17th Dec 2015 08:26
LONDON (Alliance News) - Stocks around the world were rallying Thursday after the Federal Reserve pulled the trigger on the first US interest rate hike in just under 10 years but maintained a dovish tone in its comments. The pound, euro and gold fell, however, with the pound trading under USD1.50.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.4% at 6,146.58
FTSE 250: up 1.0% at 17,248.25
AIM ALL-SHARE: up 0.5% at 722.18
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Hang Seng: closed up 0.8% at 21,872.06
Nikkei 225: closed up 1.6% at 19,353.56
DJIA: closed up 1.3% at 17,749.09
S&P 500: closed up 1.5% at 2,073.07
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GBP: down at USD1.4951 (USD1.5002)
EUR: down at USD1.0870 (USD1.0942)
GOLD: down at USD1,066.46 per ounce (USD1,075.20)
OIL (Brent): down at USD37.07 a barrel (USD37.46)
(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)
09:00 Germany IFO
09:00 Italy Trade Balance
09:00 EU Economic Bulletin
09:30 UK Retail Sales
10:00 EU Construction Output
11:00 UK CBI Industrial Trends Survey
13:30 US Current Account
13:30 US Initial and Continuing Jobless Claims
14:30 US Philadelphia Fed Manufacturing Survey
15:00 US CB Leading Indicator
15:30 US EIA Natural Gas Storage
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The Federal Reserve announced the first US interest rate hike since 2006, marking the end of the central bank's zero interest-rate policy. The Federal Open Market Committee was unanimous in its decision to raise the target for Fed Funds rates by 25 basis points to 0.25% to 0.50% from 0% to 0.25%. Looking further out, the Fed sees only "gradual" rate hikes in 2016, according to its so-called 'dot plot' of FOMC member forecasts. From there, the policy makers expect even slower rate hikes in 2017-2018. In her press conference Fed Chair Janet Yellen said the interest rate rise recognises the "considerable progress that has been made toward restoring jobs, raising incomes and easing the economic hardship of millions of Americans. And it reflects the committee's confidence that the economy will continue to strengthen." Looking ahead, Yellen said: "As the outlook evolves we'll respond appropriately. I strongly doubt that it will mean equally spaced hikes, and it certainly is not the intention of the committee to follow any mechanical formula of that type."
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The Chinese yuan weakened against the dollar in the Asian session on Thursday, as dollar rose after the US Federal Reserve hiked interest rates for the first time in almost a decade. Against the greenback, the yuan fell to a 4-1/2-year low of 6.4910 from yesterday's closing value of 6.4722.
The People Bank of China set Thursday's central parity rate for yuan at 6.4757 per dollar, compared to Wednesday's reference rate of 6.4626. The central bank sets the reference rate every morning and allows the currency to move up to 2% from that level.
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UK car production increased in November fueled by overseas demand, the Society of Motor Manufacturers and Traders said. Car manufacturing advanced 9.3% year-on-year to 150,084 units in November. Production for export grew 10.8% and that for domestic market climbed 3.4%. The latest figures put year-to-date volumes 3.8% ahead of the same period in 2014.
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Japan's merchandise trade deficit narrowed more-than-expected in November from a year ago, as imports fell faster than exports, the Ministry of Finance said. The trade deficit decreased notably to JPY379.7 billion in November from JPY898.8 billion in the corresponding month last year. Economists had expected the deficit to narrow to JPY449.7 billion. Exports dropped 3.3% year-over-year in November, exceeding economists' expectations for a 1.6% decline. Imports plunged 10.2% in November from a year ago. The expected rate of fall was 7.3%.
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US lawmakers in the lower House of Representatives will vote on a USD1.1 trillion budget bill Friday in a last minute effort to avoid a shutdown of the US government. Congressional leaders reached a bipartisan agreement late Tuesday after weeks of contentious negotiations that will also see lawmakers vote on a separate tax measure. Speaker of the House Paul Ryan, who took office in late October, urged his fellow Republican lawmakers to support the measures in order to allow Congress to return to working in a more regular manner.
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Finance ministers of UN Security Council member states are expected to pass a council resolution Thursday aiming to connect the global financial system to cut off funding to the Islamic State extremist group, US officials said. The first-ever meeting of finance ministers at the council will bring together leaders in an effort to coordinate financial systems worldwide to "starve" the Islamic State of its funding, said Samantha Power, US ambassador to the UN.
