27th Jan 2016 08:24
LONDON (Alliance News) - London share prices opened weaker Wednesday, undermined by some negative UK company news after having been called to open slightly higher.
Royal Bank of Scotland and Antofagasta led heavyweight decliners, both down 3.4%. The bank outlined a series of large new provisions and impairments that will hit its 2015 results, while the miner said its full-year production was lower in 2015.
Software firm Sage Group led FTSE 100 gainers, up 4.4%, after an upbeat trading update.
In the FTSE 250, broker rating changes were driving stock movements. Just Eat was down 4.9% after being cut to Underweight by Morgan Stanley.
The conclusion of the US Fed's policy-making meeting after the London close is the major market event still ahead.
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 5,891.29
FTSE 250: flat at 16,171.81
AIM ALL-SHARE: down 0.1% at 683.22
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Hang Seng: closed up 1.0% at 19,052.45
Nikkei 225: closed up 2.7% at 17,163.92
DJIA: closed up 1.8% at 16,167.23
S&P 500: closed up 1.4% at 1,903.63
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GBP: soft at USD1.4333 (USD1.4342)
EUR: firm at USD1.0860 (USD1.0850)
GOLD: soft at USD1,117.72 per ounce (USD1,118.01)
OIL (Brent): down at USD31.00 a barrel (USD31.68)
(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 Consumer and Business Confidence
09:30 UK BBA Mortgage Approvals
12:00 US MBA Mortgage Applications
15:00 US New Home Sales (MoM)
15:00 US New Home Sales Change
15:30 US EIA Crude Oil Stocks
19:00 US Fed Interest Rate Decision and Monetary Policy Statement
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UK house prices increased at a slower pace in January, data from the Nationwide Building Society showed. House prices climbed 4.4% year-on-year in January, slightly slower than a 4.5% rise in December. Economists had forecast the annual growth to accelerate to 4.6%. On a monthly basis, house prices rose only 0.3% after increasing 0.8% in December. Prices were expected to rise 0.6%.
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Germany's consumer confidence is set to remain unchanged in February as modest improvements in economic expectations and willingness-to-buy were offset by deterioration in the income outlook, survey results from GfK showed. The forward-looking GfK Consumer Confidence Index showed a score of 9.4 points for February, unchanged from January, the Nuremberg-based market research group said. Economists had expected slight easing to 9.3 points. "The consumer climate has therefore been able to withstand the recent growth in risks it is facing," GfK said.
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Profits earned by Chinese industrial enterprises declined at a faster pace in December, figures from the National Bureau of Statistics showed. Industrial profits fell 4.7% year-over-year at the end of the year, which was worse than the 1.4% decrease in November. It was the seventh month of drop in a row. In the whole year 2015, total industrial profits contracted 2.3% compared with the preceding year.
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Confidence among Japan's small and medium-sized enterprises weakened for the second straight month in January to the lowest level in seven months, survey figures released by the Shoko Chukin Bank showed. The small business confidence index dropped to 47.2 in January from 48.3 in December. In November, the reading was 49.9.
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Italian Finance Minister Pier Carlo Padoan and the European Commission reached a deal that will allow Italy to purge its banks of loans that are not likely to be repaid. The deal would create a so-called bad bank in line with EU rules on state aid. Efforts to create a bad bank have been under way for several months.
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BROKER RATING CHANGES
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S&P CAPITAL IQ RAISES EASYJET TO 'BUY' ('HOLD') - TARGET 1,900 PENCE
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HSBC RAISES EASYJET TO 'HOLD' ('REDUCE') - TARGET 1,575 (1,500) PENCE
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CREDIT SUISSE RAISES ICAP TO 'OUTPERFORM' ('NEUTRAL') - TARGET 510 PENCE
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TRADERS: MORGAN STANLEY CUTS JUST EAT TO 'UNDERWEIGHT' ('EQUAL-WEIGHT')
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NOMURA RAISES CINEWORLD TO 'BUY' ('NEUTRAL') - TARGET 588 PENCE
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N+1 Cuts Euromoney Institutional Investor To Sell From Hold, Target At 849p
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COMPANIES - FTSE 100
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The Royal Bank of Scotland Group outlined a series of additional provisions and impairments it will book in the fourth quarter which will impact its 2015 results by just over GBP4 billion, related to its pension obligations, US residential mortgage-backed securities, payment protection insurance, and on its private banking arm. As of the end of December, RBS expects it will show a CET1 ratio of around 15.0% as a result of the charges and provisions, compared to 16.2% at the end of September.
