30th Nov 2015 12:08
LONDON (Alliance News) - UK equities had come off their lows by midday Monday but still traded mixed, on a quiet start to an important week in the economic data and central bank calendar.
Investors have a number of significant events later this week to sink their teeth into, including final manufacturing and services purchasing managers' index readings from Asia, Europe and the US on Tuesday and Thursday, eurozone inflation on Wednesday, the European Central Bank's policy decision on Thursday and US nonfarm payrolls on Friday.
In London on Monday, the FTSE 100 index was flat at 6,376.69 points, the FTSE 250 was up 0.4% at 17,327.34 and the AIM All-Share was up 0.2% at 733.23.
European stocks were outperforming amid expectations of further monetary easing by the ECB later this week. The CAC 40 index in Paris was up 0.7% and the DAX 30 in Frankfurt was up 1.0%.
Wall Street was indicated for a higher open for its first full session since last Wednesday due to Thanksgiving Day. The Dow Industrials and S&P 500 index were pointed up 0.1%, and the Nasdaq 100 was indicated up 0.2%.
On the London Stock Exchange, mining companies reversed their early falls to trade higher. Glencore was up 2.3%, Antofagasta was up 0.8% and Anglo American was up 0.3%.
"The UK index managed to reduce its 45 point nadir to around zero as the morning continued, though the sustainability of any tentative gains will be almost solely reliant on the performance of the FTSE's commodity stocks. A slight rebound from copper has mitigated some of the mining losses," said Connor Campbell, financial analyst at Spreadex. "
BHP Billiton was again excluded from a rally in the wider sector and traded down 3.7% at 777.81 pence, having hit a seven year low at 755.00p earlier in the session.
The Anglo-Australian miner and Brazilian partner Vale said a total of 13 fatalities have been recorded so far after the pair's tailings dam in Brazil burst earlier this month, as the clean up operation commences. The pair each own a 50% stake in the Samarco joint venture, which was responsible for the Fundão dam which burst in early November. A further six people are still missing.
On Friday, the Brazilian federal government tabled plans to sue BHP and Vale for causing what it called an environmental catastrophe in the region. On Monday, the two companies said they are still committed to establishing a separate, voluntary, non-profit fund to support the recovery of the Rio Doce river system, which was affected by the dam burst.
Aberdeen Asset Management was down 4.2%, making it the worst blue-chip performer. The emerging markets-focused investment manager reported stable profit in its last financial year, as weak investor sentiment towards Asia and emerging markets in general weighed on its results, with heavy net outflows hitting assets under management.
Pretax profit fell to GBP353.7 million in the year ended September 30, compared with GBP354.6 million the prior year. Assets under management fell to GBP283.7 billion on September 30 from GBP324.4 billion at the same stage the prior year, as Aberdeen saw net outflows of GBP33.88 billion over the year as a whole. Net outflows were highest in the fourth quarter, which accounted for 38% of the total at GBP12.69 billion.
Chief Executive Martin Gilbert said the current weakness in emerging markets has "some way to run", but believes the long-term fundamentals remain compelling for patient investors. Responding to persistent takeover speculation, Aberdeen Chief Executive Martin Gilbert told journalists on a conference call Monday: "We're not for sale and have never approached anyone to be sold."
In the FTSE 250, Cranswick traded up 3.9%. The pork and poultry producer said its pretax profit ticked higher in the first half, held back slightly by an impairment charge, as revenue came in slightly ahead of its expectations.
Cranswick said its pretax profit for the six months to the end of September was GBP25.5 million, 3.0% higher than the GBP24.6 million it posted a year earlier and held back somewhat by a GBP4.6 million goodwill charge the company booked on its sandwiches business. It said it will pay an interim dividend of 11.6 pence per share, up from 10.6p
TalkTalk Telecom Group was one of the worst performers in the index, down 1.2% after Berenberg downgraded it to Sell from Hold. The investment bank said TalkTalk's plans to improve margins face significant challenges, made more difficult by the recent cyber attack on the telecommunications company.
Fashion retailer French Connection Group traded up 22% after it reported improved trading in the second half, with sales higher and its gross margin healthier. The company said sales of its Winter 15 collection continued to be strong in the 16 weeks to November 21, following a promising start to the season.
French Connection said like-for-like UK and Europe retail sales were up 0.2%, compared to a 6.1% decline a year earlier, with full-price like-for-like sales growth flat at 6.0%. The gross margin for the half also improved, up 1.5 percentage points as the full-price contribution to the sales mix improved, along with better input margins.
Aureus Mining was the biggest faller in the AIM All-Share index, down 47% at 7.02p, having struck an all-time low of 6.13p earlier in the session. The miner said it had agreed terms for USD21.5 million of financing, the majority of which will come from heavily-discounted equity financing, and also warned it may have to raise further funds in the future if gold prices do not improve.
Overall, the new financing is aimed at giving Aureus breathing space to optimise the New Liberty mine in Liberia, which is behind schedule and currently unable to generate sufficient cashflow. Aureus said it believes it can "deliver on the production and cost estimates, which at the prevailing gold price, should see it generate sufficient cashflow to meet its continuing obligations, including its debt repayments, until the end of 2016," it said.
Still ahead in Monday's economic calendar, Germany's consumer price index is at 1300 GMT. In the US, the Chicago Purchasing Manager's Index is due at 1445 GMT, pending homes data are expected at 1500 GMT and the Dallas Fed manufacturing index is at 1530 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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