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Argentina said it will end currency controls, as promised by newly elected President Mauricio Macri.
From Thursday, "it will be possible to export, import and buy dollars freely," Finance Minister Alfonso Prat-Gay told reporters in Buenos Aires. The peso was expected to drop from its latest official rate of 9.83 to the dollar, to closer to its current black market rate of between 13.50 and 15 to the dollar, local media reported. Strict controls on peso exchange, known collectively as the cepo, were implemented under the former government of Cristina Fernandez de Kirchner in 2011 to prevent an exodus of capital.
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Dozens of countries completed a deal to eliminate tariffs on high-tech IT products on Wednesday at a high level World Trade Organization conference in Nairobi, despite serious differences over the future of global trade liberalization talks. The Information Technology Agreement will phase out tariffs on some 200 products including telecommunication satellites, manufacturing equipment for smart phones and software that are worth 1.3 trillion dollars in annual trade.
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Russia said it hopes the Syrian government and the opposition will sit down to negotiations as early as January 1. Representatives of 18 countries, the Arab League and the EU - who met in Vienna in October and are steering efforts for a peace deal - will meet again on Friday in New York, Russian Foreign Ministry spokeswoman Maria Zakharova said, according to state news agency TASS. Russian Foreign Minister Sergei Lavrov said he agreed with US Secretary of State John Kerry to work towards a UN Security Council resolution backing the Vienna process, which calls for a transitional government to be set up within six months and new elections within 18 months.
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BROKER RATING CHANGES
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GOLDMAN RESUMES GKN WITH 'BUY' - TARGET 327 PENCE
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HSBC RESUMES AL NOOR HOSPITALS WITH 'HOLD' - TARGET 1120 PENCE
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BERENBERG RAISES DOMINO'S PIZZA TO 'BUY' ('HOLD') - TARGET 1200 (900) PENCE
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COMPANIES - FTSE 100
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Pharmaceutical giant AstraZeneca said it has agreed to acquire a majority stake in Dutch and US biopharmaceutical company Acerta Pharma. AstraZeneca will pay an initial USD2.5 billion upfront for a 55% stake in Acerta. A further USD1.5 billion will be paid either when Acerta's cancer drug acalabrutinib is approved in the US for any indication, or the end of 2018, whichever is first. The agreement also includes options which, if exercised, would allow Acerta shareholders to sell and AstraZeneca to buy the remaining 45% stake in Acerta, at a price of around USD3 billion.
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London Stock Exchange Group said it has seen a good performance across each of its businesses in the eleven months to end-November. In the Information Services segment, the LSE cited good momentum in the integration of FTSE Russell and delivery of synergies, whilst in the Post Trade Services segment, the LCH.Clearnet business delivered a good performance, it said. In Capital Markets, primary markets were robust, LSE said, with GBP40 billion in equity capital raised on the markets for the period, down 2% from the previous year in more challenging market conditions. Secondary markets saw average daily UK equity value traded up 9%, and Italian average daily volumes up 7%.
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COMPANIES - FTSE 250
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Speciality chemicals company Elementis said its earnings per share for 2015 is now projected to be at the lower end of the range of market expectations, as challenging markets continued. However, the company said it still expects its year-end net cash balance to be higher than the previous year balance of USD64.2 million. Elementis said its operating profit in 2015 has benefited from around USD5 million in one-off gains related to legal settlements and property easements which will not be repeated in 2016.
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Ted Baker said it has entered into a contract to purchase the building that houses the company in London for GBP58.3 million and said it is eyeing expansion after striking a deal to potentially acquire a stake in the adjacent building. Ted Baker is headquartered in the "Ugly Brown Building" on Canal Reach, St Pancras Way, London, and the clothing and accessories retailer is purchasing the property through its wholly owned subsidiary Big Lobster. Currently, Ted Baker pays GBP1.2 million in annual rent for its headquarters.
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Halma said it has acquired Barcelona-based Visiometrics SL and California-based Visual Performance Diagnostics Inc, together known as Visiometrics, for a maximum total consideration of EUR125 million. This includes EUR18 million to be paid at closing, deferred consideration of up to EUR69 million to be paid over the next three years, and deferred consideration of up to EUR40 million to be paid in royalties over the next five years. Visiometrics will become part of Halma's Medical sector, and its chief executive officer and management team will continue to operate the business out of its current locations.
