7th Feb 2019 12:24
LONDON (Alliance News) - Stock prices in London were flat to lower at midday on Thursday, with holiday operator TUI weighing on the FTSE 100 after warning on earnings, offsetting gains by caterer Compass and medical devices maker Smith & Nephew. The Bank of England voted unanimously to keep interest rates on hold, as UK economic growth forecasts were heavily downgraded while inflation is now seen above target over the forecast period. The nine-strong Monetary Policy Committee voted to keep Bank Rate at 0.75%.In the UK central bank's latest set of economic forecasts, inflation is now seen above the 2% target over the coming years, while gross domestic product growth for this year and next was revised down substantially.The pound was quoted at USD1.2877 at midday, down from USD1.2960 at the London equities close Wednesday.A press conference will be held with BoE Governor Mark Carney at 1230 GMT.The FTSE 100 was just 6.01 points higher at 7,179.10 at midday. The FTSE 250 was down 174.99 points, or 0.9%, at 18,898.42, and the AIM All-Share was down 0.7% at 918.06.The Cboe UK 100 was down 0.1% at 12,193.30, while the Cboe UK 250 was down 0.6% at 16,909.68 and the Cboe UK Small Companies down 0.2% at 11,187.78."Investors lack enthusiasm as there is little in the way of major macroeconomic news. Stock markets have reached multi-month highs this week, and now dealers are wondering which way to look. For now, the bounce back that started in late December is on hold, and it seems like traders are waiting to find out about US-China trade talks before making their next move," said David Madden, market analyst at CMC Markets.The pound was quoted at USD at midday, compared to USD1.2960 at the London equities close Wednesday, in the wake of the BoE's rate decision. On the London Stock Exchange, Compass Group was the best blue-chip performer, up 4.5% at 1,774.00 pence after the contract caterer lifted its full-year growth expectations after reporting an "excellent" start to the year.The stock price hit an all-time high of 1,776.50p in early trade Thursday. Compass said revenue in the three months to the end of December 2018 grew by 6.9% on a year before, driven by strong levels of new business wins and a positive sporting events calendar.Geographically, revenue in North America increased by 8.0%, with very good growth across all sectors, particularly in Business & Industry and Sports & Leisure, the latter of which benefited from the timing of certain events. In Europe, organic revenue grew by 6.4%, Compass said, reflecting the significant impact of Defence contracts in the UK.Looking ahead, Compass now expects annual growth to be slightly above the middle of its target growth range of 4% to 6%, with modest margin progression. At the end of November, the company expected its growth to be in the middle of its 4% to 6% range. Smith & Nephew was up 2.5%, after the medical devices maker raised its dividend and said it still expects to see growth over the coming year. However, Smith & Nephew posted a reduction in annual profit in 2018 due to increased expenses from its restructuring effort. Pretax profit was USD781 million, 11% less than USD879 million in profit in 2017.Revenue for 2018 was USD4.90 billion, up from USD4.77 billion the year before. This matches the company-compiled consensus of USD4.91 billion.Looking ahead, Smith & Nephew said revenue is expected to increase around 1.8% to 2.8% and 2.5% to 3.5% on an underlying basis. Diageo was up 1.7% after the brewer and distiller said it has entered into an agreement with Citigroup Global Markets to execute the second tranche of its share buyback programme.The first tranche of 47.9 million shares, worth GBP1.3 billion, was completed last week. Diageo on Thursday said it will now commence the second tranche and will buy back up to 246.1 million shares, totalling GBP1.7 billion.At the other end of the large cap index, TUI was the worst large-cap performer, down 17% after the Anglo-German travel company late Wednesday said annual earnings for its current financial year will be "broadly stable" on last year due to "extraordinary" hot weather and the weakness of the pound. For the year ending September 30, TUI expects adjusted earnings before interest, taxes, depreciation and amortisation to be broadly stable on the record performance in the prior year of EUR1.17 billion. "Consequently, we are not reiterating our guidance of at least 10% [compound annual growth rate] in underlying Ebitda at constant currency for the three years to 2020," the company said. TUI said the out-of-the-ordinary hot weather in the summer resulted in later bookings, weakening margins. It also cited the "continued weakness of the pound sterling, making it difficult to improve margins on holidays sold to