24th Oct 2019 08:01
(Alliance News) - Royal Bank of Scotland early Thursday reported a GBP8 million operating loss before tax for the quarter to September, after a GBP2.69 billion profit a year before.
The loss, RBS said, was caused in part by a GBP900 million provision for PPI payments.
The lender, the first of the big UK banks to report third-quarter earnings, also said income was hurt by a "particularly challenging" quarter for NatWest Markets, though income was "broadly stable" across retail and commercial businesses compared to the second quarter of 2019.
Looking ahead, RBS reiterated all guidance given for 2019 and 2020 at the time of its interim results.
Barclays follows with its own quarterly results on Friday, with HSBC and Lloyds Banking next week.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 7,270.08
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Hang Seng: up 0.6% at 26,733.56
Nikkei 225: closed up 0.6% at 22,750.60
DJIA: closed up 45.85 points, 0.2%, at 26,833.95
S&P 500: closed up 0.3% at 3,004.52
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GBP: up at USD1.2920 (USD1.2887)
EUR: firm at USD1.1134 (USD1.1114)
Gold: down at USD1,491.60 per ounce (USD1,493.54)
Oil (Brent): up at USD60.96 a barrel (USD60.08)
(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
0930 BST UK household finance update
0930 CEST Germany flash purchasing managers' index
1000 CEST EU eurozone flash PMI
1345 CEST EU ECB interest rate decision
1430 CEST EU press conference with ECB President Mario Draghi
0830 EDT US advance report on durable goods
0830 EDT US initial jobless claims
0830 EDT US weekly export sales
0945 EDT US flash manufacturing and services PMI
0945 EDT US Bloomberg consumer comfort index
1000 EDT US new residential sales
1030 EDT US EIA weekly natural gas storage report
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EU leaders are continuing to consider whether to grant a further extension to Brexit against the objections of Boris Johnson. The UK prime minister has warned he will push for a snap general election if he is forced to accept a lengthy delay to Britain's departure, potentially into the new year. However there are signs of divisions among ministers and senior No 10 advisers over whether to press for a December poll. Dominic Cummings, Johnson's chief adviser, is reportedly leading calls to abandon attempts to get the prime minister's Brexit deal through Parliament and go for an election. But Northern Ireland Secretary Julian Smith is said to be among ministers arguing it is still possible to pass a bill ratifying the agreement, despite Tuesday's defeat for Johnson's attempt to fast-track it through the Commons.
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The number of workers in retail companies in the UK has fallen by 85,000 in the past year, new figures suggest. Full-time and part-time employment was lower than a year ago, while the number of hours they worked also fell, said the British Retail Consortium. Employment trends in the retail sector are in "stark contrast" to the UK's labour market as a whole, said the report. The BRC said it expects the long-term decline in employment to continue amid weak consumer spending and fierce competition in the industry.
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US President Donald Trump on Wednesday said he will lift sanctions on Turkey after the Nato ally agreed to permanently stop fighting Kurdish forces in Syria. Trump made the announcement as he defended his decision to withdraw American troops, saying the US should not be the world's policeman. "We're getting out," Trump said at the White House, asserting that tens of thousands of Kurdish lives were saved as the result of his actions. "Let someone else fight over this long, blood-stained sand," he added. Trump warned that if Turkey does not honour its pledge for a permanent ceasefire, he will not hesitate to reimpose sanctions.
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BROKER RATING CHANGES
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BERNSTEIN RAISES WHITBREAD TO 'MARKET-PERFORM' ('UNDERPERFORM') - TARGET 4000 PENCE
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HSBC RAISES ASOS PRICE TARGET TO 3560 (2430) PENCE - 'HOLD'
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COMPANIES - FTSE 100
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Pharmaceutical giant AstraZeneca reported a 16% rise in product sales for the third quarter, to USD6.13 billion, helping revenue rise 20% to USD6.41 billion. AstraZeneca's pretax profit for the quarter narrowed by 14% to USD409 million. The company said all three therapy areas and every sales region had an "encouraging" performance. AstraZeneca has, as a result, upgraded 2019 product sales guidance. This is now expected to be in the low-to-mid-teens as percentage growth, compared to low double-digit growth before. Earnings guidance is reiterated.
