21st Oct 2015 07:30
LONDON (Alliance News) - A string of disappointing UK company announcements have left London share prices lower at the open Wednesday, amid little in the way of economic news.
Publisher Pearson leads blue-chip decliners, off 12%, after it cut its earnings per share expectations for 2015 following its sale of its PowerSchool business, the FT Group and stake in The Economist Group, as well as continued challenging market conditions and currency movements.
In the FTSE 250, shares in Home Retail Group were down 13%, after reporting half-year results showing sales down 2% and a reduction in cash gross margin. The Argos and Homebase owner left its interim dividend unchanged.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,327.76
FTSE 250: down 0.2% at 16,957.20
AIM ALL-SHARE: down 0.1% at 744.60
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Hang Seng: market closed for holiday
Nikkei 225: closed up 1.9% at 18,554.28
DJIA: closed down 0.1% at 17,217.11
S&P 500: closed down 0.1% at 2,030.77
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GBP: down at USD1.5425 (USD1.5464)
EUR: slightly up at USD1.1352 (USD1.1343)
GOLD: flat at USD1,174.78 per ounce (USD1,174.70)
OIL (Brent): slightly down at USD48.26 a barrel (USD48.62)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
(all times in BST)
09:30 UK Public Sector Net Borrowing
12:00 US MBA Mortgage Applications
15:00 Canada Bank of Canada Interest Rate Decision
15:30 US EIA Crude Oil Stocks
16:15 Canada BoC Press Conference
18:00 UK BOE Governor Carney speech
18:30 US FOMC Member Powell Speech
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Japan had a merchandise trade deficit of JPY114.5 billion in September, the Ministry of Finance said. That was well shy of forecasts for a surplus of 87.0 billion yen following the 569.4 billion yen shortfall in August. Exports were up just 0.6% on year, also well below forecasts for an increase of 3.6% following the 3.1% gain in the previous month. Imports dipped an annual 11.1% versus expectations for a fall of 12.0% following the 3.1% contraction a month earlier.
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Japan's all industry activity dropped for the second straight month in August, in line with expectations, figures from the Ministry of Economy, Trade and Industry showed. The all industry activity index fell a seasonally adjusted 0.2% month-over-month in August, following a 0.1% decrease in the previous month. The figure was also matched with consensus estimate.
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Thousands of Syrian civilians who have fled rebel-held areas near Aleppo are sleeping in the open after escaping fighting and government shelling, activists and aid organizations said. About 35,000 people have left the Hader and Zerbeh districts south-west of the divided city, a spokeswoman for the UN Office for the Coordination of Humanitarian Affairs said. Syrian troops, backed by Russian airstrikes, have gained ground from rebels in the area in recent days. Meanwhile, Canadian Liberal Party leader Justin Trudeau said his government plans to end the country's direct participation in the US-led coalition against Islamic State forces in Iraq and Syria. The Liberals won an outright majority in Monday's election in Canada.
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Initial results from the first stage of Egypt's parliamentary elections, held Saturday and Sunday, showed a pro-government slate ahead in the race for 60 seats reserved for party lists. Reports in Egyptian media on Tuesday put the For Love of Egypt list, widely thought to be backed by the authorities, ahead in most of the polling stations where presiding judges had announced local results. The polls will elect Egypt's first parliament since then-army chief Abdel-Fattah al-Sissi deposed Islamist president Mohammed Morsi in the wake of mass demonstrations two years ago.
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BROKER RATING CHANGES
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CITIGROUP RAISES SMITHS GROUP TO 'BUY' ('NEUTRAL') - TARGET 1,200 (1,050) PENCE
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TRADERS: JEFFERIES INITIATES SSE WITH 'HOLD' - TARGET 1,600 PENCE
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DEUTSCHE BANK RAISES RANDGOLD TO 'BUY' ('HOLD') - TARGET 5,050 (4,640) PENCE
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Numis Ups Fidessa Group To Buy From Hold, Keeps Price Target At 2,355p
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COMPANIES - FTSE 100
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BHP Billiton, the world's biggest miner, said its iron ore production for the first quarter rose 7% year-over-year to a record 61.32 million tons. The company affirmed its forecast for fiscal 2016 iron ore production of 247 million tons. First-quarter production of metallurgical coal, which is used in steel making, was flat with last year at 10 million tons. Energy coal production was also flat with the prior-year quarter at 8.85 million tons. The company backed its energy coal and metallurgical coal production outlook for fiscal 2016 at 40 million tons each.
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Pearson cut its earnings per share expectations for 2015 following its sale of its PowerSchool business, the FT Group and stake in The Economist Group, as well as continued challenging market conditions and currency movements. Pearson had previously guided for earnings per share of between 75p and 80 pence, however, following these sales, as well as movements in exchange rates, this range is reduced by around 5p to between 70p to 75p. What's more, due to continued challenging market conditions, Pearson said, it now expects adjusted earnings per share to be at the bottom of this range.
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Reckitt Benckiser Group reported a fall in group net revenue in the third quarter of 2015, although it grew at constant exchange rates, leading the consumer goods company to raise its full-year revenue forecast on a constant currency basis. The company, which makes products including cleaning spray Cillit Bang and Nurofen painkillers, said group net revenue fell 1% to GBP2.19 billion in the third quarter, but rose 7% on a like-for-like basis at constant currencies.
