4th Aug 2015 11:21
LONDON (Alliance News) - London stock indices are mixed Tuesday midday, while Wall Street is called for a lower opening as market focus starts to shift from the US earnings season to the possibility of a US interest rate hike in September by the Federal Reserve.
The FTSE 100 is down 0.2% at 6,673.55, the FTSE 250 is flat at 17,672.41, and the AIM All-Share index is up 0.3% at 753.55. In Europe, the CAC 40 in Paris is down 0.7% and the DAX 30 in Frankfurt is down 0.3.
US futures point to a lower open, with the DJIA and the S&P 500 down 0.2% and the Nasdaq 100 seen down 0.3%.
"Now that the US reporting season is coming to an end, and the Fed’s meeting is on traders’ minds, the downward trend is here to stay," says IG market analyst David Madden. "Dealers are very much divided over the possibility of an interest rate hike next month, but those who don’t foresee a rate increase can’t be convinced to buy into the market."
Last week, analysts highlighted the inclusion of the word "some" in the Fed's assessment that it would be appropriate to raise rates "when it has seen some further improvement in the labor market", as the word implies a slight softening in the Fed committee's requirements for moving on rates. The next Fed's decision on US interest rates is due on September 17.
On Monday, Institute for Supply Management data showed that the US manufacturing sector unexpectedly grew at a slower rate in July. Separately, the US Commerce Department released a report showing a much smaller-than-expected increase in construction spending in the month of June.
Still ahead in the US economic calendar Tuesday are the ISM New York Index at 1445 BST and US factory orders at 1500 BST.
"[US factor orders data] can be quite volatile, and we’re expecting that to be the case again, with a rebound in June of 1.8% from a decline of 1% in May," writes Oanda analyst Craig Erlam.
Looking forward in the week at US data, Wednesday's ADP unemployment data, Thursday's initial and continuing jobless claims, and Friday's key nonfarm payroll figures are likely to be the centre of market attention.
In the UK, the pound fell sharply after the release of a weaker-than-expected UK construction purchasing managers' index score.
UK construction sector growth slowed unexpectedly in July, with business activity and incoming new work expanding at slower rates, survey results from Markit Economics showed. The Markit/Chartered Institute of Procurement & Supply construction PMI slipped to 57.1 in July from June's four-month high of 58.1. It was forecast to rise to 58.5.
"July's growth slowdown is the first for three months and perhaps a sign that the post-election impact on construction confidence has started to diminish. Reflecting this, UK construction firms’ business activity expectations moderated from June's 11-year peak but remain strong overall," says Tim Moore, senior economist at Markit.
The pound fell sharply against other major currencies following the data. Against the dollar, the pound fell to a low of USD1.5570 after the data from USD1.5610 prior to it. However, sterling has recovered some ground standing at USD1.5589 Tuesday midday.
On the London Stock Exchange, the biggest gainers in the FTSE 100 are mostly miners, recovering somewhat from their heavy falls on Monday. Glencore, which hit a new all-time low on Monday, is up 0.9%, while Anglo American is up 2.4%, Rio Tinto is up 2.2% and BHP Billiton is up 2.1%.
Outside mining stocks, Smiths Group is the best blue-chip performer, trading up 5.8%. US activist hedge fund ValueAct has emerged as a shareholder in FTSE 100-listed engineering company, just days after it was revealed the fund had become the largest shareholder in Rolls-Royce Holdings, the Financial Times reported.
ValueAct's holding in Smiths, which makes products including airport scanners and medical devices, is below the 5% threshold required for disclosure to the London Stock Exchange, the FT said.
Meggitt trades up 5.2% after the aerospace engineering company Tuesday said its pretax profit jumped in the first half of 2015 as revenue increased, though the company's order intake was slightly weaker in the period, as it said it has won two further deals in the US and UK.
The group said its pretax profit for the half to the end of June was up to GBP115.8 million from GBP98.2 million, driven by a 10% rise in revenue in the half to GBP793.7 million from GBP718.9 million. Order intake, however, fell by 1% in the half to GBP775.3 million from GBP782.7 million.
On the other side of the index, Standard Life shares are down 3.6%. The Edinburgh-based investments and savings company said it expects a lower contribution to its results for 2015 from annuity new business in the wake of changes to UK pensions rules that mean retirees are no longer required to purchase them. It said it expects annuity new business to fall by about GBP10 million to GBP15 million in 2015. The contribution from asset liability management is to fall by about GBP30 million to GBP40 million, Standard Life said.
Standard Life said that fee-based business is driving its growth, continuing the company's move to reduce exposure to more volatile earnings from providing guaranteed-income products. Its operating profit before tax increased by 6% to GBP290 million in first half of 2015, as fee-based revenue including the acquisition of Ignis Asset Management rose by 17% to GBP761 million and spread/risk margin revenue almost halved to GBP40 million.
In the AIM All-Share, Optimal Payments is up 11%. The company said it has received "change of control" approval from the UK regulator for its reverse takeover of payments rival Skrill. The news means that Optimal Payments now expects the deal to complete on August 10. The UK's Financial Conduct Authority had been expected to make a decision no later than August 11. Optimal, which will seek to leave AIM for the London Main Market once the deal completes, previously had expected a decision on the GBP1.1 billion acquisition by Thursday last week.
Meanwhile, Armour Group is off 26%. Shares in the investing company are set to be suspended after the company said it has failed to implement its investing policy in time to meet AIM listing rules, Armour said. It said its shares will be suspended from trading on Wednesday after it was unable to complete an acquisition or reverse takeover within 12 months of setting out its investing policy. Should it be unable to seal a deal in the next six months, its shares will be cancelled from AIM. The company said it continues to pursue potential investment opportunities.
By Daniel Ruiz; [email protected]
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Anglo AmericanRio TintoBHP Billiton PLCSmiths GroupMGGT.LGlencoreRolls-RoyceOPAY.LSL..L