10th Dec 2015 08:25
LONDON (Alliance News) - Shares were slightly lower at the open Thursday, ahead of a Bank of England interest rate decision due at midday.
Old Mutual and Sports Direct International were the two biggest FTSE 100 fallers, down 5.1% and 7.5%, respectively.
Old Mutual shares were cut to Under Perform from Sector Perform by RBC Capital.
Sports Direct reported a big rise in annual profit, due to investment gains and margin improvement, though underlying profit grew by only 3.6% and revenue was flat. The retailer also had to defend itself against a newspaper report about work practices at its warehouse in Derbyshire.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 6,113.51
FTSE 250: down 0.3% at 17,081.73
AIM ALL-SHARE: down 0.2% at 733.31
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Hang Seng: closed down 0.5% at 21,704.61
Nikkei 225: closed down 1.3% at 19,046.55
DJIA: closed down 0.4% at 17,492.30
S&P 500: closed down 0.8% at 2,047.62
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GBP: flat at USD1.5179 (USD1.5172)
EUR: up at USD1.0994 (USD1.0979)
GOLD: firm at USD1,073.91 per ounce (USD1,073.10)
OIL (Brent): firm at USD40.47 a barrel (USD40.38)
(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
(all times in GMT)
08:30 Switzerland SNB Interest Rate Decision and press conference
09:30 UK Trade Balance
11:00 Ireland Consumer Price Index
12:00 UK BoE Interest Rate Decision, Minutes and Policy Statement
13:00 US Initial and Continuing Jobless Claims
13:30 US Export and Import Price indices
13:30 Canada Capacity Utilization
13:30 Canada New Housing Price Index
15:30 US EIA Natural Gas Storage
18:00 Germany Buba President Weidmann speech
19:00 US Monthly Budget Statement
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The house price balance in the UK came in at 49% in November, the latest survey from the Royal Institution of Chartered Surveyors showed. That beats forecasts for a reading of 48% but was down from the upwardly revised 50% in October. Among the individual regions, house prices in Scotland surged, while prices in the London area advanced more slowly.
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Producer prices in Japan were down 0.1% on month in November, the Bank of Japan said. That beat forecasts for a decline of 0.3% following the 0.6% contraction in October. On a yearly basis, prices slipped 3.6% versus expectations for a decline of 3.8% - which would have been unchanged from the previous month.
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Negotiators at the Paris climate talks released a new streamlined draft climate text on Wednesday, narrowing down the key points of disagreement with little more than 48 hours left before the final deal is meant to be adopted. With French Foreign Minister Laurent Fabius warning that "nothing is agreed until everything is agreed," the new draft resolved some of the major issues that have plagued negotiators while leaving other main questions unanswered.
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BROKER RATING CHANGES
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TRADERS: GOLDMAN CUTS BRITISH AMERICAN TOBACCO TO 'SELL' ('NEUTRAL')
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RBC CAPITAL CUTS ST JAMES'S PLACE TO 'SECTOR PERFORM' ('OUTPERFORM')
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RBC CAPITAL CUTS OLD MUTUAL TO 'UNDERPERFORM' ('SECTOR PERFORM') - TARGET 180 (200)P
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RBC CAPITAL CUTS PRUDENTIAL TO 'SECTOR PERFORM' ('OUTPERFORM')
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COMPANIES - FTSE 100
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Sports Direct International posted a 25% rise in interim pretax profit despite revenue only ticking up slightly, mainly due to a big increase in investment income and a better gross margin. The sports clothing and equipment retailer said its pretax profit for the 26 weeks to October 25 was GBP187.3 million, up 25% from the GBP149.7 million it made a year earlier, mainly due to the group booking a big gain on its investment income. The company also saw its gross margin improve, up to 44.9% from 44.0% a year earlier. Underlying pretax profit rose 3.6% to GBP166.4 million from GBP160.6 million.
