22nd Jun 2016 07:39
LONDON (Alliance News) - Stocks in the London started mostly higher on Wednesday, the final day of political campaigning for the UK referendum, but shares in specialty chemicals company Elementis sunk after it issued a profit warning.
The FTSE 250-listed company said its earnings for 2016 are set to miss market expectations amid difficult conditions for its chromium division.
Elementis, which manufactures additives used in industrial, personal care and oilfield drilling markets, said that while sales and margins in its North American chromium business are set to be broadly in line year-on-year, market conditions outside the North American market are proving challenging.
Eastern Europe has taken a particular hit, mainly as a result of local currency weakness against the dollar, and this will result in chromium sales and margins for 2016 being materially weaker year-on-year. That, in turn, will mean earnings for the group in 2016 will miss market expectations.
The stock was down 13%, making it the worst performer in the FTSE 100.
The FTSE 100 was up 0.1%, or 7.62 points at 6,234.17. The FTSE 250 gave up early gains and was down 0.1% at 16,960.26 and the AIM All-Share was down 0.1% at 720.74.
The pound and UK stocks continue to follow sentiment over the UK referendum on EU membership which takes place on Thursday. This week's gains in both stocks and sterling have been driven by recent opinion polls which showed the Remain side in the lead, but the vote could still go either way.
"Even though the Remain camp had a small lead in most polls compiled over the past few days, the Leave camp had recorded a lead of up to 10% in some of the polls compiled in the previous two weeks," noted Thu Lan Nguyen, an analyst at Commerzbank.
"For sterling to continue its appreciation trend seen over the past few days the polls would all have to record a notable lead for the Remain camp today. Should the polls continue to paint an uncertain picture sterling might even trend a little weaker again as a result of the then highly uncertain outcome of the vote," the analyst added.
Just after the London stock market open on Wednesday the pound traded the dollar at USD1.4697, compared to USD1.4661 at the close on Tuesday.
In Europe, the CAC 40 in Paris was up 0.4% and the DAX 30 in Frankfurt was up 0.5%.
In Asia, the Nikkei 225 index closed down 0.6%, the Shanghai Composite ended up 0.9%, while the Hang Seng continues up 0.7%.
In the FTSE 100, SSE was one of the biggest fallers, down 1.0%. UK energy regulator Ofgem said it is consulting on legally-binding commitments from the major utility company in regards to its investigation about whether the its behaviour impeded competition in the electricity distribution network.
Ofgem has been investigating SSE after identifying competition concerns relating to SSE's behaviour in providing services needed to enable it and its competitors' to connect up new development sites within the distribution network. Ofgem said the "behaviour in question" includes inconsistencies in SSE providing "essential information" to competitors when competing to provide connections.
Department store retailer Debenhams was down 5.3% as it slightly pulled back its margin forecasts for the full year and said like-for-like sales declined in the 15 weeks to June 11. Debenhams said its gross margin guidance has been moved to flat for the full year, from a previous expectation of flat to a 50 basis point expansion.
Gross transaction values in the 15 weeks to June 11 grew 0.5% year-on-year, while like-for-like sales in the period declined 0.2%. Online sales grew 7.0% year-on-year. Group constant currency like-for-like sales were down 1.6%.
Debenhams added gross transaction values for the 41 weeks to June 11 grew 1.3% year-on-year, Debenhams said, while like-for-like sales have grown 0.7%, indicating a slowdown in the most recent trading period.
Self-storage provider Safestore Holdings said it expects to complete the GBP44.4 million acquisition of Space Maker Ltd on July 29.
Safestore announced the deal in March and said the acquisition is set to be immediately earnings accretive. It added the purchase will support its future dividend-paying capacity. Like Safestore, Space Maker also provides self-storage facilities. The stock traded up 3.6%.
Still ahead in the economic calendar, the focus will be on the US housing market with MBA mortgage applications at 1200 BST, housing price index at 1400 BST and existing home sales at 1500 BST. Federal Reserve Chair Janet Yellen will complete the second day of her testimony to Congress at 1500 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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