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Burberry Alliance News (BRBY)

Alliance News for Burberry (BRBY)

Share Price: 1,795.00Bid: 1,797.00Ask: 1,798.00Change: 42.00 (+2.40%)Riser - Burberry Grp
Spread: 1.00Spread as %: 0.06%Open: 1,754.50High: 1,799.00Low: 1,738.00Yesterday’s Close: 1,753.00

LONDON MARKET OPEN: Dovish BoE Deputy Governor Drags Down Sterling

Wed, 12th Jul 2017 08:43

LONDON (Alliance News) - Stock prices in London opened higher in London, as dovish comments from the deputy governor of the Bank of England weighed on the pound while oil prices rallied, and Burberry Group was the early standout performer on the back of a strong trading update.

The FTSE 100 index of large caps was up 0.7%, or 47.67 points at 7,377.43. The FTSE 250 index was up 0.6% at 19,327.96 points, and the AIM All-Share index was up 0.3% at 957.65.

The BATS UK 100 index was up 0.8% at 12,527.65, and the BATS 250 was rising 0.6% at 17,545.58. The BATS Small Companies was up 0.3% at 11,946.14.

The pound was quoted at USD1.2819 early Wednesday, falling from USD1.2850 at the London equities close on Tuesday.

Sterling dropped in early trading on Wednesday following the publication of an interview with Ben Broadbent, deputy governor of the Bank of England, with the Press & Journal newspaper during a visit to Aberdeen. Broadbent said he is "not ready" to vote for a rate in interest rate rises due to uncertainty in the mood of UK businesses.

Attention will now turn to UK employment and average earnings data at 0930 BST, to see if low rates of joblessness are pushing up wages to help consumers struggling with rising inflation.

"We expect employment to have increased by 100k in the three months to May. This should be sufficient to push the unemployment rate down to 4.5% from 4.6% - a new cyclical low and to around the BoE?s estimate of the equilibrium rate. Balanced against this, however, headline wage growth is expected to remain weak and drop below 2% for the first time since early 2015," said analysts at Lloyds.

In early UK corporate news, fashion chain Burberry was the top performer in the FTSE 100, rising 4.3%.

The luxury retailer said retail revenue in the three months to June 30 rose by 13% year-on-year, boosted by favourable movements in foreign exchange rates when overseas sales are translated back into the weak pound, while growing by 3% on an underlying basis to GBP478.0 million. Like-for-like sales grew by 4%.

Burberry maintained its guidance for full-year adjusted pretax profit at constant exchange rates. It said that if foreign exchange rates remain as they are currently, reported adjusted pretax profit will face a GBP25.0 million hit, lower than its previous guidance of a GBP30.0 million hit.

Also rising was Barratt Developments, up 1.5% as the housebuilder said it expects its annual profit to be better than market forecasts and delivered its highest number of home completions for nine years.

Barratt expects pretax profit to increase to about GBP765.0 million for the financial year ended June 30, up from GBP682.3 million the previous year and ahead of market expectations. Barratt said that according to Reuters, the consensus estimate range for pretax profit is between GBP699.0 million to GBP740.0 million.

At the other end of the blue-chip index was technology firm Micro Focus International, down 3.7%, as it said its pretax profit for its financial year to April 30 dropped 29% to USD196.3 million from USD278.1 million the prior year on a pro-forma basis. This included exceptional costs of USD97.3 million, including pre-acquisition costs for its merger with Hewlett Packett Enterprises.

In the FTSE 250 index, proposed merger partners Amec Foster Wheeler and John Wood Group were down 6.7% and 5.3%, respectively. Amec Foster Wheeler said late Tuesday it is subject to a UK Serious Fraud Office Investigation for possible bribery and corruption, but said the investigation is not expected to impact the two firms' proposed merger. Energy services firm John Wood said it was too early to tell what the impact of the probe would be.

Meanwhile, Brent oil was trading at USD48.32 a barrel in early trading on Wednesday, rising from USD47.16 a barrel at the London equities close on Tuesday. US API crude oil stocks data on Tuesday evening showed an inventory drawdown of 8.1 million barrels, and the US Energy Information Administration lowered its forecast for 2018 crude production.

In mainland Europe, the CAC 40 index in Paris was up 0.6%, and the DAX 30 in Frankfurt was 0.4% higher.

In Asia, the Japanese Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong is up 0.7%.

Wall Street ended mixed on Tuesday, with the Dow Jones Industrial Average flat, the S&P 500 index down 0.1% and the Nasdaq Composite up 0.3%.

The choppy trading on Wall Street came as traders remained reluctant to make significant moves ahead of Federal Reserve Chair Janet Yellen's semi-annual testimony before Congress. The comments from Yellen could have a significant impact on the outlook for interest rates ahead of the central bank's monetary policy meeting later this month.

"It is likely she reiterates that one further rate hike this year and a start to the balance sheet reduction process are plausible this year. Although, with this being predicated on the assumption that the recent dip in inflation will be transitory, she is likely to be grilled on this, particularly given the continued weakness of headline CPI," said Lloyds analysts.

After the UK jobs data at 0930 BST, EU industrial production is at 1000 BST. US MBA mortgage applications are released at 1200 BST, before Fed Chair Yellen's testimony before Congress.

By Adam Clark; adamclark@alliancenews.com

Copyright 2017 Alliance News Limited. All Rights Reserved.

Alliance News

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