23rd May 2016 07:21
LONDON (Alliance News) - London shares were narrowly mixed early Monday, as a big week in company reporting started fairly quietly.
Broker rating changes were behind some of the biggest early stock movements. Royal Mail shares led the FTSE 100, up 3.3%, after RBC Capital raised the stock to Sector Perform from Underperform.
Among mid-caps, Sports Direct International, down 3.9%, and ICAP, down 3.4%, were suffering from downgrades by Goldman Sachs and Credit Suisse, respectively.
The most prominent company to report Monday, Ryanair, was up 0.5%. The budget airline provided a strong set of annual figures but was cautious in its outlook for the year 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 0.4% at 6,132.45
FTSE 250: flat at 16,916.60
AIM ALL-SHARE: up 0.2% at 729.26
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Hang Seng: down 0.2% at 19,807.21
Nikkei 225: closed down 0.5% at 16,654.60
DJIA: closed up 0.4% at 17,500.94
S&P 500: closed up 0.6% at 2,052.32
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GBP: flat at USD1.4525 (USD1.4514)
EUR: firm at USD1.1236 (USD1.1207)
GOLD: firm at USD1,251.16 per ounce (USD1,249.50)
OIL (Brent): soft at USD48.21 a barrel (USD48.73)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
(all times in BST)
holiday Canada Victoria Day
08:50 France Markit services, manufacturing and composite PMI preliminary
08:55 Germany Markit services, manufacturing and composite PMI preliminary
09:00 EU Markit services, manufacturing and composite PMI preliminary
11:00 Ireland retail sales
11:15 US Fed's Bullard speech
14:45 US Markit manufacturing PMI preliminary
15:00 EU consumer confidence preliminary
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Quitting the European Union would plunge Britain into a year-long recession, UK Chancellor of the Exchequer George Osborne has warned. The country would suffer an "immediate and profound" economic shock following a vote to leave that would be made worse by the negotiations that followed, according to Treasury analysis released by the chancellor ahead of the EU referendum in one month today. It shows that economic growth would be at least 3.6% lower following a Brexit win in the June 23 referendum but could plummet as much as 6%.
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Prime Minister David Cameron rejected claims by Vote Leave campaigners that Turkey could join the EU in the next five years and flood Britain with new migrants. Vote Leave will launch a poster campaign showing an open door in the style of an EU passport and the message: "Turkey (population 76 million) is joining the EU. Vote Leave, take back control." It claims Britain is powerless to stop Turkey joining the EU and enjoying freedom of movement for its citizens. But Cameron told broadcaster ITV that Turkey's accession was not "remotely on the cards" in the near future and that Britain has a veto over it joining the EU.
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Turkish President Recep Tayyip Erdogan appointed loyalist Binali Yildirim as the country's new prime minister on Sunday, just hours after the former transport minister was confirmed leader of the ruling Justice and Development Party (AKP). Yildirim, a staunch conservative, was the AKP's sole nominee to replace Ahmet Davutoglu at the helm of the party and the cabinet following a special congress held in Ankara.
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British exporters logged a moderate growth in the first quarter, the latest Quarterly International Trade Outlook from the British Chambers of Commerce and DHL showed. The trade confidence index increased by 1.4% sequentially to 116.04 in the first quarter. However, it dropped 4.4% from the prior year. The balance of manufacturers reporting improved export sales and orders growth rose to +8% each. Meanwhile, the balance of services firms posting improved export sales over the past three months fell to +13% in the first quarter from +15% a quarter ago.
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The Greek parliament approved a new package of tax hikes and austerity measures that are demanded by the country's international creditors. The 153 members of Prime Minister Alexis Tsipras' coalition supported the measure late Sunday, while 145 members of opposition parties voted against the measure required for the cash-strapped country to receive additional bailout loans from its creditors. The measure is designed to generate EUR1.8 billion through a tax hike affecting restaurants, hotels, petrol and public transportation tickets.
