve as a guide to technology gear, home products and other consumer services. The acquisition was an all-cash transaction.
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Tuesday's Shareholder Meetings
Mattioli Woods
Aberforth Geared Income Trust
Empiric Student Property
Brooks Macdonald Group
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By Tom Waite; [email protected]; @thomaslwaite
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