5th May 2015 09:42
LONDON (Alliance News) - London shares trade higher Tuesday morning despite drops in the mining sector, with HSBC Holdings reporting higher pretax profit in the first quarter and with investors preparing for Thursday's UK General Election.
The FTSE 100 is trading up 0.7% at 7,029.32, while the FTSE 250 is up 0.7% at 17,597.75. Meanwhile, the AIM All-Share is up 0.1% at 753.78.
European indices are trading higher, with the CAC 40 in Paris and the DAX 30 in Frankfurt, both up 0.5%.
HSBC reported higher first-quarter pretax profit, supported by growth in its Asian operations and its investment banking division. The biggest London-listed bank by market capitalisation said it made a USD7.06 billion pretax profit in the quarter ended March 31, compared with USD6.79 billion in the corresponding quarter of the prior year. Its first-quarter dividend remained at USD0.10.
However, despite an initial spike upon the news, released after the market opened, HSBC shares are down 2.5% at 630.30 pence at mid-morning.
Oanda analyst Craig Erlam believes this week is one of the biggest for the markets this year, with investors focusing on the UK General Election, Greek's deal progress with its European creditors, and US non-farm payrolls data due on Friday.
"If investors weren?t already worried enough about whether Greece can come to an agreement with its creditors before it runs out of money, they now have to contend with the closest fought UK election in years and a very important US jobs report. This week could be hugely important for the markets," says Erlam.
"Greek negotiations are continuing this week and both sides will be hoping that a deal can be reached by the eurogroup meeting on 11 May, with Greece having to repay EUR763 million in loans to the IMF a day later," writes the analyst, adding the uncertainty of the UK General Election also will put the pound under a bit of pressure this week.
The Conservatives and Labour were in a deadlock two days ahead of the UK election. They are tied in the daily YouGov/The Sun poll, with both parties at 33%. The ComRes/Sunday Mirror poll has exactly the same result as the YouGov survey, with the two main parties tied at 33%.
UK construction sector expansion slowed for a second month in a row in April, marking the weakest pace in nearly two years, amid sluggish output and new order growth, survey data from Markit Economics revealed. The Markit/CIPS UK Construction Purchasing Managers' Index fell sharply to 54.2 from 57.8 in March. Economists had forecast a modest drop to 57.4. A PMI reading above 50 suggests growth in construction activity.
The pace of expansion slowed to a 22-month low in residential building activity, even though it was the best performing area of construction output during April. Commercial construction grew the least since August 2013, and civil engineering work declined for the first time in four months.
?April?s survey highlights another growth slowdown across the UK construction sector," says Tim Moore, senior economist at Markit. ?The uncertain general election outcome appears to have put some grit in the wheels of decision making. Construction firms widely noted delays with clients? budget setting and a reduced propensity to commit to new projects."
On the London Stock Exchange, Spreadex analyst Connor Campbell says "the FTSE isn?t being helped by its mining sector, which is in somewhat of a slump this morning after the Australian central bank squashed interest rates to their lowest ever level in order to combat the country?s post-mining boom headache."
The Reserve Bank of Australia lowered Tuesday its benchmark interest rate by a quarter point as widely expected by economists. The policy board of the RBA decided to cut the cash rate for a second time this year by 25 basis point to 2.00%, effective May 6.
Mining stocks are lower, with Anglo American down 2.2%, BHP Billiton down 1.4%, Rio Tinto down 1.3% and Antofagasta down 0.7%. Glencore, down 1.3%, said Tuesday production grew year-on-year across all of its commodities in the first quarter of 2015, but some segments saw production fall from the previous quarter.
Outside mining, Aberdeen Asset Manager is the worst performer in the FTSE 100, down 3.3%, even though it said it is returning surplus capital to shareholders, as net outflows in the first half of its financial year were "cushioned" by rallying markets. It said assets under management grew to GBP330.6 billion from GBP324.4 billion between September 30, 2014 and March 31, 2015.
Numis analyst David McCann says the results from the fund manager were overall "a little disappointing", saying the update is far from Aberdeen's finest hour. "Whilst pleasing that the company has finally begun to return excess capital to shareholders...we believe the scale may disappoint some in the market," says McCann.
Just Eat is amongst the best performers in the FTSE 250, up 2.8%, after it said its orders surged in the first quarter, with total orders boosted by its French and Mexican businesses, though like-for-like orders also boomed.
Rolls Royce Holdings, up 0.8%, and Weir Group, up 0.3%, have formed a joint venture to develop equipment designed to make drilling for oil using the "fracking" process more efficient, The Daily Telegraph reports.
Barclays, up 0.8%, is preparing to sell a GBP2 billion package of second-charge mortgages and loans made via its Firstplus brand, more than a decade after it first floated plans to dispose of the subsidiary, the Financial Times reported on Monday. The bank has been in talks with a number of new banks, which the newspaper did not name, in recent weeks about selling the portfolio, according to sources close to the situation.
Still in the economic calendar Tuesday, US Markit services PMI is due at 1445 BST.
By Daniel Ruiz; [email protected]
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