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Japan's manufacturing activity deteriorated at the steepest pace in over three years in May, the latest flash survey from Markit Economics showed. The Markit/ Nikkei Manufacturing Purchasing Managers' Index, or PMI, fell to 47.6 in May from 48.2 in April. The latest reading signalled the quickest contraction in manufacturing conditions since December 2012. A score below 50 indicates contraction.
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An Egyptian submarine is backing up search efforts for the black boxes of an EgyptAir plane that crashed three days ago with 66 people on board, President Abdel-Fattah el-Sisi said on Sunday. He added that the submarine, operated by the Oil Ministry, was dispatched earlier on Sunday to the Mediterranean Sea where the Airbus A320 had crashed. The two black boxes - cockpit voice and flight data recorders - can provide clues to what caused the airliner to plunge into the sea. Smoke was detected on the jet shortly before its crash on Thursday, the French air accident investigation agency BEA said on Saturday, confirming earlier news reports.
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Iraqi troops, backed by US-led airstrikes, have begun a major attack to drive the Islamic State terrorist militia from its stronghold in the western city of Fallujah, Iraqi Prime Minister Haider al-Abadi said. "The clock of liberating Fallujah has struck," al-Abadi added in a televised address. Islamic State has been in control of Fallujah since early 2014. The city, around 50 kilometres west of the capital Baghdad, was the first Iraqi city to fall to the al-Qaeda splinter group, before Islamic State seized more territory in the country in a lightning attack months later.
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The leader of the Afghan Taliban, Mullah Akhtar Mansoor, was killed in a US drone strike on Saturday, Afghan officials confirmed. The Afghan spy agency, the National Directorate of Security (NDS), government Chief Executive Abdullah Abdullah and the presidential palace confirmed the death of Taliban leader Mullah Akhtar Mohammad Mansoor. US Secretary of State John Kerry confirmed the strike, noting the decision was made by President Barack Obama and that the leaders of Afghanistan and Pakistan had been notified of the airstrike.
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US President Barack Obama began a three-day visit to Vietnam on Monday outside the Presidential Palace in Hanoi. President Tran Dai Quang welcomed Obama in front of the century-old, French colonial-style building, which stands less than 300 metres from the mausoleum of former Communist revolutionary leader Ho Chi Minh. Obama was to participate in three meetings with senior Vietnamese leadership. They were expected to discuss maritime security in the South China Sea, the possible lifting of a decades-old US arms embargo, and the Trans-Pacific Partnership trade deal that both countries signed in February.
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BROKER RATING CHANGES
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RBC CAPITAL RAISES ROYAL MAIL TO 'SECTOR PERFORM' ('UNDERPERFORM') - TARGET 525 (445) PENCE
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GOLDMAN CUTS SPORTS DIRECT TO 'NEUTRAL' ('BUY') - TARGET 400 (525) PENCE
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CREDIT SUISSE CUTS ICAP TO 'NEUTRAL' ('OUTPERFORM') - TARGET 450 (475) PENCE
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JPMORGAN CUTS SPECTRIS TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 1765 PENCE
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HSBC RAISES WEIR GROUP TO 'BUY' ('HOLD') - TARGET 1450 (1150) PENCE
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TRADERS: PEEL HUNT INITIATES SECURE TRUST BANK WITH 'BUY' - TARGET 3800 PENCE
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COMPANIES - FTSE 100
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Life insurer and investment manager Legal & General Group said it has agreed to acquire a GBP3.0 billion annuity portfolio from Dutch peer Aegon. The deal has been structured as a reinsurance contract initially, L&G said, and covers around 27,000 in-payment policyholders who will remain customers of Aegon during the period. They will continue to be served by Aegon until the deal receives regulatory and court approval, L&G said.
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Sky is being courted by at least five private equity groups seeking to get its backing for a bid for mobile operator O2, The Sunday Telegraph reported. Discussions on a possible GBP9.0 billion offer for O2, the UK mobile operator which has just seen its proposed merger with smaller rival Three UK blocked by European regulators, are at an early stage, the newspaper said. Sky's backing for a bid could be crucial as it is set to launch its own mobile service based on O2's network later in the year.
