19th May 2015 09:41
LONDON (Alliance News) - London share prices are trading higher Tuesday mid-morning, as UK inflation was reported to have turned negative in April.
Vodafone Group leads blue-chip losers even though it reported earnings and revenue ahead of expectations.
The FTSE 100 is up 0.4% at 6,994.38, having surpassed the 7,000 mark earlier in the morning before falling back. The FTSE 250 is up 0.5% at 18,117.45 and the AIM All-Share is up 0.1% at 760.64.
The Office for National Statistics said Tuesday that UK consumer prices fell 0.1% in April from a year before, while they had been forecast to remain flat as they had in March. This was the first negative rate of inflation for the UK since the official series started in 1996. Based on comparable estimates, it was the first annual decline in prices since 1960.
Month-on-month, consumer prices rose 0.2%, the same rate of increase as seen in March. Core inflation eased to 0.8% from 1% in March. Economists had forecast it to remain at 1%.
European indices also are higher, with the CAC 40 in Paris up 1.9% and the DAX 30 in Frankfurt up 1.8%, after European Central Bank Executive Board member Benoit Coeure said Tuesday the central bank will accelerate its quantitative easing plan, "moderately" front-loading May and June in order to prevent any summer economic slump.
The euro is lower against the dollar at USD1.1178 Tuesday morning.
Meanwhile, interviewed on a Greek television last night, Greek Finance Minister Yanis Varoufakis appeared confident of reaching a deal with European creditors, yet with the Greek government?s "red lines" of opposing pension and wage cuts being respected.
"Given that the [European] Commission reiterated yesterday that a deal is not yet in sight, we continue to believe that the dilemma facing the Greek government will ultimately be resolved by [Greek Prime Minister Alexis] Tsipras abandoning his party?s radical left wing...in favour of sealing a deal with lenders later this month," says Daiwa Markets analyst Robert Kuenzel. "While this certainly won?t guarantee a happy ending, it would at least keep hopes of Greece not defaulting on the International Monetary Fund in June alive."
Greece said it wants to reach a loan deal with its international creditors by the end of this month, the BBC reported Monday afternoon, citing government spokesman Gabriel Sakellaridis, who said "a deal is required immediately...to resolve these critical liquidity issues."
On the London Stock Exchange, Vodafone is amongst the worst performers in the blue-chip index, down 2.6%, even though it reported higher earnings and revenue ahead of expectations for its recently ended financial year, and delivered a return to organic growth in its fourth quarter as it saw "increasing signs of stabilisation" in many of its European markets.
For the year to end-March Vodafone reported earnings before interest, tax, depreciation and amortisation of GBP11.92 billion, up from GBP11.08 billion a year before, and beating analyst expectations of GBP11.87 billion. This was on group revenue of GBP42.22 billion, increased from GBP38.35 billion a year before, and ahead of analyst expectations of GBP41.89 billion.
However, Michael van Dulken, head of research at Accendo Markets, says investors are ignoring calls for optimism from Vodafone's management. Although there are a multiple of available positives, van Dulken says, the market is focusing on a 19% fall in adjusted operating profits excluding exceptional costs and a more cautious outlook than expected as Vodafone presses ahead with network investment.
"It would appear that the prospect of further network investment being required to offset squeezed consumers is weighing on expectations and taken the shares back from three-month highs to test their 50- and 100-day monthly averages," van Dulken said.
Miners are not helping the FTSE 100. BHP Billiton is down 2.6%, Glencore 1.8%, Rio Tinto 1.3% and Anglo American 0.9%. Randgold Resources is down 1.1% and Fresnillo 1.0%, giving back its gains on Monday.
Land Securities Group is up 2.8% after reporting strong growth in returns and profits in its last financial year as property valuations continued to surge and it achieved strong leasing levels across its new developments in London, and it also said the outlook remains positive as London remains supply constrained despite the growth in new developments.
The real estate development trust reported a total business return of 30.7% for the year to March 31, with net asset value per share rising to 1,343 pence from 1,069 pence a year earlier and its adjusted diluted NAV rising to 1,293p from 1,013p.
RELX, formerly Reed Elsevier, is up 2.1% after being upgraded to Buy from Neutral by Goldman Sachs.
In the FTSE 250, distribution company DCC Group is the best performer, up 9.9%, after it said it has struck a EUR464 million deal to acquire liquefied petroleum gas company Butagaz from Royal Dutch Shell, as the group also posted a rise in pretax profit for the year to the end of March. DCC said it will partly fund the acquisition via the issue of at least 4.2 million shares, raising GBP184.3 million based on its closing price of 4,390p on Monday. The remainder of the funding required for the acquisition will come from existing cash resources.
Royal Dutch Shell 'A' shares are flat, while 'B' shares are down 0.2%.
On the flip side, Moneysupermarket.com Group is the biggest mid-cap faller, down 4.1%, after its founder Simon Nixon sold a 3.7% stake in the company, Credit Suisse Securities (Europe) announced Tuesday. The sale of 20.0 million shares at 280 pence per share raised GBP56 million before expenses for Nixon. The amount of shares sold is at the top end of the range announced late Monday, when Credit Suisse, the sole bookrunner on the placing, said it would sell a stake of between 2.8% and 3.7% on behalf of Nixon.
Moneysupermarket said that, as a result of Simon Nixon's stake falling below 15%, the relationship agreement between Simon and Moneysupermarket.com, in place since 2007, has now ended.
Still in the economic calendar, in the US, the Redbook index is due at 1355 BST.
US futures point to a higher opening, with the DJIA and the S&P 500 pointed up 0.3%, while the Nasdaq 100 is pointed up 0.4%.
By Daniel Ruiz; [email protected]
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