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LONDON (Alliance News) - London stock prices are higher Wednesday mid-morning, with shares across the FTSE 100 and FTSE 250 mostly driven by UK earnings updates, while the wider market awaits a US Federal Reserve decision on interest rates expected at 1900 BST.
The FTSE 100 index is up 0.5% at 6,589.53, the FTSE 250 is up 0.4% at 17,451.87, and the AIM All-Share is up 0.1% at 749.95.
European major indices also are higher, with the CAC 40 in Paris and the DAX 30 in Frankfurt both up 0.4%.
On the London Stock Exchange, Hikma Pharmaceuticals is the best blue-chip performer, up 3.5%, after Jefferies upgraded the company to Buy from Hold. The rating change comes after Hikma agreed Tuesday a USD2.65 billion deal to acquire Roxane Laboratories and Boehringer Ingelheim Roxane from Boehringer Ingelheim, the German pharmaceutical company.
British American Tobacco is up 2.8% after it reported growth in profit in the first half of 2015. The tobacco company said revenue was hit by adverse exchange rate movements, but it said it remains confident it will deliver an improved performance in the second half of the year.
BAT reported a rise in pretax profit in the six months to June 30 to GBP3.5 billion from GBP2.6 billion, as revenue grew 2.4% at constant rates to GBP7 billion from GBP6.8 billion but declined 5.9% to GBP6.4 billion at current rates
Barclays is up 1.4% after the bank reported a big increase in second-quarter net profit, and revealed plans to intensify the scaling down of its non-core assets.
In its first set of results since the board sacked Antony Jenkins as chief executive earlier this month, Barclays said it is now planning to reduce non-core risk-weighted assets to about GBP20 billion by the end of 2017, when Chairman John McFarlane expects it will be put back into the group's core division and managed down, changing previous guidance of reducing non-core risk-weighted assets to GBP45 billion at the end of 2016. The bank's net profit increased to GBP1.15 billion in the quarter ended June 30, compared with GBP161 million in the corresponding period the prior year.
Among blue-chips in the red, Compass Group is down 4.0%. The catering services and outsourcing company said sales growth in the third quarter was slightly slower than the 5.5% growth it registered in the first nine months of the year. However, it said it is having a strong year, though it will book some restructuring charges related to its offshore and remote business.
Capita is down 2.4% after the outsourcing company said its pretax profit fell in the first half of 2015 despite a rise in revenue, as the group said it has won more contracts in the period and hiked its interim dividend. It said its pretax profit in the half to the end of June was GBP146.1 million, down from GBP152.3 million a year earlier, despite revenue rising to GBP2.29 billion from GBP2.07 billion.
RSA Insurance Group is down 2.2% Wednesday after rising 16% on Tuesday, when Switzerland-based Zurich Insurance confirmed that it is running the rule over RSA. Later in the day on Tuesday, RSA said it has yet to hold any talks with Zurich and has not received any proposal from the Swiss insurer. Early on Wednesday, Zurich said that should it make any offer for RSA Insurance, the offer would be made solely in cash.
Sky is down 1.8% at 1,105 pence after opening amongst the best performers at 1,162.00p. The broadcaster increased its full year dividend as it posted a rise in pretax profit. It said pretax profit was GBP1.52 billion for the year to end-June, up from GBP1.03 billion a year before, as revenue rose to GBP9.99 billion from GBP7.45 billion. The reported results include Sky Italia and Sky Deutschland following their acquisition in November.
On an adjusted basis, including the results of the Italian and German business for the full year and at constant currency, pretax profit rose to GBP1.20 billion, up from GBP1.13 billion a year before, on revenue of GBP11.28 billion, up from GBP10.78 billion. The company proposed a final dividend of 20.5 pence, which takes its total dividend for the year to 32.8 pence, up from 32.0 pence a year before.