UK customers".Ocado Group was down 9.5% after the online grocer said that a fire that broke out at its warehouse in Andover led to the evacuation of the area on Wednesday evening, due to the presence of pressurised refrigerants on site.The fire started at the warehouse on Tuesday, when Ocado said that the measures taken to contain it "appear to have affected a proportion of the mechanical handling equipment and some of the grid". News of the fire came on the same day that Ocado reported annual results, in which it posted a much wider loss than the market had expected, due to the costs of fulfilment centres such as the one in Andover.The stock is down 11% since the start of the week.In the FTSE 250, Beazley was the best performer, up 5.3% after the insurer said its profit dropped significantly in 2018, but gross premiums achieved double-digit growth on a strong performance in the US.Beazley's pretax profit for 2018 fell 55% to USD76.4 million from USD168.0 million a year earlier but total revenue for the company rose 5.7% to USD2.16 billion from USD2.04 billion. The company said profitability was hit by underwriting losses in its property insurance and reinsurance business, which fed into a combined ratio for the group of 98% from 99% in 2017.The company delivered strong premium growth in 2018 against a backdrop of often challenging market conditions, with premiums rising 12% to USD2.62 billion from USD2.34 billion the year prior.At the bottom of the midcap index, Petrofac was the worst performer, down 27% after the oil and gas services firm said an ex-employee has admitted bribery in the UK, with some Petrofac individuals and entities alleged to have acted with the individual. Petrofac stressed that none of its current board members are alleged to have been involved. Elsewhere, Thomas Cook was up 13% after the travel agent said revenue for the first quarter rose 1% to GBP1.66 billion but the firm's adjusted operating loss widened by GBP14 million to GBP60 million.Thomas Cook also announced a strategic review of its airline business.The company said it is clear it needs "greater financial flexibility", and has therefore decided to review its airline business aiming to enhance value for shareholders and intensify its strategic focus. It currently operates 103 aircraft.In domestic political news, UK Prime Minister Theresa May arrived in Brussels for crunch Brexit talks after insisting that the UK must not be "trapped" in a backstop deal.May is meeting EU leaders on Thursday in the wake of the latest war of words between the two sides triggered by European Council president Donald Tusk saying there was a "special place in hell" for those who pushed for Brexit without a plan.The prime minister's latest diplomatic offensive comes as Labour leader Jeremy Corbyn wrote to May setting out five demands, including joining a customs union, that would need to be met for Labour to back the Government on Brexit.The PM is using the top level Brussels talks with Juncker, Tusk and other prominent EU figures to press for legally binding guarantees on the Northern Ireland backstop.Downing Street said May is "open to different ways" of achieving her objectives on the backstop.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.6% and 1.0% respectively at midday.French oil major Total reported that its net income group share for the fourth-quarter rose 11% to USD1.13 billion or USD0.40 per share from last year's USD1.02 billion or USD0.37 per share, reflecting increased production volumes. London-listed oil majors Royal Dutch Shell and BP both delivered strong annual earnings over the past week, topping analysts' expectations. Total also announced a "significant" offshore gas condensate discovery in South Africa at the Brulpadda prospects.The euro was lower, quoted at USD1.1336 at midday, against USD1.1376 at the European equities close Wednesday, after disappointing industrial production data from Germany. Germany's industrial production decreased for a fourth consecutive month in December, defying expectations for an increase, preliminary figures from the Federal Statistical Office showed. Industrial production fell a calendar and seasonally-adjusted 0.4% from November, when it decreased 1.3%, revised from 1.9%. Economists had expected a 0.8% increase. Excluding energy and construction, production grew 0.2% from the previous month after a 1.5% slump in November.Stocks in New York were set for a lower open with tobacco company Philip Morris International, breakfast cereal maker Kellogg and social media platform Twitter reporting earnings before the market open in New York. The DJIA was called down 0.4%, the S&P 500 index and the Nasdaq Composite were both called down 0.5%.
Related Shares:
PetrofacSmith & NephewOcadoBeazleyDiageoCompass GroupTUI.L