24th Feb 2016 08:23
LONDON (Alliance News) - The pound fell below USD1.40 early Wednesday for the first time since March 2009, while oil prices were again under pressure as well.
Bank of England Governor Mark Carney told UK lawmakers on Tuesday that uncertainty over the outcome of UK referendum to decide whether to remain in the EU is weighing on the exchange rate.
Carney said that the bank is ready to loosen monetary policy, including cutting interest rates towards zero and increasing its bond buying programme to stimulate the UK economy. However, Carney dismissed the idea of negative interest rates, such as implemented by the European Central Bank and the Bank of Japan, saying the Monetary Policy Committee has "absolutely no intention" of taking such a step.
"We could cut interest rates towards zero. We could engage in additional asset purchases, including a variety of assets. We could also provide a perspective or we could adjust the horizon over which officials wish to return inflation to the 2% target," Carney told the Treasury committee.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.5% at 5,932.76
FTSE 250: down 0.2% at 16,200.20
AIM ALL-SHARE: flat at 688.73
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Hang Seng: closed down 1.2% at 19,192.45
Nikkei 225: closed down 0.9% at 15,915.79
DJIA: closed down 1.1% at 16,431.78
S&P 500: closed down 1.3% at 1,921.27
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GBP: down at USD1.3981 (USD1.4082)
EUR: down at USD1.0996 (USD1.1019)
GOLD: up at USD1,225.51 per ounce (USD1,224.90)
OIL (Brent): down at USD32.72 a barrel (USD33.22)
(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 Industrial Orders
09:30 UK BBA Mortgage Approvals
11:00 UK CBI Distributive Trades Survey
12:00 US MBA Mortgage Applications
14:45 US Markit Services and Composite PMI Preliminary
15:00 US New Home Sales
15:30 US EIA Crude Oil Stocks
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Donald Trump scored another victory in the Nevada caucus, according to projections by broadcaster CNN, cementing his status as frontrunner in the race for the Republican Party's presidential nomination. Indications of a strong victory by the bombastic billionaire were so clear that the news broadcaster said it was able to predict it with "100% certainty" just one minute after the caucuses closed. As initial results trickled in, Trump's main rivals for the nomination, Florida Senator Marco Rubio and Texas Senator Ted Cruz, appeared to be wrestling for second place in the contest.
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China has placed fighter jets on the same South China Sea island where anti-aircraft batteries were spotted last week, a US news report said. Quoting an unnamed official, broadcaster CNN said it was not the first time that China had deployed warplanes to the island, a disputed part of one of the world's most important shipping routes. News of the J-7 and J-11 deployment came as US Secretary of State John Kerry and Chinese Foreign Minister Wang Yi met in Washington for talks that included the increasingly tense issue of the South China Sea.
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The referendum posters couldn't be clearer: They show a white sheep kicking a black sheep out of Switzerland. The posters were designed by the Swiss People's Party. The right-wing party has launched the public vote on the automatic expulsion of foreigners who are found guilty of minor or major crimes, no matter how long they have resided in Switzerland. The outcome of the referendum on Sunday is uncertain, as polls show that the 5 million voters are nearly evenly split on whether to support this tough new rule.
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Greece may be sliding into a humanitarian crisis, EU officials warned, as thousands of migrants became stranded after Macedonia sealed its border and thousands more arrived from Turkey. "We are concerned about the developments along the Balkan route and the humanitarian crisis that might unfold in certain countries, especially in Greece," EU Migration Commissioner Dimitris Avramopoulos and Dutch Migration Minister Klaas Dijkhoff said in a statement.
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Hoping to finally achieve one of his original campaign promises, US President Barack Obama sent Congress a plan to close the detention facility at Guantanamo Bay. In remarks from the White House, Obama claimed the Guantanamo Bay facility does not advance US national security and is a drain on military resources. The president's plan includes transferring detainees to other countries, utilizing military commissions to close out the cases of some detainees, and finding a secure location within the US to hold the remaining detainees.
