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LONDON (Alliance News) - UK shares have opened higher Tuesday, taking heart from better-than-expected Chinese GDP data, even as the International Monetary Fund followed the World Bank in downgrading its global growth outlook.
A reported fall in German producer prices is likely to further stoke expectations of an announcement of full quantitative easing by the European Central Bank later in the week.
Shares in 3i Infrastructure are leading all FTSE 350 gainers, up 5.1%, after saying it will sell its entire stake in UK train leasing company Eversholt Rail Group to a Hong Kong-based infrastructure company, generating estimated proceeds of about GBP358 million.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: up 0.4% at 6,613.19
FTSE 250: up 0.3% at 16,118.83
AIM ALL-SHARE: up 0.2% at 699.10
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Hang Seng: closed up 0.9% at 23,951.16
Nikkei 225: closed up 2.1% at 17,366.30
DJIA: market closed for holiday Monday
S&P 500: market closed for holiday Monday
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GBP-USD: down at USD1.5096
EUR-USD: down at USD1.1578
GOLD: up at USD1,278.75 per ounce
OIL (Brent): down at USD48.49 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in GMT)
09:00 Italy Trade Balance
10:00 Germany ZEW Survey
10:00 EU ZEW Survey
13:30 Canada Manufacturing Shipments
13:55 US Redbook index
15:00 US FOMC Member Powell Speech
15:00 US NAHB Housing Market Index
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The International Monetary Fund downgraded its global growth outlook as positive effects of lower oil prices and depreciation of euro and yen are more than offset by persistent negative forces. In its World Economic Outlook Update, the Washington-based lender said the global economy is set to grow 3.5% this year, down from the prior forecast of 3.8%. For 2016, growth is projected to be at 3.7% instead of 4%.
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The Chinese economy grew at the weakest pace since early 2009 in the fourth quarter, though the growth was more than the consensus estimate, data from the National Bureau of Statistics showed. Gross domestic product grew 7.3% in the fourth quarter from a year ago, the same rate as in the third quarter. This was the weakest growth since the first quarter of 2009. However, the growth was stronger than the 7.2% rise forecast by economists. Quarter-on-quarter, GDP rose by a seasonally adjusted 1.5%, slower than the 1.7% increase expected by economists. In the third quarter, GDP had grown 1.9%. For the year 2014, GDP was up 7.4%, the same rate as for the first three quarters of the year. The growth rate was more than the 7.3% consensus estimate.
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China's industrial production grew more than expected in December, data from the National Bureau of Statistics showed. Industrial production rose 7.9% year-over-year in December following the 7.2% growth in November. Economists had expected production to rise 7.4%.
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Germany's producer prices declined at the fastest pace since March 2010, data from Destatis showed. Producer prices fell 1.7% year-on-year in December, the biggest fall since March 2010 when it declined 1.8%. Prices decreased for 17 consecutive months. Economists had forecast producer prices to drop 1.4% after easing 0.9% in November.
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Denmark's central bank on Monday lowered its lending and deposit rate by 0.15 percentage point, in a surprise move taken in the wake of the Swiss decision to stop supporting a minimum exchange rate with the euro. The Danish central bank's new lending rate, effective as of Tuesday, is 0.05%, while the deposit rate is minus 0.20%.
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The government in Kiev accused Russia of sending hundreds of additional troops into separatist-controlled regions as the fighting in eastern Ukraine widened Monday. Heavy artillery battles were reported from Mariupol, where a standoff between pro-Russian militias and government forces has held since the southern city was returned under Kiev's control in the summer. Initial media reports said four Ukrainian soldiers were injured.