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The board of HSBC Holdings will meet on Wednesday to consider moving the banking giant's headquarters to Hong Kong from London, Reuters reported Wednesday. There are concerns about China's increasing influence over Hong Kong, with its independence possibly a factor in the decision, the report said, citing a senior source at the bank. A decision on the domicile issue could come as early as this week, Reuters said.
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Aberdeen Asset Management said it continued to suffer net outflows in the quarter to the end of December, driven by continued volatility in emerging markets, and said it will cut further costs as it looks to cope in a tough investment environment. The emerging markets fund manager, which has suffered in recent months from its exposure to a slowing Chinese economy, said it recorded net outflows of GBP9.1 billion for the quarter to the end of December, compared to the GBP12.7 billion it posted in the quarter to the end of September.
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Business software company Sage Group said its organic revenue grew in the first quarter of its financial year, with good growth in its recurring revenue stream. Sage said its organic revenue, on a like-for-like and constant currency basis, grew 6.6% in the quarter to the end of December.
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Chilean miner Antofagasta said its copper and gold production accelerated in the fourth quarter but said full-year 2015 production still was lower than the year before. The group said its copper production for the fourth quarter to the end of December hit 169,900 tonnes, up 8.2% from the third quarter, thanks to higher production from its Los Pelambres and Centinela concentrates projects, plus the contribution from the Antucoya and Zaldivar mines. For all of 2015, however, copper production dipped to 630,300 tonnes, down 11% year-on-year. Gold production for the fourth quarter was 55,700 ounces, up 22% on the third quarter, mainly due to higher grades from Centinela. But gold production for the year also fell, down to 213,900 ounces from 270,900 in 2014.
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Rio Tinto said that it has reached a binding agreement to sell its Mount Pleasant thermal coal assets to MACH Energy Australia for USD224 million plus royalties. With the recently announced binding agreement for the sale of Rio Tinto's interest in the neighbouring Bengalla coal joint venture, this amounts to USD830 million of agreed sales. Mount Pleasant is a large-scale, thermal coal asset in the Hunter Valley of New South Wales with total marketable reserves of 474 million tonnes.
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The largest investor in grocer J Sainsbury is close to giving its support for a renewed bid for Home Retail Group, The Times reported. The Qatar Investment Authority, which owns a 25% stake in Sainsbury's, is understood to have indicated it would support the UK supermarket chain should it make a renewed bid for Home Retail, the owner of Homebase and Argos, of more than GBP1.0 billion.
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COMPANIES - FTSE 250
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Wealth manager Brewin Dolphin Holdings said its core fund inflows remained robust in the first quarter, as it continues to focus on its discretionary fund management business. The FTSE 250-listed group said its total funds under management increased to GBP33.2 billion at the end of the quarter, from GBP32.0 million at the end of September. The group said its total core funds under management, which only includes its discretionary and execution-only funds, rose 4.2% in the quarter to GBP29.7 billion, as it continues to focus on this business. Other income fell in the quarter, in line with this strategy shift.
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Tritax Big Box REIT said it is seeking to raise GBP100.0 million through a placing, open offer and subscription to back its investment plans. The group, which invests in 'big box' warehouse property, said it will issue a total of 80.6 million shares at 124 pence per share through the placing, open offer and subscription. The stock closed Tuesday at 131.38p.
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Eastern Europe-focused low-cost airline Wizz Air Holdings said it carried more passengers and generated more revenue in its third quarter year-on-year, while it also upgraded its underlying profit estimate for the year as trading continued to prove strong. The airline said it now expects its underlying net profit for the full year to the end of March to be EUR200.0 million to EUR210.0 million. The underlying numbers strip out currency translation and one-off items and were upgraded from its previous guidance for EUR190.0 million to EUR200.0 million.
