30th Jul 2015 11:11
LONDON (Alliance News) - A busy day of corporate news is driving UK equity markets higher midday Thursday, while US stocks are pointed to a firm open, as investors continue to digest the US Federal Reserve's policy statement on Wednesday.
The FTSE 100 trades up 0.8% at 6,683.20, the FTSE 250 is up 0.1% at 17,532.68 and the AIM All-Share is up 0.1% at 750.15.
The CAC 40 in Paris trades up 0.7% and the DAX 30 in Frankfurt trades up 0.6%.
Stock futures point to a higher start to trade. The Dow 30 and the S&P 500 are both indicated up 0.1%, while the Nasdaq 100 is expected to open up 0.2%.
Facebook shares are pointed down 1.3% in pre-market trade. The social networking giant said Wednesday after the markets closed that its second quarter profit fell 9% from last year, as higher costs and expenses more than offset a 39% increase in revenue. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.
In the US corporate calendar Thursday, there are earnings updates from LinkedIn, Expedia, Amgen, T-Mobile, Procter & Gamble, Time Warner Cable, Electronic Arts, ConocoPhillips, Colgate-Palmolive, Western Union and World Wrestling Entertainment, amongst others. Like in the UK, the US earnings season is at its peak.
US investors also will have had more time to ponder the Fed's statement on monetary policy which was seen as slightly more hawkish than its statement last month. After a two-day meeting of its policy committee, the Federal Reserve observed signs of an improving US labour market and economy, but refrained from signalling the timing of a rate hike.
The Fed said it "anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the US labour market and is reasonably confident that inflation will move back to its 2% objective over the medium term," repeating its past statements nearly word-for-word.
The central bank's emphasis on continuing job improvement will make the next US nonfarm payrolls number, which is due next week, even more important than usual.
Also in focus will be the first reading of US second-quarter GDP at 1330 BST, given the Fed's reiteration of a rate hike being data-dependent. Economists expect annualised GDP to rise 2.6% in the second quarter from a 0.2% decline seen in the first quarter.
Elsewhere in the economic calendar in the US are initial and continuing jobless claims, also at 1330 BST alongside trade trade balance and personal consumption and expenditure data. In Germany, there are inflation figures at 1300 BST.
On the corporate front in London, Royal Dutch Shell and BG Group are the best performers in the FTSE 100. Shell reported a USD1.7 billion drop in earnings in the second quarter of 2015, as its upstream division continued to be hampered by lower oil prices, compounded by a fall in production.
But the company reaffirmed its commitment to its dividend, alongside a share buyback, as its merger with BG Group continues as planned. BG shares are up 3.3%. Shell also confirmed it sold a 33.24% stake in Japanese refiner Showa Shell Sekiyu KK for around USD1.40 billion to Idemitsu.
Shell reported current cost of supply earnings of USD3.4 billion in the second quarter of 2015, down from USD5.1 billion a year before, as revenue fell to USD73.95 billion from USD115.27 billion after being hit by lower oil prices.
Shell said it is planning for a "prolonged downturn" in the market caused by lower oil prices and said its operating costs will fall by around USD4.0 billion in 2015, which will be a reduction of about 10%, which includes 6,500 job cuts.
Shell 'B' shares trade up 4.1%, while 'A' shares are up 4.0%. BG is up 4.3%.
Babcock International Group trades down 3.5%. the biggest faller in the FTSE 100. The support services company said it is trading in line with its first-half and full-year expectations so far in its 2015 financial year. But Babcock said it still expects a fall in first-half revenue in its defence and security business and said it expects oil and gas-related revenue in its MCS business to drop, though emergency services revenue should offset this.
Centrica said it has completed its strategic review of the business which will see it shift investment away from upstream production and toward British Gas and its other consumer businesses, as it reported a rise in pretax profit but a slight fall in earnings in the first half of 2015.
The FTSE 100-listed electricity and gas provider reported a GBP1.20 billion pretax profit in the first half of 2015, up from a GBP890 million profit a year earlier despite revenue experiencing a slight 2% drop to GBP15.45 billion from GBP15.74 billion. The company trades down 2.1%.
In the FTSE 250, HellermannTyton shares are surging after the company said it has agreed to be taken over by Delphi Automotive, the UK-based automotive parts manufacturer. HellermannTyton, which makes wires and cables, said it has agreed to be acquired by Delphi for 480 pence per share, valuing the company at around GBP1.07 billion.
The price is at at 45% premium to HellermannTyton's closing price on Wednesday and at a 43% premium to its one-month volume weighted average price prior to the offer. The company currently trades up 42% at 471.388 pence.
In the AIM All-Share index, Accesso Technology Group is up 20% after the company said it has won an exclusive, long-term deal with Merlin Entertainments Group to provide its online ticketing and eCommerce products across Merlin's attractions. Additionally, whilst the company has maintained its guidance for 2015, it now expects 2016 to be ahead of current expectations and 2017 to be "materially" ahead of current expectations due to "excellent momentum across all of its business divisions".
Kromek Group, off 15%, said it is planning to raise GBP11 million via a discounted placing, which overshadowed its report of a narrower pretax loss and higher revenue for its financial year to the end of April. The radiation detection technology company said it will raise GBP11 million in a firm placing via the issue of 36 million shares at 25 pence per share, plus a further 8 million shares in an open offer at the same price. The discounted placing sent Kromek shares tumbling.
By Neil Thakrar; [email protected]; @NeilThakrar1
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