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Sky also is understood to be among the companies looking at the possibility of picking up assets which may have to be sold to get regulatory passage for the merger of CK Hutchison and VimpelCom. CK Hutchison and VimpelCom have agreed a EUR20.0 billion merger of their 3 Italia and Wind mobile businesses in Italy. Hutchison is particularly sensitive to potential regulatory worries after its attempt to merger its Three UK business with O2 UK was blocked by the European Commission. The 3 Italia-Wind deal will create the largest mobile-only operator in Italy, putting the combined business narrowly ahead of Telecom Italia.
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BT Group is to start the search for a new chairman to replace Mike Rake at the end of the year, the Financial Times reported. Rake told the FT he will remain in his role "until at least September 2017", by which time he will have served a decade in the role.
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COMPANIES - FTSE 250
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Mitie Group said pretax profit more than doubled in its recent financial year thanks to lower one-off costs, as the FTSE 250 outsourcer launched a share buyback. However, Mitie's underlying profit only edged higher in the year to the end of March, and its order book for the new year is slightly weaker than a year prior. Mitie handles facilities management and advises clients on how to cut energy usage. It said its pretax profit more than doubled in the recent year to GBP96.8 million from GBP41.5 million the year earlier, mainly due lower one-off costs. Mitie declared a final dividend of 6.7 pence per share, up from 6.5p, taking its total payout for the year up 3.4% to 12.1p from 11.7p. In addition, Mitie announced a GBP20.0 million share buyback to return cash to shareholders.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Irish budget airline Ryanair Holdings said its profit, revenue and number of customers carried all grew in its recently completed financial year, though it expects softer pricing and only modest growth in net profit in the current year. Ryanair said profit after tax for the year to the end of March grew 43% to EUR1.24 billion from EUR867.0 million a year earlier. But Ryanair expressed a degree of caution on the current financial year. The group said it anticipates profit after tax to rise "modestly" in the year to the end of March 2017 to between EUR1.38 billion and EUR1.43 billion.
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Banknote printer De La Rue said it has completed the sale of its Cash Processing Solutions subsidiary to CPS Topco, a company owned by private equity investor Privet Capital. De La Rue got GBP2.1 million on completion and could be paid up to GBP6.5 million in total based on Cash Processing Solutions hitting performance targets in the two years following the deal.
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GVC Holdings said it will licence its online sportsbook and gaming platform to Betfred, signing a ten-year agreement with the UK-based bookmaker. The London-listed e-gaming operator said the deal will lead to the "full migration" of Betfred's online businesses to the GVC platform on an exclusive basis after GVC was chosen to help drive the bookmaker's online growth.
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COMPANIES - INTERNATIONAL
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German conglomerate Bayer said it has made an all-cash offer to acquire agricultural products giant Monsanto for USD122 per share or an aggregate value of USD62 billion. This offer, based on Bayer's proposal to Monsanto on May 10, represents a premium of 37% over Monsanto's closing share price on May 9.
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Quarrels have broken out behind the scenes of Anthem's USD48 billion proposed acquisition of Cigna Corp as the health insurers seek regulatory approval for their landmark deal, the Wall Street Journal reported. The report noted that the squabbles could delay or derail antitrust approvals, which are typically harder to obtain if both parties aren't in sync. While neither company has sought to terminate the merger, the people say, and it doesn't appear in danger of imminent collapse, Anthem and Cigna are bickering on several fronts.
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Aerospace and defense giant Boeing announced that the company and Vietnam's airline VietJet Aviation Joint Stock Co. have finalised an order for 100 737 MAX 200 airplanes, valued at approximately USD11.3 billion at current list prices. The order is the largest ever single commercial airplane purchase in Vietnam aviation. US President Barack Obama and Tran Dai Quang, president of Vietnam, witnessed the signing of the agreement.
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Monday's Scheduled AGMs/EGMs
Restore
Stock Spirits Group
Noricum Gold
Nasstar
4D Pharma
Hvivo
Plant Healthcare
Synety Group
Vertu Capital
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
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