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Britvic said trading for the first quarter to December 20 had been hit by difficult trading conditions, but that revenue was boosted by encouraging Christmas trading. The soft drinks company reaffirmed its earnings before interest, tax, depreciation and amortisation guidance range of GBP180 million to GBP190 million, after it said it saw good trading in its core markets over the entire Christmas period, with reported revenue for the first quarter 4.8% ahead of last year at GBP311.6 million.
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Buy-to-let lender and consumer debt purchaser Paragon Group of Companies said its financial performance met its expectations in the quarter to the end of December and said it remains confident on the outlook for the buy-to-let market in the UK, despite regulatory changes. The FTSE 250-listed group said its underlying operating profit, which strips out fair value items and acquisition-related costs, rose 14% in the quarter year-on-year. Its pretax profit was GBP33.9 million for the quarter, up from GBP30.2 million.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Metro Bank is set to announce plans to float in London by the end of February, Sky News reported, in an initial public offering which would value the business around GBP2.0 billion. The challenger bank, which in 2010 became the first new high street lender to launch in Britain for more than a century, has told investors its shares will be admitted to the London market by the end of February. The board of the bank met on Tuesday to discuss its progress towards the IPO and outlined plans to raise GBP500.0 million by selling new shares to investors.
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COMPANIES - INTERNATIONAL
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Apple posted its biggest quarterly earnings ever - USD18.4 billion in the three months that ended December 26 - but warned revenue could sink soon. The record profits were driven by what Apple chief executive Tim Cook called all-time record sales of iPhone, Apple Watch and Apple TV. Apple sold 76.8 million iPhones in its fiscal 2016 first quarter, which includes consumer spending for the December holidays and is traditionally the company's strongest. But the tech giant's forecast for the second quarter, while far from gloomy, took some of the shine off of the news. Apple predicted between USD50 billion and USD53 billion in revenue for the second quarter, a drop from USD58 billion in the same quarter in 2015. If the prediction holds true, it will be the first time in more than a decade that Apple's revenue shrinks.
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AT&T posted a profit for the fourth quarter turning around from a loss last year, as revenue grew 22% and operating costs also dropped. Earnings for the quarter came in line with Wall Street estimates, however, revenues fell short of expectations.
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German chemical giant BASF further lowered its forecast for fiscal 2015, noting that lower price forecasts for oil and gas led to impairments in its income from operations or EBIT. As forecast by BASF, sales and EBIT before special items for the full year 2015 are slightly below the level of the previous year. For the full year 2015, EBIT of BASF Group is expected to be EUR6.2 billion, compared to EUR7.6 billion in the prior year, mainly due to impairments in the Oil & Gas segment.
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Novartis reported that its net income for fourth-quarter 2015 declined 29% to USD1.056 billion from the prior year's USD1.487 billion. Group net sales and core operating income in 2016 are expected to be broadly in line with the prior year at constant currency, after absorbing the impact of generic competition. Generic competition impact on sales is expected to be as much as USD3.2 billion compared to USD2.2 billion in 2015.
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Toyota Motor and Suzuki Motor denied a report they are discussing a potential partnership. Nikkei Asian review had reported that Toyota Motor and Suzuki Motor have begun talks on a tie-up, looking to take advantage of each other's know-how and capitalize on demand for compact cars in India and other emerging economies. The report said that Suzuki and the Toyota group will discuss the potential partnership from a variety of angles, with cross-shareholdings a possibility.
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Wednesday's Scheduled AGMs/EGMs
Invesco Perpetual Enhanced Income
Aberdeen Asset Management
Royal Dutch Shell (re merger with BG Group)
Renew Holdings
Polar Capital Global Healthcare Grwth&Inc
Alternative Networks
Britvic
JPMorgan Indian IT
Patisserie Holdings
WH Smith
Henderson Alternative Strategies Trust
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By Tom Waite; [email protected]; @thomaslwaite
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