25th Nov 2015 08:38
LONDON (Alliance News) - Stocks in the UK have opened higher Wednesday, with housebuilders leading the gainers ahead of the UK Autumn Statement and Comprehensive Spending Review announcement at midday.
The focus for the Autumn Statement, due to be delivered by UK Chancellor George Osborne starting at 1230 GMT, will be whether he will stick to his budget surplus target, following figures on the UK's public finances coming in below expectations last week and amid a series of defence spending pledges by the government.
Osborne has tabled a plan to eliminate the deficit and have the UK in a budget surplus of around GBP10.0 billion by 2020. The spending cuts required to get there will be announced Wednesday afternoon as part of the government's Comprehensive Spending Review, which will outline the spending plans for the next five years.
In the Autumn Statement itself, the Financial Times reported Osborne will announce plans to build more than 400,000 new homes across England, in a GBP6.9 billion programme to help people buy their own homes.
This was supporting the shares of housebuilders in early trade Wednesday, with Persimmon up 2.9%, Taylor Wimpey up 2.6% Barratt Developments up 2.5% and Berkeley Group Holdings up 1.8%.
Meanwhile, analysts at Societe Generale expect the Chancellor to use the Autumn Statement to soften the blow of cuts to tax credits, for which he has come under heavy criticism.
"We expect that in the Autumn Statement, the Chancellor will respond to this harsh (but valid) criticism by making slower cuts to tax credits (but still ending up with GBP4 billion cuts by 2019-20) offset by deeper cuts elsewhere so as to maintain the overall spending profile," SocGen said.
In the rest of the economic calendar, the British Bankers' Association's mortgage approvals are at 0930 GMT and US Mortgage Bankers Association's mortgage applications at 1200 GMT.
In a blast of US data releases before the Thanksgiving Day holiday on Thursday and a half day for markets on Friday, personal income, spending and consumption data are at 1330 GMT alongside durable goods data. The Federal Housing Finance Agency's housing price index is at 1400 GMT, flash Markit services and composite purchasing managers' index readings are at 1445 GMT, new home sales at 1500 GMT and the Energy Information Administration's crude oil stocks at 1530 BST.
The FTSE 100 traded up 0.5% at 6,310.04 points, the FTSE 250 was up 0.4% at 17,020.69 and the AIM All-Share was up 0.2% at 729.95.
In Europe, the French CAC 40 was up 0.2%, as was the German DAX 30.
Asian stocks ended mixed Wednesday with the Nikkei 225 index in Tokyo ending down 0.4%, while the Shanghai Composite closed up 0.9% and the Hang Seng in Hong Kong ended down 0.4%.
In London, Shire was one of the biggest FTSE 100 fallers, down 1.1% after Reuters reported on Tuesday that the Irish drugmaker is preparing to make a new takeover offer for US peer Baxalta, citing a source with "direct knowledge of the situation".
This comes almost four months after Baxalta rejected a previous unsolicited GBP20.0 billion offer Shire made, which it argued significantly undervalued the company.
Thomas Cook Group was the best FTSE 250 performer, up 8.9%, after it said current trading is encouraging, as it report a swing to a profit in its recently-ended financial year, with strong demand for some of its holidays offsetting disruption caused by the terrorist attack in Tunisia in June.
The travel company said it made a pretax profit in the year ended September 30 of GBP50 million, having suffered a GBP114 million pretax loss the year before. Revenue fell to GBP7.83 billion from GBP8.58 billion, although it grew on a like-for-like basis.
Thomas Cook said demand for holidays to own-brand hotels and other new products increased, despite disruption to the business from the terrorist attack on a beach in Tunisia in which 38 holidaymakers died.
Plastic packaging company RPC Group declared an 18% improvement to its interim dividend following a rise in pretax profit in the first half, driven by much higher revenue derived from organic growth and acquisitions.
The FTSE 250-listed company, which makes a range of plastic containers and packaging products, said its pretax profit for the six months to the end of September was GBP40.5 million, up from GBP34.9 million a year earlier. Its shares traded up 3.5%.
Equipment rental company Vp traded up 5.6% after it said its pretax profit and revenue both rose in the first half and said it would hike its dividend payout on confidence its robust performance will continue in the balance of its financial year.
Vp said its pretax profit for the six months to the end of September was GBP16.3 million, up from GBP15.5 million a year earlier, as revenue rose to GBP105.1 million from GBP101.3 million. The company said its interim dividend will rise to 5.35 pence per share, up from 5.0p.
On the AIM market, Weatherly International, down 30%, said its largest shareholder and lender has agreed to defer a loan instalment repayment, as its Tschudi mine in Namibia is not generating enough operating cash to service its debt facility.
The company said that it produced 1,361 tonnes of copper cathode at Tschudi in October, at a costs of USD4,361. It expects to achieve nameplate production levels of 1,400 tonnes of copper cathode by the end of the quarter, in line with its previous announcements, and expects costs to be lower as a result of this.
However, it warned that in light of the current copper price being at a six year low, the Tschudi mine is not "making sufficient operating cash for the service of its debt facility".
By Neil Thakrar; [email protected]; @NeilThakrar1
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Related Shares:
Berkeley GroupThomas CookBarratt DevelopmentsVpPersimmonWeatherly International PlcTaylor WimpeyShireRpc Group