12th Dec 2018 08:39
LONDON (Alliance News) - While the FTSE 100 was higher in early trade on Wednesday, the pound tumbled to fresh lows following news that a vote of no confidence in UK Prime Minister Theresa May has been triggered by members of her own party.Rolls-Royce was the top gainer in the FTSE 100, while dragging on the FTSE 250 were sharp losses for retailers Superdry and Dixons Carphone. The blue-chip FTSE 100 index was up 26.72 points, or 0.4%, at 6,833.66 in early trade. The FTSE 250 was up 25.47 points, or 0.1%, at 17,678.73 and the AIM All-Share was flat at 886.00.The Cboe UK 100 was up 0.1% at 11,598.14, while the Cboe UK 250 was down 0.3% at 15,753.52. The Cboe UK Small Companies was flat at 10,986.1.In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.5% and 0.4% respectively. In Asia on Wednesday, stocks ended higher amid hopes for improvements to US-China relations, with the Japanese Nikkei 225 index closing up 2.2%. In China, the Shanghai Composite ended up 0.3%, while the Hang Seng index in Hong Kong finished 1.6% higher.The chief financial officer of Chinese telecom giant Huawei smiled and wiped tears from her eyes on Tuesday as a Canadian court granted her bail following a gruelling three-day hearing in Vancouver. Meng Wanzhou, who is also the daughter of company founder Ren Zhengfei, was ordered to post bail of CAD10 million, about USD7.5 million, including a cash deposit of CAD7 million.Meng's arrest, which occurred on the same day that US President Donald Trump and Chinese President Xi Jinping met after the G20 summit in Buenos Aires to hammer out a 90-day truce in their trade war, has escalated tensions between Beijing, Ottawa and Washington.Trump has said he would consider intervening in the case against Meng if it would be in the interest of US national security and help forge a trade deal with China.Amid fresh political turmoil in the UK, enough Conservative MPs have requested a vote of confidence in UK Prime Minister Theresa May to trigger a contest. The vote will go ahead Wednesday evening.Graham Brady, the chair of the backbench 1922 Committee, said: "The threshold of 15% of the parliamentary party seeking a vote of confidence in the leader of the Conservative Party has been exceeded."In accordance with the rules, a ballot will be held between 1800 and 2000 on Wednesday 12th December in committee room 14 of the House of Commons. The votes will be counted immediately afterwards and an announcement will be made as soon as possible in the evening. Arrangements for the announcement will be released later today."May is expected to make a statement responding to the development outside the door of 10 Downing Street on Wednesday morning, a senior source told the Press Association.Sterling was quoted at USD1.2482 early Wednesday, having dipped to its lowest level since April 2017 of USD1.2476 shortly after the no confidence vote news, down from USD1.2517 late Tuesday.The best performer in the FTSE 100 early Wednesday was Rolls-Royce, up 2.8% after the engine maker said it expects an annual outcome towards the upper end of guidance.Operating profit for 2018 excluding ITP Areo is expected to be around GBP400 million, give or take GBP100 million, while core operating profit, which includes ITP Areo, is expected in a range of GBP350 million to GBP550 million. Free cash flow is expected between GBP350 million to GBP550 million, and core free cash flow in a range of GBP300 million to GBP500 million.In Civil Aerospace, the strong large engine flying hour growth report in the first half continued into the second half of the year, Rolls-Royce said. As previously guided, full-year growth is expected in the mid-teens range. Good momentum also continued in Power Systems, it said.Defence trading progress has remained in line with annual guidance, with revenue to remain stable, while ITP Aero also continues to trade in line with forecasts, it added.On Brexit, Rolls-Royce said it will continue to implement contingency plans until it is certain a deal and transition period has been agreed. J Sainsbury fell 3.9% after the supermarket said it and proposed acquisition Asda Group will lodge an application with the Competition Appeal Tribunal for a judicial review of the Competition & Markets Authority's phase two investigation into their merger.The application requests a review of the timetable and process, reflecting both companies' view that there currently is not sufficient time to consider all the evidence given the "unprecedented scale and complexity" of the case.Both parties have engaged "constructively" with the CMA to date and have made repeated requests for additional time, said Sainsbury's. Specifically, Sainsbury's said it has asked the CMA for an additional 11 working days over the Christmas period to respond to a "large amount of material" recently provided to the supermarket."We are confident in the merits of the deal and our ability to deliver the synergies. By bringing our two businesses together, we will invest further in range, quality and customer service, while lowering prices and reducing the cost of living for millions of UK households," said Sainsbury's.In the FTSE 250, Superdry tumbled 25% - taking the shares a staggering 78% lower since 2018 began - after it guided to a sharp drop in annual profit. Group revenue for the half-year to October 27 grew 3.1% to GBP414.6 million, while pretax profit nearly tripled to GBP26.4 million from GBP9.1 million a year ago, reflecting the fair value movement on forward exchange contracts. On an underlying basis, pretax profit fell 49% to GBP12.9 million.The clothing retailer said unseasonably warm weather has continued through November and into December, which Superdry noted are its two biggest trading months of the year, across all its key markets."Given Superdry's reliance on cold weather related product continues and a lack of innovation in some of its core categories, sales have remained under pressure despite a strong performance in the Black Friday week," the company said.This has resulted in a GBP11 million hit to profit in November, and a similar hit is expected in December if trading conditions don't pick up. In October, the company had guided to a GBP10 million hit to profit for its current financial year due to hot weather in the UK and weak consumer confidence.Superdry said it expects underlying pretax profit in a range of GBP55 million to GBP70 million for the full-year, reflecting "considerable uncertainty" in the weather outlook, changing consumer behaviour and wider economic and political uncertainty.For the firm's previous financial year, underlying pretax profit came in at GBP97.0 million, which had been up 12% from GBP87.0 million the year before that. The company kept its interim dividend unchanged at 9.3p per share.Fellow retailer Dixons Carphone fared little better, shares down 11% in early trade after the electronics seller said Revenue for the half-year to October 27 grew marginally to GBP4.89 billion from GBP4.87 billion a year ago, as the company swung to a substantial pretax loss of GBP440 million from a GBP51 million profit a year before. The FTSE 250 constituent said it booked non-headline charges of GBP490 million in the period, primarily relating to non-cash impairments, mainly goodwill.Despite the swing to loss, Dixons Carphone nonetheless backed its annual guidance for headline pretax profit of around GBP300 million. For the half-year, headline pretax profit came in at GBP50 million, down from GBP73 million a year ago.First half like-for-like revenue grew 2%, with comparable sales in the second quarter up 4%. The company lowered its interim dividend to 2.25p from the 3.5p paid out last year. In Wednesday's economic calendar, eurozone industrial production is at 1000 GMT while US CPI is at 1330 GMT.
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