16th Nov 2015 12:14
LONDON (Alliance News) - Stocks in the UK and Europe were showing resilience Monday after the Paris terrorist attacks last Friday sent shockwaves around the world and analysts scrambling to weigh up the economic consequences.
At midday, London's FTSE 100 index traded up 0.4% at 6,143.68, having opened lower. The FTSE 250 was up 0.2% at 16,808.37. The AIM All-Share was underperforming, down 0.3% at 72990.
In Paris, the CAC 40 index was flat, having earlier traded much lower. The DAX 30 in Frankfurt traded up 0.3%.
Following the attack late Friday which left 129 people dead and some 350 injured, the French Defence Ministry launched airstrikes against Islamic State in its stronghold of al-Raqqa in Syria. The strike involved 10 French planes that dropped 20 bombs, destroying a commando position where munitions were stored and a training camp for terrorists.
Analysts deliberated the economic consequences of the attack on France. Berenberg's chief economist Holger Schmieding said that, in the past, attacks similar to one seen in Paris, such as the 7/7 bombings in London in 2005, 9/11 in the US and the 2004 attack on Madrid, economic trends have not been derailed.
Schmieding noted that the attacks likely will see more spending on police and military, but not to such an extent as to make a major difference to short-term aggregate demand.
"Of course, the terror attacks raise profound political issues that can also have longer-term economic consequences. While difficult and potentially contentious decisions are ahead, the external threat can also serve as reminder of the ties that bind Europe and its citizens and nations together," he added.
Joshua Mahone, market analyst at IG said that the attack will see reduced investment, consumer spending and confidence for an economy in France that was already under pressure.
For the London stock market, the attack has resulted in a sell-off in travel stocks. TUI Group led decliners in the FTSE 100, down 4.5%, while International Consolidated Airlines was down 2.9% and Carnival was down 2.1%.
Also in Europe, data from Eurostat showed inflation in the eurozone turned positive in October after falling a month ago. Consumer prices gained 0.1% year-on-year, reversing a 0.1% fall in September and a touch above the forecast for a flat reading.
Core inflation, which excludes energy, food, alcohol and tobacco, rose 1.1% year-on-year in October from 0.9% in September.
Brent oil crept above the USD45 a barrel mark sending shares in oil producers higher. Royal Dutch Shell A shares were up 2.6%, BG Group was up 2.4%, and BP was up 1.7%.
In the FTSE 250, Premier Oil was up 8.0% and Tullow Oil was up 6.4%.
Premier Oil said it has struck a deal to sell its Norwegian assets to Det Norske Oljeselskap ASA for USD120.0 million in cash. The oil and gas company said the proceeds from the sale will be used to pay down debt. It expects the deal to complete by the end of the year.
Technical products and services company Diploma was the biggest gainer in the midcap index, up 16%. It said its pretax profit and revenue edged higher in its recently-ended financial year, albeit as sales were held back in the second half by softer industrial markets and cost-cutting in the healthcare sector.
Diploma said its pretax profit for the year to the end of September was GBP51.8 million, compared to GBP49.8 million a year earlier, as revenue rose to GBP333.8 million from GBP305.8 million. The group will pay a final dividend of 12.4 pence per share, up 7.0% year-on-year, bringing its total dividend up to 18.2p from 17.0p.
SIG, up 6.8%, said trading improved in October, following the profit warning it issued last month as it was hit by sluggish conditions in its key markets. The building products company had downgraded its underlying operating profit guidance for all of 2015 to GBP85.0 million to GBP90.0 million, down from the GBP98.1 million it made a year earlier. On Monday, the group said trading had improved in October and affirmed that reduced full-year guidance.
Keller Group traded up 5.3% after it said it is on track to meet market expectations for 2015 after an in-line second half so far. The company, which provides engineering services for ground structures, primarily for construction projects but also for underground structures, said said overall trading in the four months to the end of October had been in line with its expectations. Keller said its order book at the end of October was around 20% higher year-on-year, or up 15% on a like-for-like basis.
On the AIM market, Eden Research was up 28% after it said its Kenyan partner, Lachlan Kenya, received approval to begin sales of Eden's fungicide 3AEY, to be sold under the trade name Hawk. Under Eden's licence agreement with Lachlan, it is now due a milestone payment and will receive royalties based on the net sales of 3AEY.
It will supply Lachlan from the UK and has received an initial order to provide enough 3AEY to treat an area of around 1,667 hectares. "This is the first commercial order for 3AEY which will generate product sales revenue and royalties. We expect this to be the first of many such orders not only from Kenya, but also from our other partners in Europe in due course," Chief Executive Sean Smith said.
Juridica Investments traded down 19%. The corporate legal claims advisor said it will see a return of USD2.0 million in relation to a recently completed legal case, below its original investment of USD3.5 million.
A recent case, 5009-S, which involved a theft of trade secret dispute brought by a smaller plaintiff against a much larger company, has been completed. Although there was a full win on liability, the jury only awarded an amount that will result in Juridica receiving USD2.0 million. This falls below the USD3.5 million it had invested originally in the case, and a valuation of USD9.4 million related to the case in its net asset value as at the end of June.
Still ahead in the economic calendar, the Federal Reserve Bank of New York's manufacturing index is expected to be published at 1330 GMT.
Before the data, futures indicated Wall Street for a higher open, with the Dow 30, S&P 500 and Nasdaq Composite all called 0.1% higher.
By Neil Thakrar; [email protected]; @NeilThakrar1
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