29th Oct 2015 08:31
LONDON (Alliance News) - UK shares opened lower Thursday and the dollar was stronger against the pound and euro, after the Federal Reserve left the door open for a US interest rate hike in December.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.8% at 6,387.40
FTSE 250: down 0.3% at 17,090.86
AIM ALL-SHARE: down 0.3% at 739.88
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Hang Seng: closed down 0.6% at 22,819.94
Nikkei 225: closed up 0.2% at 18,935.71
DJIA: closed up 1.1% at 17,779.52
S&P 500: closed up 1.2% at 2,090.35
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GBP: down at USD1.5263 (USD1.5320)
EUR: down at USD1.0927 (USD1.1071)
GOLD: down at USD1,159.30 per ounce (USD1,178.78)
OIL (Brent): down at USD48.60 a barrel (USD48.96)
(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)
08:55 Germany Unemployment Rate
09:30 UK Consumer Credit, Mortgage Approvals, M4 Money Supply
10:00 EU Industrial Confidence
10:00 EU Consumer Confidence
11:00 UK CBI Distributive Trades Survey
12:30 US Initial and Continuing Jobless Claims
12:30 US Gross Domestic Product Preliminary
13:00 Germany Consumer Price Index Preliminary
13:10 US Fed's Lockhart speech
14:00 US Pending Home Sales
14:30 US EIA Natural Gas Storage change
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The Federal Reserve kept US interest rates unchanged amid internal debate about whether to have tightened monetary policy, according to the central bank's latest policy statement. Policy makers signaled that a rate hike is still possible at their "next meeting" in December. Fed Chairperson Janet Yellen has repeatedly insisted that a rate hike would be "appropriate" this year, but in recent months global economy has shown signs of strain that may wash ashore in the US. However on Wednesday, Fed policymakers removed a line from the previous statement expressing concerns that "recent global economic and financial developments may restrain economic activity somewhat." The vote to maintain interest rates at zero was 9-1, with only Richmond Fed President Jeffrey Lacker arguing for a rate hike.
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UK house price inflation accelerated unexpectedly in October to the highest level in five months, the Nationwide Building Society said. House prices climbed 3.9% year-over-year in October, slightly faster than September's 3.8% rise. Economists had forecast prices to remain stable at 3.8%. The latest rate of increase was the fastest since May this year, when prices grew 4.6%.
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Industrial production in Japan was up a seasonally adjusted 1.0% on month in September, the Ministry of Economy, Trade and Industry said in a preliminary reading. That beat forecasts for a decline of 0.5% following the 1.2% contraction in August. On a yearly basis, industrial production dipped 0.9% - also beating expectations for a decline of 2.6% following the 0.4% decline in the previous month.
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Chinese and German companies signed far-reaching deals worth tens of billions of dollars during German Chancellor Angela Merkel's visit to Beijing. Merkel arrived early Thursday with a delegation of 20 business leaders for a visit expected to focus on strengthening economic cooperation and China's role in international crises. The chancellor and Chinese premier Li Keqiang presided over several signings, including a deal for Chinese airlines to buy about 100 A320 aeroplanes and another 30 A330s manufactured by Airbus Group. Additional agreements included a strategic cooperation between the German engineering company Voith and the China Three Gorges Corp, which built the massive dam on the Yangtze River. Merkel was due to meet President Xi Jinping later in the day.
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Beijing summoned the US ambassador to China to express its "strong discontent" after a US naval destroyer sailed close to islets occupied by China but claimed by the Philippines. Beijing said the USS Lassen illegally entered Chinese territorial waters when it sailed early Tuesday near the disputed Spratly, or Nansha, group of islands.
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The top Republican presidential candidates dug into government spending, debt and taxation during the party's third presidential debate. The 10 leading candidates out of 14 vying for the Republican nomination debated in Boulder, Colorado, opening with a discussion of their proposals to lower taxes and pay off the deficit. The debate was heavy on questions related to the candidates' economic policies. The candidates hit on the themes of cutting taxes, balancing the budget and addressing government debt. Several candidates said they opposed a tentative two-year budget deal passed this week by the House of Representatives because it lifts mandatory spending caps that have been in place for years.