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The leading index for Japan, which measures the future economic activity, decreased less than initially estimated in December, final figures from the Cabinet Office showed. The leading index dropped to 102.1 in December from 103.2 in the previous month. The December figure was revised up from 102.0.
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Producer prices in Japan were up 0.2% on year in January, the Bank of Japan said. That missed forecasts for an increase of 0.3% and was down from 0.4% in December. On a monthly basis, producer prices tumbled 0.6% after adding 0.1% in the previous month.
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BROKER RATING CHANGES
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TRADERS: MERRILL LYNCH CUTS STANDARD CHARTERED TO 'NEUTRAL' ('BUY')
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TRADERS: MACQUARIE RAISES LLOYDS TO 'NEUTRAL' ('UNDERPERFORM')
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CREDIT SUISSE RESUMES ITV WITH 'OUTPERFORM' - TARGET 310 PENCE
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TRADERS: JPMORGAN CUTS MEGGITT TO 'UNDERWEIGHT' ('NEUTRAL')
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TRADERS: NUMIS RAISES WHITBREAD TO 'HOLD' ('REDUCE')
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TRADERS: KEPLER CHEUVREUX CUTS INTERCONTINENTAL HOTELS TO 'HOLD' ('BUY')
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UBS RAISES PERSIMMON TO 'BUY' ('NEUTRAL') - TARGET 2,330 (2,135) PENCE
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COMPANIES - FTSE 100
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Barratt Developments said pretax profit surged by 40% in the first half of its financial year to December 31, after it sold more houses at higher prices, which appears to be continuing into its second half. The housebuilder posted pretax profit of GBP295.0 million, up from GBP210.2 million for the first half of its previous financial year, whilst revenue was boosted in the half to GBP1.88 billion from GBP1.58 billion, up 19%. Barratt announced an interim dividend of 6.0 pence per share, up from 4.8 pence per share the previous year.
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Vodafone Group said the initial conversion price of the GBP2.88 billion of subordinated mandatory convertible notes it placed last week has been set at 217.30 pence. The stock closed at 214.72p on Tuesday. This represents an initial conversion ratio of 46,019.32812 shares per GBP100,000 of the bonds, Vodafone said.
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COMPANIES - FTSE 250
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Interserve increased its full-year dividend after reporting a significant rise in profit in 2015, but said it does not expect to experience any further growth until 2017. The support service and construction company reported a 28% lift in pretax profit in 2015 to GBP79.5 million from GBP61.9 million in 2014, as revenue increased 10% to GBP3.62 billion from GBP3.30 billion. Interserve upped its dividend by 6% to 24.3 pence in 2015 compared to the 23.0 pence paid last year.
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Petrofac said 2015 earnings were reduced by losses booked against the Laggan-Tormore project in the UK North Sea, but the oil field services company stuck to its commitment to maintain its dividend. Petrofac managed to squeeze out a net profit in 2015. However this dropped 98% to only USD9.0 million from USD581.0 million in 2014. Excluding the loss booked against Laggan-Tormore, net profit met expectations at USD440.0 million. Petrofac kept its dividend flat in 2015 at 65.80 cents, after it committed to that payout in late 2015.
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Hedge fund manager Man Group said its pretax profit sunk in 2015 as revenue remained broadly flat and net inflows into its funds slowed. Man said pretax profit fell to USD184.0 million in the year to the end of December from USD384.0 million in 2014, as revenue came in broadly flat at USD1.08 billion. Man said it will pay a final dividend of 4.8 cents per share, taking its total dividend to 10.2 cents, slightly up on the 10.1 cents it paid a year earlier. Total funds under management in the year rose to USD78.7 billion from USD72.9 billion.
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Weir Group reported a substantial pretax loss in 2015 after impairments, a fall in revenue, and lower operating margins negatively impacted its results, as the company warned 2016 is expected to be "another challenging year". The engineering company reported a GBP199.8 million loss before tax from continuing operations in the year ended January 1, swinging from a GBP149.1 million profit in 2014. Despite the loss, Weir maintained its dividend in 2015 at 44.0 pence per share.
