5th Aug 2016 07:23
LONDON (Alliance News) - The pound remained depressed but stock prices continued to rise Friday, after the Bank of England's decision on Thursday to cut UK interest rates and inject money into the economy. Friday's focus will be on US nonfarm payrolls in the afternoon.
Royal Bank of Scotland was the biggest FTSE 100 faller at the open, down 4.3%, after it reported a swing to an operating loss in the first half of 2016 and said it may take longer to hit it returns targets given current challenging economic conditions in the UK.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 6,776.91
FTSE 250: up 0.3% at 17,298.57
AIM ALL-SHARE: up 0.3% at 763.84
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Hang Seng: up 1.4% at 22,146.57
Nikkei 225: closed flat at 16,254.45
DJIA: closed flat at 18,352.05
S&P 500: closed flat at 2,164.25
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GBP: flat at USD1.3126 (USD1.3138)
EUR: flat at USD1.1143 (USD1.1134)
GOLD: flat at USD1,364.06 per ounce (USD1.363.19)
OIL (Brent): firm at USD43.89 a barrel (USD43.30)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times in BST)
0830 UK Halifax house prices
0900 Italy industrial output
1330 US nonfarm payrolls, unemployment rate, average earnings
1330 US trade balance
1330 Canada unemployment rate
1330 Canada international merchandise trade
1500 Canada Ivey purchasing managers index
1800 US Baker Hughes US oil rig count
2000 US consumer credit
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Labour is failing to provide a "powerful, credible opposition" to the UK's Conservative government under Jeremy Corbyn, leadership challenger Owen Smith claimed as the two men clashed in the first head-to-head debate of the campaign. In an often fiery exchange, Corbyn hit back, blaming Smith and others for undermining party unity when they quit the shadow cabinet in protest at his leadership. The challenger was booed and heckled by Corbyn supporters at the televised debate in Cardiff as he denied being part of a "coup" to oust the veteran left-winger. He accused Corbyn of presiding over an increasingly fractious Labour Party and "sloganising" rather than developing effective policies that would lead them back to power.
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Japan's leading index held steady in June, defying economists' expectations for an increase, preliminary survey data from the Cabinet Office showed. The leading index that signals the future economic activity, came in at 98.4 in June, the same reading as in the previous month. It was forecast to climb to 99.7.
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US President Barack Obama dismissed as "ridiculous" charges by Republican candidate Donald Trump that the US presidential election is going to be rigged against him. "Of course the elections will not be rigged - what does that mean?" Obama said at a press conference Thursday. Voting is overseen by local and state officials, but national officials take seriously the obligation to protect the voting process, Obama said during a press conference.
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A Brazilian Senate commission voted as anticipated in favour of impeaching President Dilma Rousseff, in a move that clears one of the final hurdles before a trial expected late this month. The 14-5 vote on the eve of the Rio 2016 Olympic Games followed two hours of debate in which a majority of senators appeared to support the case against Rousseff. The full Senate is expected to vote next week whether to proceed with a trial.
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BROKER RATING CHANGES
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JEFFERIES CUTS WOLSELEY TO 'HOLD' ('BUY') - TARGET 4180 (3980) PENCE
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UBS RAISES CAIRN ENERGY TO 'BUY' ('NEUTRAL') - TARGET 220 PENCE
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COMPANIES - FTSE 100
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Royal Bank of Scotland Group said it swung to an operating loss in the first half of 2016 and said it may take longer to hit it returns targets given current challenging economic conditions. RBS, which is 73%-owned by the UK government, said it made an operating loss of GBP274.0 million in the half to the end of June, swung from a GBP261.0 million profit a year prior. RBS said its adjusted operating profit for the half, which removes one-off costs along with litigation and conduct charges, was GBP1.16 billion, down from GBP2.89 billion a year before. The bank said the outcome of the EU referendum has created "considerable uncertainty in our core market". It said that within the current low interest rate environment and amid low economic growth conditions, hitting its cost-to-income ratio and return targets by 2019 will likely prove "more challenging".