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House Republicans officially nominated Congressman Paul Ryan to be the next Speaker of the House. Two hundred of the 247 House Republicans reportedly voted to put Ryan in the top leadership position, while 43 voted for Daniel Webster. The full House is expected to vote on the speakership on Thursday, when Ryan will need 218 votes to take the gavel from outgoing Speaker John Boehner.
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BROKER RATING CHANGES
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CREDIT SUISSE RAISES DIAGEO TO 'OUTPERFORM' ('NEUTRAL') - PRICE TARGET 2100 (1780) PENCE
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CS CUTS BAE SYSTEMS TO 'NEUTRAL' ('OUTPERFORM') - TARGET 460 (590) PENCE
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Liberum Downgrades BHP Billiton To Sell From Hold, Cuts Price Target To 900p From 1,045p
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Liberum Downgrades Rio Tinto To Sell From Hold, Cuts Price Target To 1,900p From 2,090p
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COMPANIES - FTSE 100
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Royal Dutch Shell said it swung to a loss in the third quarter after booking substantial losses on exceptional items and experienced a fall in revenue. The oil and gas giant reported a USD6.10 billion current cost-of-supply loss in the third quarter of 2015, swinging from a USD5.30 billion profit a year earlier. That loss was caused by exceptional items totalling USD7.90 billion. Excluding those items, current cost of supply earnings came in at USD1.80 billion, still significantly down from the USD5.80 billion reported a year ago. As expected, Shell's downstream results improved whilst upstream earnings were severely hampered by lower oil prices.
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BT Group said it is on track to deliver its outlook for its full financial year and increased its interim dividend, as it reported a rise in pretax profit for its first half. BT reported a pretax profit of GBP1.27 billion for the six months to end-September, up from GBP1.11 billion a year before, as revenue rose to GBP8.82 billion from GBP8.74 billion. The company proposed an interim dividend of 4.4 pence, up from 3.9p a year before. BT cited a strong performance from its fibre broadband, as well as good demand from its new BT Sport Europe channel, which helped drive up BT TV customers in the second quarter.
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Barclays reported lower third-quarter adjusted pretax profit as total income net of insurance claims fell back in the quarter. Net profit amounted to GBP417 million in the three months to September 30, compared with GBP379 million the corresponding quarter the prior year. A third interim dividend of one pence will be paid on December 11. Third-quarter adjusted pretax profit, a closely watched measure which strips out the effects of own credit, provisions for fines and compensation due to customers as well as other gains and losses, fell to GBP1.43 billion from GBP1.59 billion a year before. The adjusted figure missed company-compiled consensus forecasts of GBP1.64 billion.
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The UK government has shrunk its stake in Lloyds Banking Group to below 10% of the company's equity, according to a stock exchange document on Thursday. The UK government now has a 9.89% stake in Lloyds. Its plans to fully exit the holding in the coming months include a GBP2.0 billion sale to members of the public.
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Aviva said the acquisition of Friends Life, the rival life insurer it bought for about GBP5.6 billion, is "everything we expected it to be", as it continues to work towards its cost savings target through the integration process. Aviva said its UK life business has continued to grow, with customers responding positively to new pensions freedoms on offer since the UK government acted to create more flexibility in how people save for and provide for themselves in retirement. Value of new business in life insurance grew 25% to GBP823.0 million in the first nine months of 2015, with the UK's own figure rising by 36% to GBP404.0 million. UK life value of new business was up 13% excluding Friends Life.
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Smith & Nephew said it has agreed to acquire Blue Belt Holdings for USD275 million, as it maintained its outlook for 2015, and reported a slight rise in revenue for the first nine months of 2015. Smith & Nephew reported consolidated revenue of USD3.38 billion for the nine months to end-September, up from USD3.37 billion a year before. Smith & Nephew maintained its guidance, continuing to expect high underlying revenue growth in 2015 compared to 2014 and an improvement in trading profit margin.
