4th Apr 2019 08:41
LONDON (Alliance News) - The FTSE 100 slipped back early Thursday following a series of strong gains since the start of the week, pulled down by a stronger pound and as investors await updates from US-China talks.London's blue-chip index also was held back by a number of ex-dividend stocks on Thursday, while Saga's 39% tumble ensured the FTSE 250 traded in the red. The FTSE 100 was down 48.53 points, or 0.7%, at 7,369.75 early Thursday. The FTSE 250 was down 68.11 points, or 0.4%, at 19,495.33. The AIM All-Share was flat at 921.52.The Cboe UK 100 index was down 0.6% at 12505.11. The Cboe UK 250 was flat at 17,513.94, while the Cboe UK Small Companies was broadly unmoved at 11,184.36.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.1% and 0.2% respectively in early dealings.In Asia on Thursday, the Japanese Nikkei 225 index ended up 0.1%. In China, the Shanghai Composite closed up 0.9%, while the Hang Seng index in Hong Kong is down 0.5%."The global rally has again lost steam with bulls impatient for positive noise from US-China trade talks, which could be entering their final stages," commented Michael van Dulken at Accendo Markets.According to a White House schedule, US President Donald Trump plans to meet with Chinese Vice Premier Liu He, who is in Washington for trade talks, later in the day. "GBP strength continues to hinder the FTSE, as are oil prices off their highs," van Dulken added. "Copper prices may be holding yesterday's bounce, but dual-listed FTSE Miners Rio and BHP were offside in Australia overnight."Rio Tinto was trading 1.2% lower in London, while BHP Group was down 1.0%. Brent was quoted at USD69.04 in early trade, soft compared to USD69.10 late Wednesday.Sterling was quoted at USD1.3182 early Thursday, up slightly from USD1.3155 late Wednesday after MPs narrowly voted to take a no-deal Brexit off the table.Legislation spearheaded by Labour's Yvette Cooper requiring the UK prime minister to seek a delay to Brexit rather than risk the UK crashing out on April 12 was passed by a razor-thin majority of 1 - with 313 votes for and 312 votes against.As the bill to seize control of the Brexit process went through the Commons, Prime Minister Theresa May suffered yet another humiliating defeat as the government's attempt to prevent the legislation from limiting the powers of a minister resulted in a 180-vote defeat, with 91 Tory rebels.At the bottom of the FTSE 100 in early dealings were a number of ex-dividend stocks, including Direct Line Insurance, down 4.0%, packaging firm DS Smith, down 1.9%, and educational publisher Pearson, down 1.4%.Accounting software firm Sage slipped 2.3% after Citigroup downgraded the stock to Neutral from Buy.Saga sank 39% after warning on profit in 2020 and cutting its dividend, as it set out plans to revamp the business following a series of challenges. For the financial year ended January 31, the over-50s insurance and travel services firm posted a GBP134.6 million pretax loss compared to a profit of GBP180.9 million a year ago. The swing to loss at the pretax line was mainly due to an asset impairment amounting to GBP315.9 million, which the company did not incur last year. The impairment relates to Saga re-assessing the carrying value of goodwill in its Insurance operations. On an adjusted basis, pretax profit fell 5.4% year-on-year to GBP180.3 million from GBP190.6 million.The group sees a much sharper reduction in profitability in the year ahead, however, with the 2020 financial year expected to see an underlying profit between GBP105 million to GBP120 million. This will be as a result of lower margins in Insurance, a change in approach to renewal pricing, lower reserve releases and investment in new products."Over recent years Saga has faced increasing challenges from the commoditisation of the markets in which we operate, especially in Insurance," said Chief Executive Lance Batchelor. "This has had an impact on both customer numbers and profitability. Although underlying profit before tax for the 2018-19 financial year is in line with our expectations, the long-term challenges we face and the results demonstrate that Saga cannot grow without a clearly differentiated offering to its customers.""In response, today we are launching a fundamental change to the group's strategy to return the whole business to its heritage as an organisation that offers differentiated products and services," said Batchelor.These "essential" changes combined with pressures on the Insurance business will result in the lower profit in 2020, the company explained, as it also took the decision to more than halve its full-year dividend to 4p from the 9p paid out the year before.Homeserve was at the top of the FTSE 250, meanwhile, up 4.1% after guiding to an annual profit at the upper end of market forecasts. For the year to March 31, the home repairs firm said it expects adjusted pretax profit "significantly" ahead of the GBP141.7 million generated the year before, and at the top end of market forecasts.Estimates for pretax profit range from GBP159.5 million to GBP161.7 million, Homeserve noted.In the Membership business, North America reached a "milestone" 4 million customers, while customers in the UK edged down to 2.0 million from 2.2 million the year before, which Homeserve said reflected "continued good retention" but no policy book acquisitions.Electrocomponents gained 2.0% after saying it expects to post double-digit comparable revenue growth for its recently ended financial year.For the year to March 31, the electrical parts maker expects to post like-for-like revenue growth of 8%, matching the rate of growth seen in the fourth quarter.The group has continued to outperform underlying market growth, Electrocomponents highlighted, with all regions delivering comparable revenue growth in the fourth quarter.As a result of the strong performance in the final quarter, the FTSE 250-listed firm expects to report an annual adjusted pretax profit in line with expectations.The economic events calendar on Thursday has accounts from the European Central Bank's last monetary policy meeting at 1230 BST and US continuing jobless claims number at 1330 BST.
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