15th Oct 2015 07:28
LONDON (Alliance News) - UK stocks opened higher Thursday, tracking gains seen in Asian equities, with shares in Burberry Group sold after the retailer said it has faced a difficult environment in its second quarter in the luxury goods industry, especially in China.
The FTSE 100 index opened up 0.6% at 6,309.54 points, the FTSE 250 was up 0.2% at 16,847.89, and the AIM All-Share was up 0.1% at 732.71. In Europe, the CAC 40 index in Paris was up 0.6% and the DAX 30 in Frankfurt was up 0.7%.
Burberry Group was the worst performer in the blue-chip index, down 12%, after it said its second quarter was hit by a challenging environment for the luxury goods industry, particularly in China, and said it will take further cost-control actions in the second half to minimise the impact on its profit for the full year.
Still, the group said it expects its adjusted pretax profit for the full year to be in line with analyst expectations, despite the tough environment.
Burberry said its retail revenue was up 2% on an underlying basis in the first half to the end of September to GBP774.0 million, with like-for-like sales growth of 1.0% in the period. A strong performance for the group in Europe, the Middle East, India and Africa, driven by travelling luxury customers in Europe, was offset by a mid-single digit percentage decline in sales in Asia Pacific, with a "further deceleration" in Hong Kong.
Diversified engineering company Smiths Group was down 1.4%, after being downgraded to Underperform from Neutral by Exane BNP.
Leading gainers was Unilever, up 3.5%, after it reported a rise in sales in the third quarter of 2015 and said it expects underlying sales to grow at the upper end of its guided range for the full year.
The maker of consumer products including Ben & Jerry's ice cream, Lipton tea, Vaseline and Dove beauty products, and Persil washing power, said revenue in the third quarter of the year grew 9.4% to EUR13.4 billion, while rising 11% to EUR40.4 billion in the first nine months of the year.
Unilever said growth was helped by soft comparatives in China, strong ice cream sales, and price increases in Latin America.
The company added however, that consumer demand remained fragile, while volume growth was "barely positive" in the markets in which it operates.
BHP Billiton was up 1.5%. The Anglo-Australian miner BHP Billiton has said it has no plans to cut production and denied that a series of recent mine closures will spur higher commodity prices, days after peer Glencore, up 3.5%, slashed its zinc production by a third, the Financial Times reported Wednesday.
Arnoud Balhuizen, head of marketing at BHP, said that the Anglo-Australian mining group would not reduce output because its operations were generating cash, even as some rivals struggle with commodity prices close to six-year lows.
The miner also said it has priced USD3.25 billion in subordinated fixed-rate reset notes in the dollar market. BHP said the note issue has been completed in two tranches, one of USD1.0 billion and one of USD2.25 billion. The dollar issuance follows euro and sterling deals announce late Wednesday.
Other mining stocks also were in favour, with Anglo American up 2.0%, Rio Tinto up 1.7% and Antofagasta up 1.6%.
Asian stocks gained Thursday. In China, the Hang Seng in Hong Kong was up 1.9%, while the Shanghai Composite ended up 2.3%. The Japanese Nikkei 225 index closed up 0.9%.
Oanda analyst Craig Erlam said that the gains seen in Asia were mainly due to rising expectations that the US Federal Reserve won't raise interest rates this year after weak US retail sales data.
"Yesterday's retail sales report was just the latest to cast serious doubts over the strength of the US recovery at a time when the Fed is struggling to convince the markets that now is the time for a rate hike," Erlam said.
The US Commerce Department said Wednesday that US retail sales edged up by 0.1% in September. However, the figure missed economists expectations of a 0.2% rise. Retail sales in August also were downwardly revised to unchanged compared to the previously reported 0.2% increase.
There are two more Federal Open Market Committee meetings scheduled for 2015: October 27-28 and December 15-16.
On Thursday, Federal Reserve Bank of St. Louis President James Bullard gives a speech at 1530 BST before the 40th Annual Fall Policy Conference hosted by the Federal Reserve Bank of St. Louis. Meanwhile, at the same time in Washington, the Fed New York President William Dudley participates at an event hosted by the Brookings Institution.
Also in the economic calendar, in the US, the consumer price index and initial and continuing jobless claims are both expected at 1330 BST. The Philadelphia Federal Reserve manufacturing survey is due at 1500 BST, while EIA crude oil stocks are due at 1530 BST.
Wall Street ended lower Wednesday. The DJIA closed down 0.9%, the S&P 500 ended down 0.5% and the Nasdaq Composite finished down 0.3%. Sentiment was hurt by a dire outlook provided by retailing giant Wal-Mart Stores, whose shares ended down 10%.
By Daniel Ruiz; [email protected]
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