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Bunzl said it expects to complete a number of further acquisitions during the remainder of the year and said it has acquired Canada's Planet Clean Inc, as its performance remained "consistent with expectations" it gave with its interim results in August. The distribution and outsourcing company said that in the third quarter of 2015 its revenue rose 4% compared to the previous year at constant exchange rates, boosted by acquisitions, it said. Bunzl said there has been no significant change in its financial position, and it continues to have "substantial funding headroom available" for acquisitions.
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Barclays has joined the list of banks seeking a waiver on ringfencing rules in the UK, the Financial Times reported, entering talks with the regulator about a transitional deal to make its ringfenced retail bank a wholly-owned subsidiary of the rest of the company, rather than splitting it into a standalone entity. The bank is proposing that instead of structuring itself as two "sibling" entities on either side of the ringfence under a single holding company, it could have a so-called "mother-daughter" structure, with the ringfenced entity to be owned by the rest of the group.
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Virgin Media has given its backing to BT Group in the ongoing debate surrounding calls to split the telecoms group from its Openreach network infrastructure unit, saying such a move would deter investment in broadband improvements, The Daily Telegraph reported. Tom Mockridge, the chief executive of Virgin Media, told an industry conference that BT should be allowed to keep control of Openreach, putting itself at odds with other BT rivals Vodafone Group, Sky and TalkTalk Telecom Group, all of which have called for a break-up.
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Meanwhile, Sky said it has made a "strong start" to its current financial year, as it reported a 10% rise in operating profit for its first quarter.
For the quarter to end-September, Sky reported an operating profit of GBP375 million, up from GBP347 million a year before, on revenue of GBP2.79 billion, up from GBP2.74 billion. This included 7% revenue growth in the UK and Ireland, and an 11% rise in Germany and Austria, which offset a 4% decline in Italy. Sky added 134,000 new customers during the quarter, and 937,000 new paid-for subscription products, with 133,000 new broadband subscribers in the UK.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Fyffes late Tuesday said it has invested USD30 million to expand capacity at its US melon business, acquired a banana farm in Costa Rica for USD15 million, and closed its Irish defined benefit pension scheme. Fyffes said it is still "strongly" generating cash. Following the flurry of corporate activity, it expects that year-end net debt will not exceed one times target adjusted earnings before interest, tax, depreciation and amortisation for 2015.
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COMPANIES - INTERNATIONAL
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Automaker Fiat Chrysler said the initial public offering of its luxury car division Ferrari has been priced at USD52 per share, at the top end of its estimated range. The company has raised USD893.1 million from the IPO. Ferrari's IPO of 17.18 million common shares are priced at the high of the estimated range of USD48 to USD52 per share. The total offering size will be USD982.4 million if the underwriters exercise the option in full. While the broader IPO market has appeared to cool recently, Ferrari's shares were snapped up reflecting the premium status of the luxury car company. The stock sale values Ferrari at about USD9.8 billion. Ferrari's shares are expected to begin trading on the New York Stock Exchange on Wednesday, October 21, 2015, under the symbol "RACE".
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JPMorgan Chase & Co is working to finalise a deal to sell the majority of Highbridge Capital Management's private equity business to Highbridge Chief Executive Scott Kapnick and other members of his management team, the Wall Street Journal reported citing people familiar with the matter. JP Morgan is close to relinquishing control of the USD22 billion private equity business. JP Morgan is expected to maintain a minority share of the private-equity business and all of Highbridge's USD6 billion hedge fund business, some of these people said.
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Crédit Agricole Corporate and Investment Bank, a corporate and investment bank owned by French lender Credit Agricole, has agreed to forfeit USD312 million and enter into a deferred prosecution agreement with the US Attorney's Office of the District of Columbia for CACIB's violations of the International Emergency Economic Powers Act or IEEPA and the Trading With the Enemy Act or TWEA. In total, CACIB will pay USD787.3 million in criminal and civil financial penalties.
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Yahoo! reported a profit for third quarter that lost ground from last year. The company said its bottom line totalled USD145.74 million, or USD0.15 per share. This was down from USD543.41 million, or USD0.52 per share, in last year's third quarter. Analysts had expected the company to earn USD0.17 per share, according figures compiled by Thomson Reuters. The company said revenue for the quarter rose 7.0% to USD1.23 billion.
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Separately, Yahoo! disclosed in a filing that it has entered a service agreement with Google. The services agreement is effective as of October 1 and expires at the end of 2018. Google will pay Yahoo a percentage of the gross revenues from AdSense for search service ads displayed on Yahoo Properties or affiliate sites. Yahoo will pay Google fees for requests for image search results or web algorithmic search results.
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The US Federal Trade Commission has decided to close a probe of Wal- Mart Stores after the retailer voluntarily removed the "Made in the USA." logos from its product listings. Walmart was accused of labelling products with a "Made in the USA" logo despite some of products not being made in America. The non-profit Truth in Advertising had found over 100 examples of items labelled with a "Made in the USA." logo Walmart's website when actually they weren't.
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Shares of Elon Musk's Tesla Motors tanked after Consumer Reports said it no longer recommends Model S sedan as its reliability does not match its high performance. Consumer Reports decision was based on its Annual Auto Reliability Survey. The agency said it received about 1,400 survey responses from Model S owners who detailed several problems with the car. Consumer Reports gave the sedan a "worse-than-average" overall problem rate.
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Wednesday's Scheduled AGMs/EGMs
Photo-Me International
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By Tom Waite; [email protected]; @thomaslwaite
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