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COMPANIES - FTSE 250
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Insurer esure Group trimmed its interim dividend, saying it wanted to retain capital in order to fund its growth plans, as pretax profit sank on one-off costs but underlying profit also was marginally lower. The mid-cap firm, which provides general insurance and owns price comparison service GoCompare, declared a 3.0 pence interim dividend, down from 4.2p a year earlier. Pretax profit for the half-year to the end of June was GBP30.7 million, down 69% from GBP97.6 million a year earlier. Underlying pretax profit, taking out the one-off effects, was essentially flat in the first half, at GBP45.6 million versus GBP46.5 million a year prior.
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William Hill reported growth in profit in the first half of 2016 as revenue grew on the back of a strong Euro 2016 football tournament for the bookmaker, but it kept its interim dividend flat as it works to improve its online business. William Hill said pretax profit in the first half rose to GBP100.7 million from GBP78.7 million in the first half of 2015, as net revenue grew to GBP814.4 million from GBP808.1 million. Despite the good results, William Hill kept its interim dividend flat at 4.1 pence, while it waits for the online business to return to stronger growth.
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Housebuilder Bellway said trading in recent weeks since the UK voted to leave the European Union had been encouraging, and said it expects to post a rise in revenue for its financial year. Bellway said it expects to report revenue of GBP2.20 billion for the year ended July 31, up 27% from the GBP1.74 billion recorded a year earlier, on the back of a 13% rise in housing completions to 8,721 and a 13% rise in average selling price to GBP252,700.
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Clay bricks manufacturer Ibstock said it has contingency plans in place to enable it to balance production with sales volumes for the remainder of the year as a response to the uncertainty resulting from the UK's vote to leave the EU. The building materials company said its key focus under these plans will be the management of stock levels and said capacity will be flexed to balance production with sales levels as necessary. Ibstock said it will manage its cost base in response to the evolution of its markets as visibility improves.
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COMPANIES - LONDON MAIN MARKET AND AIM
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UK private equity firm Inflexion sold a 7.7% stake in On The Beach Group in a share placing, disposing of 10.0 million shares in the holiday operator, Numis Securities said. Numis had said late on Thursday that Inflexion was looking to sell up to a 7.7% stake in an accelerated bookbuild, and the placing closed on Friday with Inflexion having sold all the shares intended. The On The Beach shares were sold at 215 pence per share, close to its closing price Thursday, to raise GBP21.5 million.
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COMPANIES - INTERNATIONAL
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Danish drugmaker Novo Nordisk reported its first-half net profit increased 7% to DKK19.4 billion. Earnings per share increased 9% to DKK7.63. Adjusted for the partial divestment of NNIT, net profit and earnings per share increased 22% and 23%, respectively. Sales increased 5% from last year to DKK54.7 billion. Sales increased 7% in local currencies.
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German insurance giant Allianz reported its second quarter net income attributable to shareholders declined 46% to EUR1.1 billion from last year's EUR2 billion, driven by EUR352 million impact from the expected disposal of South Korea. Operating profit declined 17% to EUR2.4 billion. Allianz said its earnings were burdened by claims from natural catastrophes, higher large and weather-related losses and lower returns on investments due to market turbulence.
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US packaged foods and beverage maker Kraft Heinz reported a swing to profit in the second quarter, driven largely by sales. Kraft Heinz reported second-quarter profit of USD770 million or USD0.63 per share compared to a loss of USD344 million or USD0.91 per share last year. Adjusted earnings rose to USD0.85 per share from USD0.61 per share last year. Kraft Heinz said sales for the quarter rose to USD6.79 billion from USD2.62 billion last year. Pro forma sales for the quarter dropped 4.7% to USD6.79 billion from USD7.13 billion last year. The Pittsburgh-based company was created last June through the merger of Kraft Foods and H.J. Heinz, a deal that was engineered by Heinz owners 3G Capital Partners and Berkshire Hathaway's Warren Buffett.
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Chevron is paring its Asia operations, selling assets worth up to USD5 billion in an effort to raise cash, the Wall Street Journal reported citing people familiar with the matter. The newspaper noted that the California-based energy giant is set to begin selling its offshore China assets this month, the latest in a series of divestments in Asia. The company is looking to raise up to USD10 billion globally from asset sales, a big chunk of which will come from its Asia upstream operations, as part of a broader effort to cut costs and adapt to an environment of lower oil prices.
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Friday's Shareholder Meetings
Vedanta Resources
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By Tom Waite; [email protected]; @thomaslwaite
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