28th Feb 2019 07:42
LONDON (Alliance News) - Stock prices in London are set to open lower on Thursday, as investors are rattled by trade concerns and weak data from China, while the US-North Korea summit has ended abruptly without agreement on denuclearisation.In a bumper day for corporate earnings in London, Rolls-Royce hailed a "breakthrough" year, International Consolidated Airlines proposed a special payout, and Rentokil Initial now expects a "slight increase" in market expectations for 2019.IG says futures indicate the FTSE 100 index of large-caps to open 26.50 points lower at 7,080.70 on Thursday. The FTSE 100 index closed down 43.92 points, or 0.6%, at 7,107.20 on Wednesday.In the US on Wednesday, Wall Street ended mostly lower, with the Dow Jones Industrial Average closing down 0.3%, the S&P 500 sliding 0.1% but the Nasdaq Composite rising 0.1%."The Dow & S&P fell for a second straight session and Asian shares also looked shaky overnight as investors digested key comments on US - China trade relations, weak Chinese data and a growing list of geopolitical issues," said London Capital Group's Jasper Lawler. In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.8%. In China, the Shanghai Composite closed 0.4% lower, while the Hang Seng index in Hong Kong is down 0.5%.A landmark trade deal between China and the US remains an "if", US Trade Representative Robert Lighthizer told Congress on Wednesday."If we can complete this effort, and again I say 'if', and can reach a satisfactory solution to the all-important outstanding issue of enforceability as well as some other concerns, we might be able to have an agreement that helps us turn the corner in our economic relationship with China," Lighthizer told a committee.He said the Chinese currency remains a concern and that negotiations are trying to deal with all outstanding issues.Lighthizer also indicated that trade talks with Europe are currently stalled.And then, "as if on cue", more weak data came out of China, said LCG's Lawler.China's manufacturing activity dropped to a three-year low in February, amid a prolonged trade war with the US, official data showed Thursday. The manufacturing purchasing managers index came in at 49.2 in February, sinking from 49.5 in January, the National Bureau of Statistics said.The indicator fell below the critical threshold of 50 in December, for the first time in two years. A figure below 50 indicates contraction."Further evidence of a slowdown in China hit risk sentiment, The realisation that there is still considerable work to be done for the US and China to reach a trade agreement, plus further evidence of economic activity in China slowing is leaving little for traders to cheer on Thursday," said Lawler.Elsewhere in Asia, US President Donald Trump and North Korean leader Kim Jong Un on Thursday failed to reach an agreement over denuclearization at their Hanoi summit.The White House released a statement saying Trump and Kim "had very good and constructive meetings" but that "no agreement was reached at this time"."The two leaders discussed various ways to advance denuclearization and economic driven concepts," the statement said.In a heavy day for corporate news in London, engine maker Rolls-Royce Holdings said 2018 was a "breakthrough" year despite challenges with its Trent 1000 fleet. "Underlying financial results are ahead of expectations, with good growth in profit and cash flow. Following the restructuring we announced in June last year we are starting to see the crucial behavioural changes needed to sustain our momentum," said Chief Executive Warren East.Underlying revenue was up 8% to GBP15.07 billion, with reported revenue up 7% to GBP15.73 billion. Rolls-Royce swung to a loss of GBP2.95 billion from a GBP3.90 billion profit in 2017, though underlying operating profit jumped to GBP616 million from GBP306 million.On a reported basis, the firm swung to an operating loss of GBP1.16 billion from a GBP366 million profit in 2017.The FTSE 100 constituent said it is making good progress with technical fixes on its Trent 1000 engines. Trent 1000 exceptional charges increased from GBP554 million at the half year stage to GBP790 million for the year as a whole. "This GBP236 million increase reflects a contribution to customer disruption costs greater than those anticipated at the half year," Rolls-Royce explained.The firm said it expects around 10% revenue growth in 2019 and operating profit to be "closer to break-even", while Trent 1000 costs are expected to be around GBP450 million.British Airways parent International Consolidated Airlines Group said it expects profit in 2019 to be broadly in line with that achieved for 2018, as it proposed a special dividend.Revenue for 2018 came in at EUR24.41 billion, up from EUR22.88 billion in 2017, while pretax profit was boosted to EUR3.49 billion from EUR2.48 billion.The airline operator proposed a final dividend of 16.5 