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BROKER RATING CHANGES
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TRADERS: BARCLAYS CUTS EVRAZ TO 'UNDERWEIGHT' ('EQUAL W.') - TARGET 120 (150) PENCE
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TRADERS: BARCLAYS RAISES CRODA TO 'EQUAL WEIGHT' ('UNDERWEIGHT'); RAISES PRICE TARGET TO 2,800 (2,180) PENCE
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COMPANIES - FTSE 100
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Anglo-Dutch consumer goods giant Unilever reported higher revenue and sales growth in the final quarter of 2014, capping profit growth for the full year, but the group highlighted a cautious outlook for 2015. Unilever said it faced "significant economic headwinds and weak markets" in the year just ended, yet managed to deliver sales growth and margin expansion. However in 2015, the group said it expects similar market conditions and competitive pressure. Unilever reported pretax profit of EUR7.98 billion for 2014, up 7% at current exchange rates from EUR7.11 billion the year before. Although revenue declined by 2.7% for the year to EUR48.4 billion from EUR49.8 billion, underlying sales growth was up 2.9%, buoyed by volume and price increases, up 1% and 1.9% respectively. If exchange rates had stayed the same, Unilever said revenue for the year would have risen by 2%.
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Rio Tinto said its global iron ore shipments rose 17% to 302.6 million tonnes in the fourth quarter of 2014, while total production hit 295.4 million tonnes, up 11% year-on-year. Rio Tinto's share of production in the period was 12% higher than in 2013. Of the global iron ore shipments, the group's share totalled 239.9 million tonnes, while its share of the total production volume was 233.6 million tonnes. The company noted that mined copper production for the year was 4% higher than last year, driven by the sustained ramp-up at its Oyu Tolgoi mine in Mongolia. This ramp-up, along with higher grades at both Oyu Tolgoi and Kennecott in the US, resulted in a 69% increase in mined gold production over 2013.
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Royal Dutch Shell will sell a stake in one of its crude-producing projects in Brazil to HRT Participacoes em Petroleo SA, Bloomberg reported citing two people familiar with matter. The report indicated that HRT, based in Rio de Janeiro, has agreed to buy Shell's 80% stake in the Bijupira and Salema fields, an offshore venture that started production in 2003. HRT will boost production to more than 30,000 barrels a day with the purchase.
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Capita said it had won a six-year contract extension with Sheffield City Council that it thinks is worth between GBP140 million and GBP170 million in revenue. In a statement, the outsourcing and support services giant said the new deal to run the council's ICT, revenues, benefits, HR and payroll and financial business transactions services, will run from January 2016 to January 2022.
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UK car insurance premiums rose at a slower rate over the final three months of last year than in the previous quarter, though further increases are expected as insurers continue to raise premiums. The AA British Insurance Premium Index's average 'shoparound' quote for an annual comprehensive car insurance policy increased to GBP540.26 in the fourth quarter of 2014, up 0.2% from the third quarter. That compares with a quarter-on-quarter rise of 1.2% in the third quarter, which was the first increase in three years, though premiums are 10% cheaper than this time last year.
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TSB Banking Group is opening its range of mortgages to brokers across the UK, a move that has been seen as vital to the bank's development as a challenger to the traditionally strongest lenders on the high street, according to a Financial Times report. TSB had previously offered mortgages only through its branch network.
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COMPANIES - FTSE 250
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IG Group reported a 2.8% rise in first-half pretax profit, but said it expects full-year earnings and profit to be hurt by losses stemming from the Swiss National Bank's surprise decision to remove its cap on the franc against the euro, though IG said it intends to maintain its full-year dividend at last year's level. IG said it made a GBP101.4 million pretax profit in the six months ended November 30, compared with a GBP98.6 million pretax profit in the corresponding period in the prior year. IG's first-half results come just days after the financial trading services provider said it was facing a loss of up to GBP30 million due to Swiss franc trading losses. Its first-half results included the breakdown of those losses, with GBP12 million from market exposure and GBP18 million relating to client credit.
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LondonMetric Property said it has exchanged contracts on the GBP56.5 million acquisition of a distribution facility in Dagenham in east London. LondonMetric will buy the 410,000 square foot distribution centre, which is let to Eddie Stobart Ltd, for GBP56.5 million, reflecting a net initial yield of 5.1%.
