24th Jul 2015 09:37
LONDON (Alliance News) - UK stock indices are mixed Friday mid-morning, with mobile operator Vodafone Group leading the FTSE 100 after it confirmed its guidance for its current financial year, followed by publisher Pearson, which also reiterated its outlook for the year, a day after it announced the sale of the Financial Times.
The FTSE 100 is up 0.3% at 6,672.05, the FTSE 250 is down 0.1% at 17,611.34, and the AIM All-Share is up 0.1% at 756.66.
In Europe, the CAC 40 in Paris is up 0.4% and the DAX 30 in Frankfurt is up 0.1%.
On the economic front, purchasing manager's index readings from several eurozone countries made investors briefly shift their attention from corporate news to economic data.
Germany's private sector expanded at a slower pace in July, flash survey data from Markit Economics showed. The flash composite output index fell to 53.4 in July from 53.7 in June. A reading above 50 indicates expansion. Services PMI came in at 53.7, down from 53.8 in June while it was forecast to rise to 54. The manufacturing PMI dropped to 51.5 in July, while it was expected to remain unchanged at 51.9.
Separately, the French private sector growth slowed to a three-month low in July, Markit Economics also showed Friday. The composite output index fell to 51.5 in July from June's 46-month high of 53.3. France's services PMI fell more-than-expected to 52 in July from 54.1 in June. The index was expected to drop to 53.8. Meanwhile, the manufacturing PMI declined to 49.6 from 50.7 in June, while economists had forecast a reading of 50.8.
Eurozone economic growth slowed slightly in July, but the pace of expansion remained one of the strongest seen over the last four years. Markit's composite PMI reading for the eurozone fell to 53.7 in July from June's four-year high of 54.2. But it remained slightly above the average seen over the first half of the year. The expected score was 54. The PMI for the service sector dropped more-than-expected to 53.8 in July from 54.4 in June. The expected score was 54.2. At the same time, the manufacturing PMI fell to 52.2 from 52.5 in June. Economists had forecast the indicator to remain unchanged at 52.5.
In Asia on Friday, the Japanese Nikkei 225 closed down 0.7%, while in China the Hang Seng ended down 0.9%, and the Shanghai Composite finished down 1.3%.
China's manufacturing sector contracted again in July and at an accelerated pace, the latest survey from Caixin revealed, with a flash purchasing manager's index score of 48.2. That marked a 15-month low score, and it was well shy of forecasts for a score of 49.7. It was down sharply from 49.4 in June, and it moves further beneath the line of 50 that separates expansion from contraction.
Gold prices are back around Monday's levels, when it touched lows it hasn't seen since early 2010, as the dollar strengthened after a better-than-expected US jobless claims data released Thursday. The yellow metal is quoted Friday mid-morning at USD1,083.16.
The pound hasn't recovered from the weakness it experienced Thursday and is even lower against the dollar Friday morning at USD1.5487. Prior to a disappointing UK retail sales data and the US jobless claims numbers Thursday, the pound stood at USD1.5652.
On the UK corporate front, Vodafone is the biggest blue-chip riser Friday, up 3.7%, after it confirmed its guidance for its current financial year, as it saw revenue fall 0.9% on a reported basis, saying it made a "good start to the year."
It attributed the decline in revenue to a 7.3 percentage point hit from foreign exchange movements offset a 3.1 percentage point boost from merger and acquisition activity. On an organic basis, which Vodafone defines as being on a comparable basis in terms of merger and acquisition activity and movements in foreign exchange rates, revenue rose 3.3%.
At the time of its full-year results in May, Vodafone had guided Ebitda in the range of between GBP11.5 billion and GBP12.0 billion, and to be free cash flow positive after all capital expenditure, before mergers and acquisitions, spectrum and restructuring costs for its current financial year. Vodafone posted group revenue of GBP10.11 billion for the quarter, down from GBP10.20 billion a year before, and service revenue of GBP9.17 billion, down from GBP9.45 billion. It said that on an organic basis service revenue rose 0.8%.
Meanwhile, Pearson is up 2.5%. It reiterated Friday morning its outlook for 2015 and raised its interim dividend as it posted a widened pretax loss for the first half of 2015, a day after it announced the sale of the Financial Times. Pearson posted a pretax loss of GBP115 million for the half year to end-June, widened from a pretax loss of GBP36 million a year before, as a rise in sales to GBP2.16 billion from GBP2.05 billion was offset by higher cost of goods sold and operating expenses.
The company agreed Thursday to sell its FT Group, which includes Financial Times newspaper, to Japanese media group Nikkei Inc for GBP844 million in cash as it moves to focus solely on its education businesses. The deal doesn't include the sale of property at One Southwark Bridge in London - the home of the FT newspaper - nor Pearson's 50% stake in the Economist Group, which publishes the Economist magazine.
"This was a good price for a non core asset, post tax and pension payments balance of proceeds will be used for acquisitions/organic investment in the education business," writes Numis analyst Gareth Davies. Meanwhile, Nomura says the sale was at "a high price, and reflects trophy asset status for the FT."
Anglo American is up 2.4%. The multi-commodity miner said it swung to a pretax loss in the first half of 2015 after recording a substantial USD3.5 billion impairment, driven by the fall in commodity prices, and said it is aiming to cut 35% of its workforce as part of its cost-saving initiative.
The company said it would reduce costs "through the reduction" of its 6,000 overhead and indirect job roles. It said it will cut those jobs by 46%, some of which will come as a result of it selling its assets. The miner also said it is on track to meet its long-term net debt target even as net debt increased to USD13.5 billion at the end of June from USD12.9 billion at the end of December.
In the red is Diageo, down 1.3%. The drinks company is facing scrutiny in the US over claims it has artificially boosted its sales in the country, The Daily Telegraph reports. The company has been contacted by the Securities and Exchange Commission, the US financial regulator, as it is alleged to have been sent more cases of alcohol to its clients than they required, allowing the company to report higher sales and shipments. Diageo has not yet issued a statement on the report.
Still in the economic calendar Friday, in the US, manufacturing PMI is due at 1445 BST and new home sales are due at 1500 BST.
By Daniel Ruiz; [email protected]
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