2nd May 2019 12:14
LONDON (Alliance News) - Stock prices in London were flat to lower at midday on Thursday, with the FTSE 100 in the red despite Smith & Nephew, Royal Dutch Shell and Coca-Cola HBC trading higher. The Bank of England decided to keep UK interest rates unchanged, as it boosted its forecast for UK economic growth in 2019, but cut its inflation outlook to reflect lower retail energy prices.The UK central bank sees interest rates as unlikely to rise for another two years.The nine-strong Monetary Policy Committee all voted to keep Bank Rate at 0.75%, while also unanimously voting to keep corporate bond purchases at up to GBP10 billion and purchased assets at GBP435 billion.A press conference will be held with BoE Governor Mark Carney at 1230 BST.The BoE, in its quarterly Inflation Report, now sees the UK economy growing 1.5% in 2019, having been revised down to 1.2% in February's inflation report. In 2020, this is expected to pick up slightly to 1.6% before accelerating more substantially to 2.1% in 2021.In February, the BoE had forecast gross domestic product growth of 1.5% in 2020 and 1.9% in 2021. The pound was quoted at USD1.3040 at midday, down from USD1.3090 at the London equities close Wednesday.Investors now will look to the press conference with Carney for clues about the central bank's view of the UK economy and future interest-rate plans."If Governor Carney sounds an upbeat note expressing confidence that some sort of Brexit deal will be done, cable could pop through USD1.3100 figure as the day proceeds. If however he remains cautious in his outlook suggesting that accommodative policy will be needed well through 2020, cable could quickly give back its gains for the week," said analysts at BK Asset Management. The FTSE 100 was flat at 7,383.02. The FTSE 250 index was down 98.30 points, or 0.5%, at 19,715.44, while the AIM All-Share was down 0.2% at 968.48.The Cboe UK 100 index was flat at 12,522.46. The Cboe UK 250 was down 0.5% at 17,679.95. The Cboe UK Small Companies was flat at 11,722.56.In Paris the CAC 40 was down 0.4%, while the DAX 30 in Frankfurt was up 0.2%. Financial markets on the continent reopened after being closed for the Labour Day holiday on Wednesday. On the London Stock Exchange, Smith & Nephew was the best blue-chip performer, up 2.8% after the medical devices maker said revenue growth for 2019 would be at the higher end of its guidance, as underlying revenue growth was ahead in the first quarter of the year. On a reported basis, the medical device maker's revenue was flat at USD1.20 billion for the three months to March 31 but revenue was up 4.4% on an underlying basis. Given the recent underlying performance, the medical device maker has updated its guidance and is now "increasingly confident" that its underlying revenue growth for 2019 will be in the upper half of its 2.5% to 3.5% guidance range. Smith & Nephew expects its reported revenue growth rate to be in the 2.9% to 3.9% range, including an expected loss of 40 basis points from foreign exchange and acquisitions. The company's expected trading profit margin is still expected to be in the range of 22.8% to 23.2%. Coca-Cola HBC was up 2.4% after the soft drinks bottler said it will return EUR730 million via a special dividend of EUR2.00 per share, as it reported growth in revenue and volumes for the first quarter of 2019. The company said it remains on track to deliver currency-neutral revenue growth above its internal targeted range and step up in margins for the full year due to good start to the year. For the first quarter, Coca-Cola HBC recorded 4.4% year-on-year rise in net sales reported revenue, with currency neutral revenue rising 4.7% year-on-year. The growth was mainly attributed to growth in developing and emerging markets, which delivered 6.5% and 6.9% currency neutral revenue growth, respectively. Established markets contributed 1.5% to forex-neutral revenue growth.Royal Dutch Shell 'A' and Shell 'B' shares were up 2.3% after the oil major reported a decline in quarterly earnings, but significant growth in Integrated Gas helped it beat the market's expectations. Shell increased current cost of supply earnings, its preferred profit metric, in the Integrated Gas segment by 17% to USD2.80 billion for the three months to March, on the back of higher liquefied natural gas and gas prices, helping offset lower production and sales volumes. Consensus had been for Integrated Gas - primarily Shell's BG Group acquisition - CCS earnings of USD2.07 billion. Shell also launched the next tranche of its share buyback programme, returning up to USD2.75 billion until July 29. Shell will pay a first quarter dividend of 47 US cents per share, in line with the year before."Shell is the world's largest dividend payer, and hasn't cut its pay-out since WW2. The latest pay-out was the 21st consecutive distribution held steady at 47c per share. Investors eyeing the rising oil price may have hoped for more, but the USD25 billion buyback programme continues apace, and will enhance shareholder returns over time. Like its rivals in the sector Exxon Mobil, Chevron