cents per share, bringing its total dividend for the year to 31 cents, while also proposed a special dividend of 35 cents. At current fuel prices and exchange rates, IAG said it expects its 2019 operating profit before exceptional items and IFRS16 to be broadly in line with the EUR3.23 billion reported for 2018. Both passenger unit revenue and ex-fuel unit cost is expected to improve at constant currency.Irish building materials firm CRH looked ahead to a "year of progress" in 2019 as it reported growth in annual revenue though a slight dip in profit.Revenue for 2018 rose to EUR26.79 billion, up from EUR25.22 billion in 2017, while pretax profit was marginally lower at EUR1.86 billion versus EUR1.87 billion last year."CRH remains well positioned to build upon the gains made in 2018. With a relentless focus on continuous business improvement, margin expansion, cash generation and returns for shareholders, together with continued strong financial discipline and efficient allocation of capital, we believe 2019 will be a year of progress and further growth for the Group," the company said.CRH declared a final dividend of 52.4 cents per share, which would give a total dividend of 72 cents for the year, up 6% on 2019. Pest control and hygiene firm Rentokil Initial posted a rise in adjusted profit for 2018 and said it expects a "slight increase" in market expectations for 2019.Revenue for 2018 rose 2.5% to GBP2.47 billion, while the firm swung to pretax loss of GBP114.1 million from a GBP713.6 million profit the year before. In 2017, Rentokil had benefited from a GBP449.0 million gain on the disposal of businesses, which did not repeat in 2018, the firm then also booked a GBP341.6 million charge in 2018 relating to a pension settlement. On an adjusted basis, pretax profit rose 7.4% to GBP308.0 million. The firm lifted its dividend by 15% to 4.471p."2018 was a very good year for Rentokil Initial, and I am delighted that we have again exceeded our medium-term financial targets for revenue, profit and cash. We are confident of delivering further progress in 2019 and anticipate a slight increase in market expectations for 2019," said Chief Executive Andy Ransom.Separately, the company said Richard Solomons will succeed John McAdam as chair. Solomons was Chief Executive of InterContinental Hotels Group until June 2017.RSA Insurance said it thinks 2019 will see a "bounce back" after its first year of underlying revenue and profit declines since 2013.Underlying pretax profit fell to GBP492 million from GBP620 million in 2017, while underlying return on tangible equity was 12.6%, down from 15.5% in 2017 and just below its 13% to 17% target range.On a reported basis, total income dipped to GBP701 billion from GBP7.11 billion in 2017, though pretax profit rose to GBP480 million from GBP448 million."In 2018 RSA increased headline profits and dividends with a still attractive return on capital. At an underlying level however, the results represent RSA's first down year since 2013. We believe strongly that 2019 will show a bounce back and are taking decisive action to that end," said Chief Executive Stephen Hester"Much went well in 2018, with excellent results in many of RSA's Personal Lines businesses and good progress on expenses and other strategic initiatives. However, adverse weather costs and challenging Commercial Lines results exposed us to more volatility than expected," Hester explained.RSA's full-year dividend was 21p per share, up 7% on last year. British American Tobacco said annual profit shrank considerably as a result of its acquisition of Reynolds American the year before.The dual-listed tobacco firm posted a pretax profit of GBP8.35 billion, less than a third of its GBP29.59 billion profit in 2017. Revenue was GBP24.49 billion, a rise of 25% from GBP19.56 billion in 2017.BAT recognised a gain of GBP23.29 billion in 2017 arising from the Reynolds American acquisition since it was deemed to have disposed of Reynolds American as an associate, and did not recognise such a gain in 2018.In the economic events calendar on Thursday are inflation readings from France, Italy and Germany at 0745 GMT, 1000 GMT and 1300 GMT, respectively. In the London afternoon, there are US fourth-quarter GDP figures and core personal consumption expenditure prices - the Fed's preferred inflation gauge - at 1330 GMT.Meanwhile, after the market close on Wednesday, the latest FTSE Russell index review saw Phoenix Group Holdings and Just Eat added to the FTSE 100 - effective from Monday 18 march - while bookmaker GVC Holdings and oilfield services firm John Wood Group will be relegated to the FTSE 250. To be added to the FTSE 250 are stockbroker AJ Bell, outsourcer Kier Group and retailer Pets at Home. Deleted from the mid-cap index will be Superdry, Halfords Group and Edinburgh Dragon Trust.
Related Shares:
International AirlinesBritish American TobaccoRSA.LCRHRentokil InitialRolls-Royce