6th Nov 2015 08:31
LONDON (Alliance News) - London stocks opened flat to lower Friday morning, with British Airways-owner IAG and Irish building materials company CRH leading the blue-chip gainers, while miner BHP Billiton was the worst performer.
The FTSE 100 index was flat at 6,362.55 points, the FTSE 250 was down 0.1% at 17,104.12, while the AIM All-Share was down 0.1% at 745.62. In Europe, the CAC 40 in Paris was down 0.4% and the DAX 30 in Frankfurt was down 0.3%.
International Consolidated Airlines Group was up 3.2% after it upgraded its long-term guidance on returns and margins and announced a reshuffle of its management team.
The owner of British Airways and Spanish carrier Iberia and recently acquired Irish airline Aer Lingus, said it has upgraded its sustainable return on invested capital target for 2016 to 2020 to 15% from 12% previously. It has also upgraded its guidance on operating margin target to between 12% and 15%, up from 10% to 14% previously, and is now targeting average annual growth in its earnings per share over the five-year period of 12%, compared to 10% before.
In a separate statement, IAG said its group traffic, measured in revenue passenger kilometres, rose 17% in October to 20.7 billion, up from 17.8 billion a year earlier. On a pro-forma basis, including the results from Aer Lingus, traffic increased 7.6%. The group's load factor for the month increased by 2.4 percentage points to 83.4% from 81.0% a year earlier and was up 2.5 points on a pro-forma basis.
Meanwhile, CRH was up 2.8%. Analysts at Davy Research note that the rise in the building materials stock comes after the US House of Representatives voted in favour of a new six-year Highway Bill entitled the Surface Transportation Reauthorisation and Reform Act.
"The new bill provides USD325 billion of funding over the 2016-21 period and effectively maintains current levels of federal spending but importantly links the annual spend to inflation. It is expected that a new bill will be signed into law before Christmas," said Davy. "This is a significant positive for CRH which is the largest provider of raw materials into this end-market."
BHP Billliton was the worst blue-chip perfomer, down 3.7%, after the miner said it "understands" there has been a "serious incident" at the iron operation in Brazil operated by its partner Samarco Mineracao. BHP holds a 50% stake in Samarco and said it is "concerned for the safety of employees and the local community", but did not reveal any details over what the incident was or any further details.
"We are in the process of obtaining more details from Samarco Mineracao. We will provide updated information on the situation as soon as we are in a position to do so," it said in a statement.
The iron ore operation is in Minas Gerais in Brazil, and on BHP's website it states that the Samarco operations are a joint venture with Brazilian giant Vale.
UK manufacturing and industrial production data, expected at 0930 GMT, will provide early interest for the market, but the US non-farm payrolls report in the London afternoon will be the main data focus of the day.
"UK industrial production is expected to have declined modestly in September, although manufacturing output is forecast to rise on the month," said Lloyds Bank. "A significantly different out-turn for industrial production would increase the probability that the initial estimate of third-quarter gross domestic product growth of 0.5% will be revised."
According to FXStreet.com, UK manufacturing production is expected have grown by 0.2% month-on-month in September, while UK industrial production is expected to have shrunk by 0.1% month-on-month.
Meanwhile, the release of the latest US non-farm payrolls figure and employment data is due at 1330 GMT. The expectation, according to FXStreet.com, is for the US economy to have added 180,000 jobs in October, moderately higher than the 142,000 jobs added in September.
However, Lloyds looks for a 182,000 rise. "That would be above the disappointing gains of the past two months but still below the average rise in both 2014 and 2015. October ADP, ISM non-manufacturing and the weekly unemployment claims data all point to the risk of an upward surprise but even an out-turn close to the consensus would probably still be sufficient to leave a December US Federal Reserve move on the cards."
The US unemployment rate, also released at 1330 BST, is expected to remain unchanged at 5.1%. Investors also will keep a close eye on speeches by Federal Reserve Bank of St. Louis President James Bullard and Federal Open Market Committee member Lael Brainard at 1300 GMT and 2015 GMT, respectively.
Wall Street ended flat to lower Thursday, with the DJIA flat, the S&P 500 down 0.1% and the Nasdaq Composite down 0.3%.
Germany's industrial production decreased unexpectedly in September, data from Destatis revealed Friday. Industrial production declined 1.1% in September from August, when it fell by revised 0.6%. Economists had forecast a 0.5% increase. Production in industry excluding energy and construction declined 1.4%. Energy production gained 0.3% on the previous month, while production in construction fell 0.9%.
In Frankfurt, the DAX 30 index is down 0.2%.
In Asia on Friday, the Japanese Nikkei 225 index closed up 0.8%. In China, the Shanghai Composite finished up 1.9%, while the Hang Seng in Hong Kong is down 0.8%.
Bank of Japan Governor Haruhiko Kuroda said the fundamentals of Japan's economy are sound and the environment surrounding firms and households improved significantly since a year ago. The bank will achieve its price stability target of 2% through continuation of the current policy, he said at a meeting held by a research institute in Tokyo.
The pound remained under pressure Friday morning, after declining on Thursday following the Bank of England's decision to keep its key interest rate at a record low, while signalling that borrowing costs would remain unchanged through next year as it cut its forecast for inflation.
In what has been dubbed "Super Thursday", a dovish economic outlook from the BoE damped the prospect of an interest rate hike in the near term and suggested that interest rates are unlikely to rise until late 2016, as inflation is expected to remain low.
The Monetary Policy Committee, headed by Governor Mark Carney, voted 8-1 to hold the interest rate at 0.50%, the bank said, with Ian McCafferty the lone dissenter as he sought an increase in the Bank Rate by 25 basis points. The rate has been held at this record-low level since 2009.
The pound couldn't recover overnight after having fallen to USD1.5240 at the London close, standing at USD1.5180 at the London open Friday.
By Daniel Ruiz; [email protected]
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