14th Mar 2016 08:36
LONDON (Alliance News) - Stocks in London opened higher Monday, with investors focusing on this week's updates from several central banks and the UK Budget on Wednesday, but shares in motor insurer Admiral were suffering from two broker downgrades.
The FTSE 100 was up 0.7%, or 40.57 points, at 6,180.36. The FTSE 250 was up 0.8% at 16,727.35, and the AIM All-Share was up 0.1% at 103.10. In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.7% and 1.8%, respectively.
Admiral Group was the worst performer in the blue-chip index, down 2.2%, after Merrill Lynch reduced its recommendation to Underperform from Neutral, while HSBC downgraded the shares to Hold from Buy, according to traders.
Shares in SSE were up 0.8%. The power utility said it has signed agreements to sell a 49.9% stake in the Clyde wind farm located in South Lancashire to Greencoat UK Wind and GMPF & LPFA Infrastructure for a headline consideration of GBP355.0 million. The wind farm is operational and has a current capacity of 349.6 megawatts, but SSE said once the current 172.8 megawatt expansion at the wind farm is completed then the equity stakes in the project will be diluted.
Following the expansion of the farm, when it will have a capacity of 522.4 megawatts, SSE will hold a 70% stake and the stake held by Greencoat annd GMPF & LPFA will amount to 30%. That expansion is expected to be completed in June 2017.
In the FTSE 250, St Modwen Properties was up 3.6% after Liberum upgraded the company, which focuses on regenerating brownfield sites and building residential developments, to Buy from Hold.
NMC Health was up 1.9%, after the private hospital group gave a positive outlook for the year ahead, expecting strong growth from its enlarged network, as it reported a rise in pretax profit for 2015. In addition to operating hospitals in the United Arab Emirates, NMC provides fertility treatments in Spain through its subsidiary Clinica Eugin, which it acquired in February 2015.
NMC reported a pretax profit of USD85.4 million in 2015, up from 7.5 million in 2014, as a rise in revenue to 880.9 million from 643.9 million was partly offset by a rise in general and administrative expenses and by higher depreciation and and amortisation costs. NMC's revenue growth was partly driven by five acquisitions throughout the year, on top of a strong organic performance, it said, helped by a strong inpatient and outpatient performance at its existing hospitals and medical centres.
Stagecoach Group was down 2.6% after HSBC cut the public transport company to Reduce from Hold.
Chancellor of the Exchequer George Osborne presents the UK Budget on Wednesday, while central bank policy statement are due from the Bank of Japan on Tuesday, the US Federal Reserve on Wednesday and the Bank of England on Thursday.
Societe Generale analyst Michala Marcussen believes concerns about global financial conditions have abated somewhat, "but they appear to have shaken the Fed's confidence in the US economic outlook so no rate hike this week". However, Marcussen said it should characterise this "as a one-off pause rather than a suspension of policy normalization".
Marcussen said the UK Budget "should be a low-key affair" as the analyst believes the Chancellor will avoid any controversy ahead of the June 23 EU referendum.
"To avoid rocking the boat ahead of the Brexit referendum, Osborne is unlikely to make any significant policy changes, except probably some minor spending cuts towards the end of the five-year planning period," Marcussen said.
On Sunday, Osborne said "we need to act now so we don't pay later" as he paved the way for a further financial squeeze in the upcoming Budget. Savings equivalent to 50p in every GBP100 the UK government spends needed to be found by 2020, the Chancellor said. But the cuts were "not a huge amount in the scheme of things", Osborne told BBC One's Andrew Marr Show.
Meanwhile, the Bank of England is likely to leave policy unchanged and continue its dovish tone, added Marcussen, as should the Bank of Japan.
The UK Financial Conduct Authority and HM Treasury published the recommendations from their Financial Advice Market Review, calling for a series of reforms to make financial advice and guidance better for consumers.
The review found a "clear need for intervention" both by the FCA, the City regulator, and the UK government in order to help consumers and the financial advisory industry benefit from more cost-effective methods of delivering financial advice.
The review calls on the UK government to launch a consultation on narrowing the definition of regulated advice so that it is limited to personal recommendation. The report said this would create a "single definition for regulated financial advice" and would remove barriers for some firms seeking to offer advisory services.
The review also called on the UK government to allow consumers to access a small part of their pension pot to redeem against the cost of pre-retirement advice. It also calls for the government to explore ways to improve the existing income tax and National Insurance exemption for employer-arranged pension advice.
In Asia on Monday, the Japanese Nikkei 225 index closed up 1.7%, while in China, the Shanghai Composite ended up 1.8%. The Hang Seng index in Hong Kong finished up 1.1%.
China can achieve its recently set economic growth targets for this year and until 2020 without further monetary stimulus, China's central banker said Saturday.
"China will stick to a prudent monetary policy," Zhou Xiaochuan, governor of the People's Bank of China, told reporters on the sidelines of the annual parliament session in Beijing.
Zhou said the focus should be on creating growth without employing extra monetary measures. The targets "can be realized through improving domestic demand, consumption and innovation, without major stimulus," Zhou said. The government's gross domestic product growth target for 2016 is 6.5 to 7%, with an average annual target of 6.5% until 2020.
Also Saturday, the chief of the country's securities regulator said China will not relaunch the "circuit breaker" mechanism in its stock markets in the next several years. The China Securities Regulatory Commission was widely mocked for introducing the mechanism, which halted nationwide trading twice during one week in early January and sent shockwaves through world markets.
It had "failed due to lack of acknowledgement of the makeup of investors, in which smaller investors are main players," Liu Shiyu told reporters.
In a light economic calendar Monday, eurozone industrial production is due at 1000 GMT. The Organization of the Petroleum Exporting Countries is expected to release its monthly oil market report later in the day.
By Daniel Ruiz; [email protected]
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