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COMPANIES - FTSE 250
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The UK Competition and Markets Authority cleared Just Retirement Group's all-share merger with Partnership Assurance Group to create JRP Group following a phase I investigation. Just Retirement and Partnership Assurance welcomed the CMA's decision, and said they expect the merger to become effective in late December, subject to remaining approvals. The deal is still pending approval by the Prudential Regulation Authority and Financial Conduct Authority. Just Retirement agreed the GBP1.66 billion merger deal with Partnership Assurance in August.
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Laird set out plans to restructure and simplify its manufacturing capabilities in Europe and North America, as it reported a rise in revenue in sterling terms for the third quarter of 2015. Laird said that, prior to exceptional costs related to the restructuring programme, it expects its 2015 earnings to be broadly in line with consensus. Revenue in sterling rose to GBP160 million in the quarter to end-September, compared to GBP150 million a year before. However, the strength of the dollar held back revenue in dollar terms, falling to USD248 million from USD251 million a year before.
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John Wood Group said it has secured a new "multi-million" dollar contract to provide engineering services to oil major BP's existing subsea infrastructure in the Gulf of Mexico, the UK and Norwegian continental shelves, and offshore in Azerbaijan. The company will carry out the five-year contract through its subsidiary, John Wood Group Kenny, which is already doing work for BP under a separate contract signed back in 2007.
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Transport operator National Express Group said it delivered constant currency growth in all of its divisions in the second quarter, with like-for-like operating profit also increasing. The company said its group revenue was up 3.0% in the second quarter to the end of September on the year before, with growth in all of its divisions. Like-for-like operating profit was up 7%.
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COMPANIES - INTERNATIONAL
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Drug makers Pfizer and Allergan are considering a merger, the Wall Street Journal reported citing people familiar with the matter. The report noted that Pfizer recently approached Allergan about merging. The process is at an early stage and may not lead to an agreement. Pfizer has a market capitalisation of about USD219 billion and Allergan has a market value of USD113 billion.
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Goldman Sachs Group has agreed to pay a USD50 million fine in order to settle allegations that one of its employees took confidential documents from the Federal Reserve. The New York State Department of Financial Services also said that as part of the enforcement action, Goldman has accepted a three-year voluntary abstention from accepting new consulting engagements.
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Deutsche Bank may pay at least USD200 million to settle a regulatory investigation into alleged violations of US sanctions laws for its dealings with Iran and other blacklisted nations. A deal with The New York Department of Financial Services and the Federal Reserve may be announced as early as next week. The deals are not yet final. As the Fed was still looking for a penalty, the final sum is not yet known.
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Spanish lender Banco Santander reported its third-quarter ordinary attributable profit to the group was EUR1.68 billion, higher than last year's EUR1.61 billion. Ordinary earnings per share were EUR0.113, compared to EUR0.131 a year ago. Looking ahead, the company continues to expect increasing its earnings per share, reaching double digit growth by 2018.
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Reinsurer Swiss Re reported its third-quarter net income increased to USD1.40 billion from last year's USD1.23 billion. Earnings per share grew to USD4.09 from USD3.59 last year. The results reflected a strong underwriting and investment result and a benign natural catastrophe experience. Looking ahead, the company said it is on track to meet financial targets.
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South Korean conglomerate Samsung Electronics reported a 28% year-over-year increase in profit for the third quarter from last year, reflecting higher sales that were mainly driven by the chip and display business on the back of a weaker won. This is the company's first quarterly profit growth in two years. However, Samsung warned that it expects earnings for the fourth quarter to decline from the preceding quarter, as it does not expect the foreign exchange rate to have a positive effect. Samsung also announced a 11.3 trillion won share buyback, which is equivalent to USD9.9 billion.
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Sony reported second quarter net income attributable to stockholders of JPY33.6 billion, compared to a loss of JPY136.0 billion the previous year. Sales and operating revenue were down 0.5% to JPY1.89 trillion from JPY1.90 trillion a year ago. On a constant currency basis, sales decreased 7% year-on-year. The company said its forecast for consolidated results for the financial year ending March 31, 2016 remains unchanged.
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Thursday's Scheduled AGMs/EGMs
Mirada
Murgitroyd Group
Redde
Melrose Industries
Goldplat
Ideagen
Seeing Machines
Jelf Group
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By Tom Waite; [email protected]; @thomaslwaite
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