5th Aug 2015 11:19
LONDON (Alliance News) - UK stock indices are mixed midday Wednesday, with the market focus on individual stock news as investors gear up for 'Super Thursday' and 'Non-Farm Friday'.
On Thursday, the Bank of England will release its monetary policy decision, meeting minutes and inflation report simultaneously for the first time. Bank of England Governor Mark Carney has previously hinted that the central bank will start to consider changing its UK interest rate policy at end of 2015, but said that any increases would be slow and suggested that interest rates will rise to no more than 2.25% in the medium term.
This has led some analysts to expect some members of the monetary policy committee to vote for a rate hike in the August meeting, with known hawks Martin Weale and Ian McCafferty the most likely.
On Friday, attention will switch to US non-farm payroll figures for clues about the possibility of a US Federal Reserve interest rate hike as early as September.
The FTSE 100 trades up 0.5% at 6,717.25 midday Wednesday, the FTSE 250 is down 0.2% at 17,698.76, and the AIM All-Share is down 0.1% at 754.62.
In Europe, stocks are outperforming London, with the French CAC 40 up 1.2% and the DAX 30 up 1.3%. following better-than-expected purchasing managers' index readings.
The rate of expansion in eurozone economic activity slowed slightly at the start of the third quarter, final data from Markit revealed Wednesday. Nonetheless, growth remained close to June's four-year high. The composite PMI fell to 53.9 in July from 54.2 in June. It was above the flash estimate of 53.7.
Solid expansions of output were signalled in both eurozone's manufacturing and service sectors, with the slightly faster rate of growth at service providers. The final services PMI came in at 54.0 in July, down from 54.4 in June, but above the flash estimate of 53.8.
The UK services sector growth slowed by more than expected in July, survey data from Markit Economics showed. Still the survey signalled strong growth in the dominant services sector moving into the second half of 2015. The Markit/Chartered Institute of Procurement & Supply PMI fell to 57.4 in July from 58.5 in June. It was forecast to drop marginally to 58.0 in July.
On Wall Street, stocks are called higher, with the DJIA up 0.3%, the S&P 500 up 0.5% and the Nasdaq 100 up 0.4%.
Diversified media and entertainment conglomerate Walt Disney is called lower in pre-market trade even though it said Tuesday after the markets closed that its third quarter profit rose 11% from last year, driven mainly by strong earnings growth at its film and consumer products divisions. The company's quarterly earnings per share came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast.
Revenue from the company's media networks segment, which includes cable network ESPN and broadcaster ABC, rose 5% year-over year to USD5.8 billion in the third quarter, while the segment's operating income for the quarter grew 4% to USD2.4 billion.
Reporting on Wednesday in the US is Time Warner, Priceline.com, Discovery Communications, DISH Network, Ralph Lauren and Fitbit.
London Stock Exchange Group reported a 17% increase in first-half operating profit, driven by higher revenue from the acquisition of Frank Russell Co.
In a statement, the FTSE 100 company said it made a GBP239.4 million operating profit in the six months ended June 30, compared with GBP205.7 million in the corresponding half of 2014. Revenue increased by 90% to GBP1.16 billion when including the acquisition of Frank Russell. Revenue from continuing operations was up 9%, the group said. The company's shares trade up 2.1%.
Miners continue to rebound from their heavy fall on Monday, with BHP Billiton up 3.8%, Rio Tinto up 3.1% and Antofagasta up 2.3%. BHP and Rio also are benefiting from an upgrade to Hold from Sell by Liberum. The broker believes that the recent drops in their share prices, alongside its analysis, suggest that the risk-reward ratio is fairly poised.
Standard Chartered slashed its interim dividend and said it has yet to decide whether to ask shareholders for new capital, as the emerging markets bank reported a drop in first-half pretax profit and a jump in impairment charges for bad loans.
The emerging markets bank, which makes the bulk of its money in Asia, the Middle East and Africa, said its pretax profit amounted to USD2.10 billion in the six months to the end of June, compared with USD3.25 billion in the corresponding half of the prior year.
Operating income decreased to USD8.77 billion from USD9.25 billion, and operating expenses fell to USD5.04 billion from USD5.08 billion. Impairment losses on bad loans and advances, together with other credit risk provisions, increased to USD1.65 billion from USD846 million.
Standard Chartered shares fell immediately following the results but then sprang higher. They currently trade up 2.1%.
Shore Capital says Standard Chartered's capital position is much stronger than expected.
"There has been a significant improvement in capitalisation with the CET1 ratio increasing by 80bps during the first half at 11.5%, in the middle of the company’s 11-12% target range," writes Shore's Gary Greenwood. "This significantly reduces the possibility of a capital raise, in our view, and we think this is the key factor behind the positive share price reaction to, what on the face of it, looks like a poor set of results."
In the FTSE 250, Spirax-Sarco Engineering trade down 7.8%. The company, which makes steam management systems and peristaltic pumps, said a slowdown in global industrial production, together with negative currency movements, dragged down its pretax profit and revenue in the first half.
Spirax also incurred costs associated with the start-up of its business in India and with the restructuring of its UK operations. It said pretax profit in the first half was down by 10% to GBP57.3 million from GBP63.5 million a year earlier.
BBA Aviation is down 2.5% after the aviation services company said its pretax profit fell in the first half due to weakness in the European business and general aviation and commercial aircraft markets, which also caused revenue to fall, though it still raised its dividend slightly.
BBA said its pretax profit for the six months to the end of June was USD61.7 million, down from USD92.0 million a year before, as revenue fell to USD1.10 billion from USD1.15 billion due to lower fuel prices and the effect of the stronger dollar.
In the AIM All-Share index, Stratex International trades up 15% after the miner said cold commissioning at the Altintepe gold mine in Turkey will start in the middle of this month. Stratex said construction is on track to complete this month, with cold commissioning to follow ahead of hot commissioning and, ultimately, full production. It owns a 45% stake in the project, with the rest owned by joint venture partner Bahar Madencilik.
PHSC trades down 17%. The company said its pretax profit was slightly lower for the financial year to the end of March thanks to higher administrative expenses, which offset a rise in revenue, and said that it is seeing a decline in compliance spending in the UK.
The company, which provides health, safety, hygiene and environmental consultancy services, said its pretax profit for the year to the end of March was down to GBP503,328 from GBP654,850 a year earlier, thanks entirely to the higher administrative costs it booked in the half, which offset higher revenue.
Troubled insurance technology and outsourcing company Quindell posted a significantly widened loss for 2014 as a result of impairments and exceptional costs following a review into its accounts by audit firm PricewaterhouseCoopers earlier this year.
The company posted a pretax loss of GBP238.0 million for 2014, widened significantly from a loss of GBP8.6 million a year before, as revenue rose to GBP72.0 million from GBP61.0 million, as a result of a big jump in administrative costs, impairments of GBP157.0 million and other exceptional costs of GBP37.4 million.
Quindell said it has requested for its shares to restored to trading on AIM, and expects for trading of its shares to resume Thursday at 0800 BST.
Still ahead in the economic calendar, US Markit Services and Composite PMI readings are due at 1445 BST. The US Institute for Supply Management Non-Manufacturing PMI is at 1500 BST, while EIA crude oil stocks are expected at 1530 BST
By Neil Thakrar; [email protected]; @NeilThakrar1
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Anglo AmericanLSE.LBHP Billiton PLCStandard CharteredBBAStratex InternationalSpirax-SarcoQuindellPHSC