25th Feb 2015 10:31
LONDON (Alliance News) - London shares are trading broadly down Wednesday amid a flurry of UK corporate news, with Weir Group shares plunging after the oil and gas company warned it is preparing for a "significant reduction" in revenue and operating margins in 2015
FTSE 100 was trading down 0.3% at 6,932.08 points at mid-morning, looking a bit tired after reaching a new record intraday high of 6,958.89 on Tuesday, when it was boosted by the news of an agreement to extend Greece's bailout and by Federal Reserve Chair Janet Yellen saying US interest rates won't rise immediately.
The FTSE 250 was trading down 0.2% at 17,175.73, while the AIM All-Share was down 0.2% at 710.58.
"Yellen's message yesterday pretty clear. The ?patient' term may be dropped in March and a June hike is still on the cards, but it would not take much to make them delay the first hike, yet again," says Societe Generale analyst Kit Juckes.
"The fact that the Federal Reserve still has doubts about the US economic recovery after the addition of nearly 1 million jobs in the last four months speaks volumes about the FOMC?s view on the US economy, and suggests that some members are concerned about the effect that falling global prices are having, in respect of inflation expectations in the US," says Michael Hewson, chief market analyst at CMC Markets.
Yellen indicated the Fed is keeping a keen eye on Europe, where the recovery has been far less robust. "Foreign economic developments...could pose risks to the outlook for US economic growth," she said.
On Tuesday, Eurozone finance ministers agreed to extend the European share of Greece's debt bailout by four months, although they demanded that the SYRIZA-led government must still meet reform targets in the coming months to keep receiving funds from its creditors. The International Monetary Fund, another of its creditors, expressed doubt about the reforms pledged by Athens in return for continued loans.
"The agreement, still needs to go to a vote in the German parliament later this week, where there remains a great deal of scepticism about the new Greek government?s reliability, though it should get enough votes to pass after German finance minister Schaeuble endorsed it," says Hewson.
European indices were trading flat to lower, with the CAC 40 in Paris and DAX 30 in Frankfurt both down 0.1%. The German index joined the FTSE 100 in reaching a new all-time high in Tuesday's session.
UK mortgage approvals increased in January for the first time since June, the British Bankers' Association reported Wednesday. Mortgage approvals for house purchases rose to 36,394 from 35,816 in the prior month. Economists had forecast it to rise to 36,000. But approvals were 20% lower than last January.
In London, Weir Group is the biggest faller in the FTSE 100, down 9.8%. The oil and gas service company warned it is preparing for a "significant reduction" in revenue and operating margins in 2015, but increased its full-year dividend, saying it was for the 31st consecutive year, despite reporting a small drop in 2014 earnings.
St James's Place is the best performer in the blue-chip index, up 4.5%. The wealth management and financial advice group said its operating profit on a European embedded value (EEV) basis rose by 29% to GBP596.4 million in 2014, ahead of the GBP533.4 million consensus forecast by financial analysts. Its underlying cash result rose by 24% to GBP173.8 million, prompting a 46% rise in its dividend for the year as a whole to 23.30 pence per share.
The full numbers for the company's last financial year come after last month's update that showed an 18% rise in funds under management, bolstered by a rise in new business sales and the success of a business model under which it provides face-to-face wealth management advice to clients.
Mondi, up 2.6% at 1,341 pence, and Sky, up 2.7% at 1,001p, also are among the best performers in the blue-chips index. Credit Suisse raised Mondi's price target to 1,485p from 1,290p, keeping its Outperform rating, while Citigroup raised Sky's price target to 1,200p from 1,075p, putting the broadcaster in its "Focus List".
Whitbread is another big gainer, up 2.3%, as the hotel and coffee-shop chain operator reported like-for-like growth of 5.8% in the fourth quarter of its financial year, as its Premier Inn hotels and Costa coffee chain continued to grow sales and win UK market share, leaving the group confident of delivering full-year results towards the top end of expectations.
Wm Morrison Supermarkets, up 1.7% among the best performers, has appointed former Tesco executive David Potts as its new chief executive, a role that will involve a push to turnaround the ailing grocer in the face of tough competition from German discounters Aldi and Lidl.
In the FTSE 250, AO World shares are down 28% after the online domestic appliances retailer issued a profit warning following a weaker-than-anticipated fourth quarter for its UK business.
Still in the economic calendar Wednesday, ECB's President Mario Draghi will speak in ECB's annual report in Brussels at 1430 GMT. In the US, at 1500 GMT Fed Chair Janet Yellen will speak in the second day of the semi-annual monetary policy meeting in front of the House financial services committee. New home sales data is due is at 1500 GMT, while EIA crude oil stocks change is at 1530 GMT
China's manufacturing sector rebounded unexpectedly in February as the PMI rose to its highest level in four months, flash figures from Markit Economics showed Wednesday. The HSBC flash manufacturing purchasing managers' index rose to a four-month high of 50.1 in February from 49.7 in January. Economists expected the index to come in at 49.5.
US futures point to a flat to lower opening, with the DJIA flat and the S&P 500 down 0.1%, both having reached new record closing highs on Tuesday. The Nasdaq 100 is pointed down 0.2%.
By Daniel Ruiz; [email protected]
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Related Shares:
SkyWeir GroupMRW.LSt James's PlaceWhitbreadAo WorldMondi