31st Jan 2019 07:43
LONDON (Alliance News) - Stock prices in London on Thursday are on course to open slightly higher, adding to substantial gains in the previous session, after the US central bank pledged to be patient in making interest rate hikes. The pound gained against the dollar following the statement, putting on a limit on likely gains for the US currency earners in the FTSE 100.A busy UK corporate calendar on Thursday saw Royal Dutch Shell's annual earnings just ahead of consensus, while consumer goods giant Unilever also posted a strong rise in 2018 profit, and Smirnoff vodka maker Diageo reported growth in interim volumes as it backed its annual outlook.IG says futures indicate the FTSE 100 index of large-caps to open 8.47 points higher at 6,950.10 on Thursday. The FTSE 100 index closed up 107.70 points, or 1.6%, at 6,941.63 on Wednesday."January's Fed meeting was a highly anticipated event, more so than usual because of the volatility in markets. And it didn't disappoint. The market finally saw the U-turn in monetary policy that it had been waiting for," said Jasper Lawler, head of research at London Capital Group.He explained: "Across the end of last year, the markets had grown increasingly nervous that the Fed was on the cusp of a big policy error by remaining on its hiking path despite growing signs of weakness in the global economy. As a result, stocks dropped heavily fearing that higher borrowing costs would damage the economy at a time when global growth was also slowing."Departing from the hawkish approach to rate hikes expressed by the US Federal Reserve over the majority of 2018, the central bank kept its benchmark interest rate unchanged at its first meeting of 2019, vowing to be "patient" regarding future adjustments.The Fed did not indicate any future plans to raise interest rates, striking a cautious tone as it held the rate's target range at 2.25 to 2.50%.The accompanying statement included some notable changes from last month, including dropping a reference to the Fed's plan for further gradual rate increases.The central bank also removed a sentence describing the risks to the economic outlook as "roughly balanced". This was a change of its previous messaging in 2018, and a sign of a more dovish approach to policy.The dollar was put under selling pressure by the statement. Early Thursday, the pound was quoted at USD1.3144, up from USD1.3070 late WednesdayIn the US on Wednesday following the Fed decision, Wall Street finished firmly in the green, with the Dow Jones Industrial Average ending up 1.8%, the S&P 500 up 1.6% and Nasdaq Composite up 2.2%.Among a raft of US companies reporting on Wednesday, social media giant Facebook posted strong financial results for its fourth quarter and full year despite questions over the company's privacy practices.Net income jumped 61% to USD6.8 billion compared with the 2017 quarter, while revenue grew to USD16.9 billion, or 30%. The number of daily active users was 1.52 billion, an increase of 9% over 2017.Meanwhile, software firm Microsoft said its cloud business increased 20% in the fourth quarter of 2018. The growth of Microsoft's cloud business and its decision to work across multiple operating systems delivered for its bottomline, helping fourth-quarter operating income to rise 18% to USD10.3 billion and overall revenue 12% to USD32.5 billion.In the UK, Royal Dutch Shell, London's largest listed company by market value, said earnings came in slightly ahead of consensus after a "strong" 2018. Shell's current cost of supply (CCS) earnings excluding identified items attributable to shareholders, the firm's preferred metric, rose 36% to USD21.40 billion from USD15.76 billion in 2017. Analyst consensus had predicted CCS earnings of USD20.98 billion.Revenue for 2018 came in at USD388.38 billion, up 27% from USD305.18 billion last year."Shell delivered a very strong financial performance in 2018, with cash flow from operations of USD49.6 billion, excluding working capital movements," said Chief Executive Ben van Beurden.Unilever posted a significant increase in profit in 2018 with strong margin progression and improved sales in developed markets after a "stand-out year for ice cream" in Europe.The consumer goods company, which owns brands such as Dove soap and Ben & Jerry's ice cream, reported a pretax profit of EUR12.38 billion, up 53% from EUR8.15 billion in 2017.Unilever said that this was the result of improved margins, with its underlying operating margin improved to 24.6% from 16.5%.Unilever's revenue fell to EUR50.98 billion in 2018 from EUR53.72 billion in 2017, due to currency headwinds and the disposal of its spreads business in July, it said.Distiller Diageo said volumes, revenue and profit grew in its first half as it backed its guidance for the year.Volumes for the first half grew 4% organically to 130.5 million, as sales in the six months to the end of December rose to GBP10.36 billion from GBP9.93 billion a year ago.Pretax profit climbed to GBP2.63 billion from GBP2.20 billion. The firm raised its dividend by 5% to 26.1p from 24.9p a year ago."This half has benefitted from some one-time and phasing gains in both organic net sales and operating profit, and therefore we continue to expect to deliver mid-single digit organic net sales growth for the year and to expand operating margins in line with our previous guidance of 175 bps for the three years ending 30 June 2019," said Chief Executive Ivan Menezes.Telecommunications firm BT said year-to-date revenue fell but profit was boosted by lower specific item costs.Revenue for the nine months to December 31 fell 1% to GBP17.56 billion, as pretax profit jumped 20% to GBP2.09 billion. Profit was boosted by lower specific item costs, including the settlement of EE acquisition warranty claims in the prior year, and the release of provisions relating to settlement of various matters in the Italian business.The FTSE 100 constituent said its outlook for the financial year remains unchanged, with BT expecting earnings before interest, taxes, depreciation and amortisation around the top end of guidance. "We continue to expect regulation, market dynamics, cost inflation and legacy product declines to impact in the short term before being more than offset by improved trading and cost transformation by our 2020/21 financial year," said outgoing Chief Executive Gavin Patterson. In the FTSE 250, Dairy Crest backed its annual outlook after its "key brands" delivered an "exceptional" performance in the third quarter. The dairy company's key brands - Cathedral City cheese, Clover spread, Country Life butter and Frylight spray - all delivered strong volume and revenue growth for the three months to December 31, the firm said. On a combined basis, the four brands generated revenue growth of around 10% for the third quarter and 6% for the nine months.Soft drinks maker Britvic said first quarter trading was in line with expectations, with reported revenue up 4.5% to GBP352.4 million and organic revenue, excluding the UK sugar levy, up 1.5%."We have delivered a solid start to the new financial year, with performance in line with our expectations. Given the resilience of our business, the strength of our portfolio and exciting marketing and innovation plans, we are confident of making further progress in 2019," said Chief Executive Simon Litherland.In Asia on Thursday, the Japanese Nikkei 225 index closed up 1.1%. In China, the Shanghai Composite ended up 0.4%, while the Hang Seng index in Hong Kong is up 1.1%.China's manufacturing activity improved slightly in January, official data showed overnight, as the world's second largest economy feels the effects of a prolonged trade war with the US.The manufacturing purchasing managers index came in at 49.5 in January, edging up from 49.4% in December, the National Bureau of Statistics said.The indicator fell below the critical threshold of 50 last month, for the first time in two years. A figure below 50 indicates contraction. The second month of manufacturing contraction comes as a high-ranking Chinese delegation met with US representatives on Wednesday for trade talks expected to be made more complicated by the recent US judicial moves against tech giant Huawei.The sides have about a month to reach a deal before a deadline which will see the US impose a new set of tariffs on China.US Commerce Secretary Wilbur Ross last week indicated the gaps were still "miles and miles" wide. However, Mnuchin on Tuesday said he expected "significant progress" on core issues, including forced technology transfers and market access.To come in the economic events calendar on Thursday are German unemployment figures at 0855 GMT and Italian and eurozone GDP readings at 0900 GMT and 1000 GMT respectively.
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