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Serco Group said it has extended its contract with the Western Australian Government to operate Acacia Prison for a further five years, with the total value of the contract extension expected to be GBP166 million. The public service provider has run the prison, which is Australia's largest prison, since 2006. The prison houses 1,395 prisoners, and under the contract extension, there is an option to increase prisoner numbers by a further 100.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Glanbia reported a rise in pretax profit for 2015 despite a difficult year for dairy markets, and said its outlook for 2016 is positive, guiding for further growth in earnings. The Irish nutrition and ingredients company posted a pretax profit of EUR218.7 million, up from EUR173.6 million a year before, as revenue rose to EUR2.77 billion from EUR2.54 billion. Glanbia proposed a final dividend of 7.22 euro cents per share, taking its total dividend to 12.10 cents, up 10% from 11.0 cents it paid in 2014.
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Stockbroker and investment bank Panmure Gordon said Chief Executive Phillip Wale has stepped down and will leave the company, while it said trading has remained tough but added it has secured new financing from its main shareholder. Patric Johnson, who was appointed deputy chief executive in October, has been promoted to CEO. Johnson joined in 2013 from Evolution Group, the securities firm, and was the co-founder of ICAP Equities. The group said it has agreed a GBP5.0 million funding facility with its main shareholder, QInvest, which owns a 43% stake in the business. The revolving facility is Shariah-compliant, Panmure said, and will be provided on an unsecured basis for 18 months at a cost of funding equivalent to Libor plus 250 basis points.
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COMPANIES - INTERNATIONAL
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The US-based Mars food company issued a recall of several chocolate bar brands in countries around the world after a piece of plastic was found in one of its products. The recall includes items packaged as Snickers, Mars, Milky Way and Celebration chocolates. A piece of plastic nearly one-half centimetre long was found in one product in Germany, the company said. Mars issued the voluntary recall, warning of a possible choking hazard.
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Airbus Group reported its 2015 net income increased 15% to EUR2.7 billion from EUR2.3 billion the prior year. Earnings per share was EUR3.43 compared to EUR2.99. Group EBIT before one-off rose 2% to EUR4.13 billion from EUR4.07 billion. Revenue increased 6% to EUR64.5 billion from EUR60.7 billion in 2014. Airbus said this was mainly driven by Commercial Aircraft which registered an eight percent rise in revenues on higher deliveries of 635 aircraft and the strengthening dollar.
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Apple's deadlock with US authorities over hacking the iPhone began months ago and involves more than a dozen devices in 10 criminal investigations, according to court documents unsealed Tuesday. In a brief filed to federal court, Apple attorney Mark Zwillinger detailed a string of court orders beginning in October 2015 that directed Apple to hack 11 iPhones and another unidentified device on behalf of investigators. A letter from prosecutors filed in response mentioned one additional iPhone, bringing the total to 13. Apple has yet to comply with any of the orders, the documents said.
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US media conglomerate Viacom said it is in talks to sell a minority stake in its film division Paramount Pictures. CEO Philippe Dauman, during an investment conference, said, "We have received indications of interest from potential partners seeking a strategic investment in Paramount Pictures, and I have decided to pursue discussions with a select group of potential investors." The company has hired Paul Taubman's PJT Partners as a financial advisers to help with the discussions, Dauman said at the Jefferies Media & Communications Conference in New York. The company aims to close the deal by the end of the third quarter.
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Honeywell International confirmed it had engaged in discussions with United Technologies over the past year regarding a possible business combination. The company said it did not see the regulatory process as a material obstacle to a transaction, and the value creation from a combination is significant, including the benefits of USD3.5 billion in annualized cost synergies.
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Wednesday's Scheduled AGMs/EGMs
Gooch& Housego
Liontrust Asset Management (EGM re incentive scheme)
Blackrock Income & Growth
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By Tom Waite; [email protected]; @thomaslwaite
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