and BP, quarterly profits fell slightly in the first three months of the year, but conditions are improving," Link Market Services Chief Operating Officer Michael Kempe.At the other end of the large cap index, Paddy Power Betfair was the worst performer, down 5.3% after the bookmaker said strong growth in the US market led to 17% year-on-year rise in first quarter revenue and the company remains on track to meet full year profit expectations. In the three months to March 31, the bookie reported total revenue of GBP478 million, 17% higher than the GBP408 million reported the year before. However, the group said its UK online sports betting business was affected by "unfavourable results" in sporting events in the UK and Ireland. Online sport revenue slipped 6% to GBP152 million. Moreover, sport revenue was hurt by February horse racing, which was temporarily suspended in the UK due to an outbreak of equine flu. In the FTSE 250, Metro Bank was the worst performer, down 15% after the challenger bank said Wednesday after the London market close that its pretax profit halved in the first quarter of 2019 due to a new accounting method and interest expense. The bank also said it is planning an approximately GBP350 million equity raise in the second quarter to support growth. Metro Bank posted a pretax profit of GBP4.3 million for the three months to March 31, halving from its GBP8.6 million profit in the same quarter of 2018. Pretax profit in the final quarter of 2018 totaled GBP6.1 million. The profit drop was partly attributed to a GBP2.0 million hit from the adoption of IFRS 16 in January, an accounting standard that "recognises an interest charge on the lease liability which is partly offset by a reduction in lease expenses".On the economic front, UK construction output rose for the first time since January buoyed by domestic housebuilding, IHS Markit said. The seasonally adjusted IHS Markit/CIPS purchasing managers' index increased to 50.5 in April from 49.7 in March, beating consensus estimates of 50.3. The score went back above the line of 50 that separates expansion from contraction. Markit said the reading pointed to a modest expansion of overall construction output in April, which contrasted with the declines seen in each of the previous two months. On the political front, UK Prime Minister Theresa May is facing local elections on Thursday amid controversy over an ongoing Brexit delay and a Cabinet sacking.Gavin Williamson was fired as defence secretary following an inquiry into a leak from a top-level National Security Council meeting.With predictions that the Tories could lose more than 800 seats, Conservative high command appears braced for a difficult result. Elections are taking place in 248 English councils outside London, and 11 local authority areas in Northern Ireland.Almost 60% of the 8,425 being contested in England are currently Conservative, with a quarter held by Labour."The UK goes to the polls on Thursday in a local election that will be key in showing support for either Theresa May or Jeremy Corbyn and the first chance for the country to formally express its views after months of political guessing and second-guessing," commented City Index analyst Fiona Cincotta. The euro stood at USD1.1199 at midday, down from USD1.1245 at the European equities close Wednesday, after disappointing economic data from the continent.Eurozone manufacturing sector activity remained negative during April, with a decline in new orders weighing on the entire sector, IHS Markit reported. The Markit eurozone manufacturing purchasing managers' index increased to 47.9 in April from 47.5 in March. Despite the improvement, the PMI score remained below the no-change mark of 50, indicating a third consecutive month of decline in manufacturing activity.Stocks in New York were set for a lower open after the US Federal Reserve kept its interest rate on hold on Wednesday, but dashed investors' hopes for a near-term interest rate cut.The DJIA was called down 0.2%, the S&P 500 index down 0.1% and the Nasdaq Composite down 0.1%.In his post-monetary policy meeting press conference, Chair Jerome Powell said a fall in inflation this year could be due to "transitory" factors.Powell said the Fed would take persistently low inflation into account when setting policy but currently expects inflation to return to the 2% objective.The Fed reiterated it will be patient as it determines future adjustments to interest rates due to global economic and financial developments and muted inflation.The central bank maintained the target range for the federal funds rate at 2.25% to 2.50% for the third consecutive meeting."Clearly investors did not take too kindly to the Fed refusing to bow to public - and more importantly political - pressure to at least signal a willingness to be more accommodative. The central bank has already dramatically softened its monetary policy position, having signalled no rate hikes this year and only one next and policy makers clearly believe this is sufficient to deal with the challenges the economy is facing," said Oanda analyst Craig Erlam.