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Business publisher and analytics firm RELX delivered 4% underlying revenue growth for the first nine months of 2019, with all four business areas delivering an improvement year-on-year. The outlook for the year is unchanged, and RELX expects further revenue and adjusted operating profit growth in 2019.
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Engineering and industrial software firm AVEVA reported low double-digit revenue growth in the first half ended September, with revenue also helped by foreign exchange movements. The revenue mix was "positive", said AVEVA, with every region delivering growth. The UK competition regulator, the Competition & Markets Authority, is looking into whether SSE's sale of its energy services business to Ovo Group could lessen competition. The CMA is inviting comments, and any interested parties have until November 6 to speak to the regulator.
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COMPANIES - FTSE 250
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Refractory products company RHI Magnesita warned the global steel market has weakened further in the third quarter of 2019, with customers "significantly" reducing inventories. As a result, RH Magnesita's sales volumes have fallen. Third-quarter Steel division revenue has dipped 14% year-on-year, and second half Steel performance is expected to be "materially" below the first half. Elsewhere, the Industrial division is trading well. However, RHI Magnesita said this has not been able to offset the slowdown in Steel. As a result, the company has lowered full-year adjusted earnings before interest, tax, and amortisation guidance to between EUR400 million and EUR410 million.
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Stockbroker AJ Bell reported a 17% rise in customer numbers for its year ended September, and assets under administration has climbed 13% to GBP52.3 billion. AJ Bell said growth was mostly driven by its platform business. Total net inflows were GBP3.9 billion for the year, compared to GBP4.4 billion a year before.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Coca-Cola European Partners said third-quarter 2019 revenue of EUR3.28 billion met expectations, and was flat year-on-year. Volumes fell 1.5%, however, to 691 million cases. However, for the year-to-date, CCEP's revenue has risen 4.0% to EUR9.08 billion and volumes by 1.0% to 1.91 billion cases. CCEP said it is "pleased" with performance, but there has been a slower start to trading in the fourth quarter due to softening market conditions, especially in France and Great Britain, not helped by poorer-than-usual weather.
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Woodford Patient Capital Trust has appointed a new manager, Schroder Investment Management. Once a formal deal is signed, by the end of 2019, Woodford will rename to Schroder UK Public Private Trust.
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COMPANIES - INTERNATIONAL
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US software giant Microsoft said it made a good start to its new financial year as first-quarter revenue was helped by a strong performance from its closely watched cloud computing business. For the three months ended September, pretax profit widened 24% to USD12.69 billion from USD10.22 billion the year prior. This was after revenue rose 14% to USD33.06 billion from USD29.08 billion the year before. "It was a strong start to the fiscal year with our commercial cloud generating USD11.6 billion in revenue for the quarter, up 36% year over year," Chief Financial Officer Amy Hood said.
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US carmaker Ford Motor cut its full year profit guidance after forecasting headwinds in the fourth quarter will continue to intensify, despite delivering improved third quarter results. For the three months ended September, Ford swung to a USD1.09 billion pretax profit from a loss of USD19 million the year prior. This was despite revenue rising 1.8% to USD37.67 billion from USD36.99 billion the year before. Looking to the fourth quarter, the Dearborn, Michigan-based firm said fourth quarter headwinds have intensified since it previously gave annual guidance. This is primarily related to higher warranty costs, incentives in North America being higher than forecast and lower volumes in China. Consequently the Ford and Lincoln car maker cut full-year profit expectations.
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Tesla shares raced higher in after-hours trading in New York on Wednesday following the company's announcement that its factory in China had started production and quarterly financial results that beat expectations. Shares in Tesla climbed more than 20% after the electric carmaker, which had been expected to post a loss, reported a profit of USD143 million on revenue of USD5.4 billion in the third quarter ending September 30. Tesla said it is producing vehicles "on a trial basis" at its so-called Gigafactory in Shanghai, which will help boost global production and sales.
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Thursday's Shareholder Meetings
S4 Capital (re Firewood merger)
WPP (re transaction with Bain Capital)
Renishaw
South32
Alumasc Group
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By Tom Waite; [email protected]
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