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Balfour Beatty said it has recruited Phil Harrison from corporate services company Hogg Robinson Group to take up the role of finance director. Harrison will take up the position and join the board of the FTSE 250-listed support services and construction company later in the year, Balfour said, without providing a specific date. Hogg said Harrison will remain in the role at least until its full-year results are announced in May 2015.
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William Hill said revenue and adjusted operating profit fell in the fourth quarter of 2014 as football results went against it over the Christmas holidays, and it suffered a similar fate in the third week of 2015 although it said it has started the new year in a strong position. The company also said it will rebrand its Australian operations to the William Hill brand. In a trading statement, the betting operator said net revenue was down 2% in the 13 weeks to December 30, while its adjusted operating profit, which excludes exceptional items and some amortisation, fell 7%.
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3i Infrastructure said it will sell its entire stake in UK train leasing company Eversholt Rail Group to a Hong Kong-based infrastructure company, generating estimated proceeds of about GBP358 million. Eversholt is one of three train rolling stock leasing companies in the UK, and it owns about 28% of the current UK passenger train fleet. The leasing companies lease the stock to the train operating companies, and Eversholt leases to 11 of those operators.
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Petrofac Consortium Wins USD4B Kuwait Heavy Oil Project; Consortium To Work On First Phase Of Lower Fars Heavy Oil Programme
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COMPANIES - LONDON MAIN MARKET AND AIM
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Dairy Crest Group said it has retained its contract to supply fresh milk to Wm Morrison Supermarkets for a further three years, although it will supply about a third less milk than it had been supplying to the grocer previously. In a statement, the dairy company said it does not expect the volume decline to materially affect its financial results for the current financial year ending March 31, 2015. However, the volume decline only comes into effect in March. Dairy Crest said it will also continue to supply Morrisons with cheese, flavoured milk, butter and spreads.
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Dragon Oil said revenue and production increased during 2014, with expectations for further increases to continue over the next two years despite slashing its capital expenditure for 2015. Total revenue for 2014 is expected to total around USD1.1 billion, a slight increase from the USD1.0 billion reported a year earlier. All the company's revenue currently comes from its operations in Turkmenistan.
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COMPANIES - INTERNATIONAL
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Business software maker SAP said profit after tax on an IFRS basis was EUR1.304 billion, compared to EUR1.319 billion last year. Earnings per share were EUR1.09 while they were EUR1.10 in the previous year. Non-IFRS profit after tax grew 3% to EUR1.564 billion from EUR1.522 billion. Total revenue grew 7% to EUR5.458 billion from last year's EUR5.106 billion. Non-IFRS revenue also grew 7% to EUR5.469 billion. For 2015, based on the strong momentum in SAP's cloud business, the company expects full year 2015 non-IFRS cloud subscriptions and support revenue to be in a range of EUR1.95 billion to EUR2.05 billion at constant currencies, compared to EUR1.10 billion in 2014.
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The UK's Serious Fraud Office announced it has closed its investigation into the technology giant Hewlett-Packard Co's troubled USD11.1 billion takeover of British software company Autonomy Corp. in 2011. The investigation had begun in early 2013 after a request from HP. The two year probe was closed as the U.K regulator concluded that there is insufficient evidence for a realistic prospect of conviction with the information available to it.
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Web services company AOL Inc is planning to close some websites as part of a restructuring at the company, according to reports citing a person with knowledge of the matter. The reports quoted the person as saying that the Web portal is looking to close underperforming sites and switch resources to other AOL-owned properties that are performing better, without specifying which sites are being considered for shutdown.
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Google is close to major investment in rocket maker SpaceX, creating a formidable alliance in Silicon Valley's accelerating Internet space race, tech blog The Information reported citing people familiar with the matter. The report noted that the purpose of a deal, which is still in the works, is to support the development of SpaceX satellites that could beam low-cost Internet around the globe to billions who don't have it.
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Tuesday's Scheduled AGMs/EGMs
The European Investment Trust
Lowland Investment Co
IS Solutions
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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