11th Nov 2015 12:17
LONDON (Alliance News) - London stocks were higher Wednesday midday, with Experian and SABMiller leading blue-chip gainers and Sainsbury's the biggest faller, while Wall Street was called for a positive open, taking a break from the US rate hike jitters.
The FTSE 100 index was up 0.6% at 6,311.42 points, the FTSE 250 was up 0.4% at 17,106.43, and the AIM All-Share was up 0.2% at 744.89. In Europe, the CAC 40 in Paris was up 0.8% and the DAX 30 in Frankfurt was up 1.1%.
US stock futures pointed to a broadly positive open, with the Dow 30, the S&P 500 and the Nasdaq 100 all pointed up 0.2%. US bond markets will be closed Wednesday for Veterans Day, but the stock market will remain open. On Tuesday, the Dow and the S&P 500 ended up 0.2%, while the Nasdaq Composite finished down 0.2%.
The US earnings season continues, with a third-quarter update from department stores company Macy's before the US market open. After the US bell is expected an update from Royal Dutch Shell subsidiary Shell Midstream Partners, which was created by the London-listed oil giant in 2014 as a limited partnership vehicle to own, operate, develop and acquire pipeline and other midstream assets.
China's industrial production growth slowed unexpectedly and its property market saw subdued investment growth in October, while retail sales rose more than expected, providing a mixed picture of the economy.
Industrial production climbed 5.6% on a yearly basis in October after increasing 5.7% in September, the National Bureau of Statistics reported Wednesday. Economists had forecast it to rise at a slightly faster pace of 5.8%.
At the same time, the annual growth in retail sales in China edged up to 11% in October from 10.9% in September. This was the fastest growth seen so far this year. This belied expectations for an unchanged pace of growth. Real estate investment grew only 2% in the first ten months of the year compared to 2.6% in the period from January to September.
As for the economic data, Chinese stocks ended mixed. The Shanghai Composite index closed up 0.3%, while the Hang Seng in Hong Kong ended down 0.2%. Meanwhile, the Japanese Nikkei 225 finished up 0.1%.
Meanwhile, data from the Office for National Statistics showed that UK earnings including bonuses increased by 3% and that excluding bonuses grew 2.5% in three months to September. Economists had forecast a 3.2% increase for total pay.
The number of people claiming unemployment related benefits increased by 3,300 from September, which was more than the expected rise of 2,700. At the same time, the ILO jobless rate dropped to 5.3% in the September quarter from 5.6% in the prior quarter. The UK unemployment rate has not been lower since March to May 2008. The expected rate was 5.4%.
The pound dropped to USD1.5131, very close from its intraday low, but recovered shortly afterwards, standing at USD1.5163 at midday.
Berenberg analyst Kallum Pickering said the unemployment data "unambiguously demonstrated the labour market has recovered, proving that the UK economy is not just doing OK anymore, but is in good shape – it's time to start thinking about rate hikes."
"When unemployment is this low, the policy rate is normally higher. Of course, there are other considerations, but these are becoming weaker," added Pickering. "The bottom line is this: both the labour market and the pace of gross domestic product growth are showing mid-cycle characteristics. Monetary policy doesn't need to remain so accommodative for much longer."
The Bank of England is hosting the Open Forum 2015, looking at the future direction for financial regulation. European Central Bank President Mario Draghi expected to speak at 1315 GMT, while Bank of England Governor Mark Carney will speak later in the day.
With a light economic data calendar on Wednesday - in particular with no significant data releases from the US at all - UK investors focused on individual companies.
Information services company Experian was the biggest gainer, up 3.4% at 1,227.00 pence, after Citigroup upgraded the company's price target by 9% to 1,340p. The stock is adding to the gains seen on Tuesday, when it closed up 7.2% having said that it expects to see organic revenue growth at constant currency in the full year.
SABMiller was up 2.7%, after it confirmed it has struck a deal to be acquired by bigger rival Anheuser-Busch InBev for around GBP71.0 billion, consolidating the latter's position as the world's biggest brewer by some distance.
Anglo-South African SABMiller also said it has struck a deal to sell its stake in the MillerCoors joint venture in the US to Molson Coors, its partner in the company.
It is selling the stake to help pave the way for regulatory approval to be given for the takeover, though further remedies are likely to have to be offered as the combined group will control about a third of global beer volumes.
The takeover agreement also appeared to be benefiting Diageo, the other large London-listed drinks company, which was up 1.9%.
Having opened higher, shares in J Sainsbury soon turned lower, with the stock sitting at the bottom of the blue-chip index, down 4.1%, at midday.
The grocer said the grocery market in the UK remains challenging and posted lower sales for the first half, even as it swung to a pretax profit in the period.
Sainsbury's said its pretax profit for the 28 weeks to September 26 was GBP339.0 million, swung from a GBP290.0 million loss made a year earlier due to writedowns it had booked. Underlying pretax profit for the group fell 18% in the recent half to GBP308.0 million from GBP375.0 million a year before.
Following the update, analysts were broadly positive on the company, saying it beat consensus expectations. However, Cantor Fitzgerald noted that the reported underlying pretax profit was below its estimates of GBP320 million.
Sainsbury's will pay an interim dividend of 4.0 pence per share, but down 20% from 5.0p a year earlier.
Sainbury's peers Tesco and Wm Morrisons Supermarkets also were down 1.7% and 1.2%, respectively.
Mid-cap interdealer brokers Tullett Prebon and ICAP were seeing mixed fortunes after both confirmed an agreement for Tullett to buy ICAP's voice broking and information business in a deal which will see ICAP and its shareholders own a majority of Tullett.
Under the terms of the offer, Tullett will issue shares to ICAP shareholders and to ICAP in consideration for the acquisition. The new shares will represent a 56% stake in Tullett's enlarged share capital and ICAP shareholders will own 36% of the company, while ICAP itself will own 20%.
ICAP shares were up 5.6% on the news, first revealed last week, while Tullett shares were down 8.1%.
On AIM, Energy Technique was up 10% at 330.00 pence. Ventilation products company Volution Group struck a deal to buy the fan coils and commercial heating products company for around GBP9.3 million, as the target company said its pretax profit and revenue both increased in the first half.
Volution will pay 345.00p per share for the AIM-listed company, a 10% premium to its closing price on February 25, the day before the offer period opened. Volution shares were down 2.0%.
M Winkworth was off 11%. The estate agency added to the gloom in the sector after it echoed comments by Countrywide last, saying an anticipated rise in property transactions following the UK General Election had not materialised. As a result, its profit for the full year will fall short of market expectations. Revenue for the year is set to be broadly flat year-on-year, M Winkworth said, but profit will fall slightly behind market expectations due to the slower-than-expected transaction volumes.
By Daniel Ruiz; [email protected]
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