St James's Place is down 1.3%. The wealth manager and financial advice company said it has agreed to acquire Rowan Dartington Holdings, a stockbroker and discretionary investment manager with more than GBP1 billion in funds under management. The acquisition was revealed as St James's Place said it had a net inflow of funds under management of GBP2.67 billion in the six months to the end of June, compared with GBP2.44 billion in the corresponding period the prior year. St James's Place pretax profit for the first half fell to GBP103.7 million from GBP110.4 million year-on-year.
In the FTSE 250, Foxtons Group is up 8.6%. The estate agency said it expects to meet market expectations for its full year, as it posted a fall in pretax profit for its first half. It posted a pretax profit of GBP18.1 million for the half year to end-June, down from GBP23.1 million a year before, as revenue fell to GBP71.1 million from GBP72.8 million and administrative costs rose to GBP53.0 million from GBP49.8 million as a result of an increase in the company's branch network.
The fall in revenue came predominantly from lower sales, which offset rises in lettings and mortgage broking, Foxtons said, adding that sales market had remained constrained ahead of the UK General Election in May.
Man Group is up 7.3%. The alternative investment manager reported stronger first-half profit after generating higher performance fees, and said it remains cautious about the remaining months of the year due to "very challenging" financial markets. It said it made a USD163 million pretax profit in the six months to the end of June, compared with USD106 million in the corresponding period the prior year, as performance fees doubled to USD200 million.
Premier Farnell is down 15%. The technology products and services company warned it now expects its adjusted operating profit for its first half to be down 10% compared to the previous year, hit by slowing sales, challenging market conditions and the continued weakness of the euro. As a result it now expects adjusted operating profit to be down around 6% compared to the previous year. Premier Farnell said this guidance excludes a potential GBP2.0 million provision release related to the successful outcome of a potential legal action.
Meanwhile, Lancashire Holdings, down 4.8%, reported an 11% drop in second-quarter pretax profit, with the value of gross premiums written by the specialty insurer down and a key indicator of underwriting profit weakening. It said its pretax profit decreased to USD37.1 million in the three months to the end of June, compared with USD41.5 million in the corresponding quarter the prior year, as gross written premiums fell by 44% to USD179.3 million. Net investment income was down by 8.0% to USD7.0 million.
Outside UK corporate news, later in the day, attention will shift to the US Federal Open Market Committee two-day meeting, with its interest rate announcement due at 1900 BST.
The US Federal Reserve is widely expected to leave US interest rates unchanged at the meeting. However, investors will pay attention to the accompanying monetary policy statement after a recent hawkish speech and Congressional testimony by Fed Chair Janet Yellen intensified expectations that the bank will hike rates later this year.
"All eyes are on an FOMC announcement that comes after the London [equity markets] close and carries a significant risk of being a non-event if the Fed decides that 'data-dependence' is inconsistent with steering expectations," says Kit Juckes, analyst at Societe Generale.
"The front end of the [US] Treasury curve hasn't got overly-excited about Fed tightening yet. Complacency or just a realistic market reaction to over-frequent cries of 'wolf' by the Fed-watching community?", Juckes writes. "Either way, a failure to send a signal after the FOMC meeting sees attention move on to the upcoming data - starting with GDP tomorrow - and increases the risk that when (or if) the Fed does finally hike, there will be an adverse reaction."
In Greece, the country's government launched negotiations Tuesday on a new multi-billion-euro bailout programme, insisting that it has taken all the measures agreed with creditors for reaching a deal. Representatives of Greece's creditors started talks at a technical level, visiting Greece's General Accounting Office and the Bank of Greece, a Greek finance ministry official said Tuesday.
The same official said "technical groups are expected to complete their work by Friday 31 July" adding that no further meetings are expected during the weekend, "unless otherwise specified".
According to the same official, mission chiefs of the institutions overseeing the bailout - the European Commission, the European Central Bank, the International Monetary Fund as well as the European Stability Mechanism are expected to arrive in Athens on Wednesday. The official said both sides aim to complete the deal "as soon as possible."
Alongside the Fed interest rate decision, in the US economic calendar are pending home sales are due at 1500 BST, while EIA crude oil stocks are at 1530 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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