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A report in The Guardian newspaper said that temporary staff working at Sports Direct's large warehouse operation in Derbyshire are effectively being paid below the minimum wage and working under very difficult conditions. Based on reports from two undercover journalists, the paper said warehouse staff at the group are required to go through a series of searches at the end of each shift, for which they are not paid, yet can have their pay docked for clocking in only a minute late. Though not directly referencing the article, Sports Direct said it had streamlined security operations at the warehouse in order to cut down waiting times for staff leaving the warehouse and said it complies with all legal working requirements. It noted that no warehouse workers are on so-called 'zero hour' contracts.
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Whitbread said its total and like-for-like sales grew in the third quarter, albeit at a slightly slower pace than in the first half, with good performances from its core hotels and coffee chain businesses. The owner of Premier Inn hotels and the Costa Coffee chain said its total sales grew 10.4% in the 13 weeks to November 26, its financial third quarter, with like-for-like sales growing 3.5%. For the 39 weeks to the same date, total sales were up 11.1%, while like-for-like sales grew 3.6%.
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Travel company TUI said it outperformed its expectations in its first year post the merger of the London-listed firm with its German parent company, with revenue and the company's earnings both increasing. TUI said its earnings before interest, taxation and amortisation increased to EUR865.0 million for the year to the end of September, up from EUR777.0 million a year earlier. Revenue for the year increased to EUR20.0 billion from EUR18.6 billion, with very strong performances from its tourism business, particularly hotels and resorts and cruises, and a robust year for its specialist travel arm. The company said it will pay a full-year dividend of 56.00 euro cents per share, up from 33.00 cents a year earlier and 10% higher than the dividend guidance it gave at the time of its merger.
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Centrica said earnings remain on track for 2015 despite a challenging backdrop and price cuts at British Gas, as the company continues to cut its expenditure. The UK energy and service company said it is on track to meet full-year expectations despite commodity price falls, lower margins at its power generation business, and a second price reduction at its British Gas unit. Centrica said it is on track to deliver over GBP2.00 billion of adjusted operating cashflow for the full year and said its cost cutting is either on track or ahead of expectations.
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Glencore outlined plans to accelerate its debt reduction and capital preservation measures and to cut its capital expenditure for this year and the next amid the weak commodities market. The multi-commodities miner and trading house said it will increase its debt reduction and capital preservation measures target to USD13.0 billion, from a previous target of USD10.2 billion, with USD8.7 billion of this either already achieved or locked-in. Glencore said its new net debt target for the end of 2016 is USD18.0 billion to USD19.0 billion, from its previous target of the low twenties of billions. The group has also further reduced its capital expenditure targets for 2015, down to USD5.7 billion from USD6.0 billion, and for 2016, where the cut is more severe, down to USD3.8 billion from USD5.0 billion.
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Royal Dutch Shell is considering pulling out of New Zealand as it continues its drive to sell USD30.00 billion worth of assets to simplify the business to cope with lower oil prices, the Financial Times reported. Citing Rob Jager, Shell's chairman of New Zealand, the FT said the company has conducted an entire review of the New Zealand business, which could lead to Shell exiting the country after operating in New Zealand for a century. "The options will range anywhere from business as usual and, as we are operating today, to potentially a full country exit and any alternative in between," Jager told the FT in a conference call.
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Fund manager Neil Woodford has sold his remaining shares in Rolls-Royce Holdings, the embattled jet engine and power systems engineer, saying the problems which had been plaguing the company have now spread to its core aerospace business. In a blog, Woodford said Rolls-Royce has been hit by a number of issues, including the transition over to new engine programmes by large aircraft manufacturers and an order slump which has hammered revenue for its marine business. The shares have been sold from the CF Woodford Equity Income Fund and the Woodford Patient Capital Trust, the latter of which is a constituent of the FTSE 250. Woodford didn't state the size of the holding that was sold.
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COMPANIES - FTSE 250
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Go-Ahead Group affirmed its full-year expectations as it said revenue had increased across its bus and rail operations in its financial first half. The transport group said it expects revenue to rise 1.0% for its regional bus business in the half to December 27, despite a 2.0% decline in passenger journeys. For its London bus operation, Go-Ahead expects revenue growth of around 2.5%, though said its quality incentive income continues to be hit by ongoing congestion caused by roadworks in the capital. For its Rail arm, the company said it expects revenue growth across its Southeastern, London Midland and GTR businesses.