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Entertainment One said it has created a new partnership, forming a new film, television and digital content creation company, Amblin Partners, in association with Steven Speilberg and others. The partnership extends its output agreement with DreamWorks pictures. Along with Spielberg will be Jeff Skoll and Anil Ambani. Under the agreement Entertainment One will directly distribute Amblin Partner's films, and it will hold a small equity stake in Amblin Partners.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Premier Farnell said its operating profit for its current financial year to February 1, 2016, will be in line with previous guidance but towards the lower end of that range. The formerly FTSE 250-listed technology products distributor had previously guided for adjusted operating profit to be between GBP73 million and GBP77 million for the year. For its third quarter from August 3 to November 1, the company reported a 0.5% rise in group sales, as a strong performance in Asia Pacific offset declines in Europe and the Americas.
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Costain Group said it has been awarded two key asset support contracts from Highways England to develop and maintain the country's trunk road network, and been chosen as a preferred bidder for another contract in Sussex. The two contracts are worth a combined GBP750.0 million over a five year period, with Costain being awarded the contracts through a joint venture that will see the company enjoy about a third of the spoils. In addition, Costain has also been chosen as the preferred bidder for a seven-year, GBP300.0 million contract to provide design, maintenance and improvement services covering over 2,000 miles of road. That contract is from East Sussex County Council and is expected to be formally awarded in January, with work commencing from May.
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International corporate services firm Hogg Robinson Group said it has appointed Debenhams Chairman Nigel Northridge as its new chairman. Northridge also is a senior independent director of retail services company Inchape. Initially, Hogg Robinson has appointed Northridge as a non-executive director, but he will be appointed chairman at the start of 2016 after current Chairman John Coombe leaves the company.
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COMPANIES - INTERNATIONAL
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Conglomerate General Electric said in a presentation that it plans to return USD26 billion to shareholders in 2016, by way of buyback and dividends. The company plans to make a USD18 billion buyback and provide USD8 billion in dividends during 2016. Operating earnings per share for 2016 are estimated in the range of USD1.45-USD1.55. This includes organic growth of 2% to 4% as well as core margin expansion. GE said it expects to sell the home-appliances unit early in 2016. The company had pulled out of a deal with Electrolux on this unit last week.
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Oracle reported a profit for second quarter that decreased from last year. The company said its earnings fell to USD2.74 billion, or USD0.63 per share. This was down from USD3.12 billion, or USD0.69 per share, in last year's second quarter. Analysts had expected the company to earn USD0.60 per share, according figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items. The company said revenue for the quarter fell 6.3% to USD9.00 billion. This was down from USD9.61 billion last year.
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Package delivery giant FedEx reported an increase in profit for the second quarter, driven largely by strong revenue growth at FedEx Ground segment. Both earnings and revenues for the quarter trumped Wall Street estimates, sending its stock up by 5% in after-hours trading. Memphis, Tennessee-based FedEx's second-quarter profit rose to USD691 million or USD2.44 per share from USD663 million or USD2.31 per share last year. Adjusted earnings for the quarter rose to USD2.58 per share from USD2.16 per share last year. On average, 25 analysts polled by Thomson Reuters expected earnings of USD2.51 per share for the quarter.
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Facebook said it has added a feature for booking a ride through its messaging application. The service is currently in testing and will be available to select users in the locations where Uber operates in the US. More countries and other transportation partners will be available soon. For a limited time, users will get a free ride the first time they use this feature with Uber.
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Delta Air Lines said it will add up to 20 Embraer 190 and 20 new Boeing 737-900ER jets acquired through a new agreement with Boeing. The agreement is part of the airline's strategy to improve its efficiency by adding additional 737-900ERs and upgauging its mainline fleet with the nearly 100-seat, twin-engine E190 jets while reducing the use of small regional aircraft.
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Total said its board elected Chief Executive Officer Patrick Pouyanné as chairman. Pouyanné, CEO since October 2014, therefore becomes chairman and chief executive officer of Total, following the board's decision to recombine the two roles. He succeeds Thierry Desmarest, whose term as chairman expires this month.
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Thursday's Scheduled AGMs/EGMs
British Empire Trust
J Smart & Co
Plaza Centers
Uranium Resources
Management Consulting Group
Sirius Real Estate (re scrip dividend alternative)
RAB Special Situations Co (re continuation)
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By Tom Waite; [email protected]; @thomaslwaite
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