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Online grocery delivery service Ocado Group said its sales rose in the fourth quarter and for its recently-ended financial year, though its average order size shrunk in the final weeks. The FTSE 250-listed company said its total group sales for the 16 weeks to November 29 was GBP381.6 million, up from GBP331.9 million a year earlier, with gross retail sales rising 13% and its average orders per week up to 205,000, a 16% year-on-year rise. But the average order size for the period shrunk to GBP107.16 from GBP109.74, down 2.3%.
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John Wood Group reiterated its full-year earnings outlook for 2015 alongside its plan to increase its dividend by a "double digit percentage" despite increasingly tough market conditions. John Wood said it is on track to deliver earnings before interest, tax and amortisation of around USD465.0 million for the 2015 calendar year whilst also delivering dividend growth.
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Micro Focus International reported a rise in pretax profit for its first half following its acquisition of The Attachmate Group last November, and announced a shake-up of its board as it plans to separate its chairman and chief executive officer roles over the next one to two years. The software company said Kevin Loosemore will continue as its executive chairman until at least April 2018, whilst Stephen Murdoch, current chief operating officer, will join the board from the beginning of February next year as chief executive of Micro Focus. Nils Brauckmann, president and general manager of the SUSE business will be promoted to chief executive officer of SUSE at the same time.
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Consumer products company PZ Cussons said trading in the half to the end of November was broadly flat, as a strong performance in its European business offsets more difficult conditions in Nigeria and currency challenges in Asia and across Africa. The company, which makes the Carex and Imperial Leather brands, said it has managed to hold on to market share due to product launches, but said its performance in certain product categories in Nigeria is likely to be affected by the ongoing squeeze on consumer disposable income in the country. The group's business in the UK was strong, driven by new product launches for Carex and its St Tropez tanning lotion, while its performance in Poland and Greece also met expectations.
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Block paving manufacturer Marshalls upgraded its expectations for 2015 following strong trading in the fourth quarter. The company said its revenue for the eleven months to the end of November rose 8.0% year-on-year to GBP365.0 million, despite tough comparatives for the year before. The group has seen continued strong order intake and good sales growth, while order momentum remains positive.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Nomad Foods late Wednesday set January 11, 2016 as the likely last day of trading for its shares on the Main Market of the London Stock Exchange, with the frozen foods company set to transfer its listing to the New York Stock Exchange. The delisting and cancellation of trading of shares in Nomad Foods is expected to take effect on January 12, 2016. The cancellation of trading on the LSE is conditional upon the NYSE listing becoming effective on an unconditional basis which is expected to take place on a when-issued basis on or around 4 January 2016. Nomad Foods listed in London in April 2014 as Nomad Holdings Ltd when it raised USD500.0 million. That was followed by a series headline-grabbing acquisitions and further capital raisings. The stock currently has a USD2.07 billion market capitalisation.
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COMPANIES - INTERNATIONAL
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Japanese electronics manufacturer Toshiba is to sell its television production plants abroad, Kyodo news reported, in the wake of an accounting scandal. The move would be part of a wider cost-cutting strategy, which could include the consolidation of its loss-making personal computer and household appliance departments with those of other companies, the report said, citing an unnamed source familiar with the plan. Toshiba was the first company to develop a colour television in 1959, but has been losing market and revenue in the sector amid increasing competition and slowing demand.
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General Electric is in advanced talks to buy the drill-bits and drilling-services divisions of Halliburton, which is divesting assets to win antitrust approval for its takeover of Baker Hughes Inc, Bloomberg reported citing people familiar with the matter. Selling both the drill-bits and drilling-services businesses could have fetched as much as USD5 billion in total for the oilfield services provider, people with knowledge of the matter said earlier this year, when the units were each put on the block.
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Thursday's Scheduled AGMs/EGMs
Ferrex (re name change to Keras)
Norish (re share placing)
Marwyn Value Investors (re share placing)
Nektan
Plexus Holdings
Greatland Gold
Starvest
Pure Wafer (re disposal of trading business and delisting)
Blackrock Greater Europe Investment Trust
Nanoco Group
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
PrudentialOld Mutual PLCBritish American TobaccoSt James's PlaceSports Direct