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LONDON (Alliance News) - London share prices are set to open higher Tuesday, as the Reserve Bank of Australia has kept its interest rates on hold against market expectations.
IG futures indicate the FTSE 100 to open 5 point higher at 6,945.8. The index closed down 0.1% at 6,940.64 on Tuesday, with weak oil prices weighing in the blue-chip index, having touched a new record intraday high of 6,974.26 after British manufacturing activity was reported to be the strongest in seven months.
The monetary policy board from the Reserve Bank of Australia maintained the cash rate at 2.25% after lowering it by 25 basis points last month, and some economists had expected the bank to lower rates further this month.
"Having only just cut rates last month, the central bank probably thought it best to assess the effects of last month?s action, as well as seeing whether China?s attempts to boost its economy prompted a trickle-down effect to the Australian economy as well," says Michael Hewson, chief market analyst at CMC Markets.
On Saturday, The People's Bank Of China said it has cut its one-year lending rate by 0.25 percentage point to 5.35%. The bank made the rate cut in order to stimulate the world's second-largest economy amid concerns of slowing economic growth.
"Greece in particular continues to be a cause for concern with contradictory noises coming out of Athens with respect to the government?s willingness to abide by the agreement that appeared to be sealed last week," writes Hewson. "There still appears to be significant pushback from politicians in Athens about abiding by the terms of the current bailout agreement."
The Mediterranean country on Monday said it will not have any problem meeting its financial obligations in March, after reports indicated that Greece might have difficulty repaying its international creditors in the coming months.
"The public should not be concerned...the Greek government has been looking for solutions to ensure there are no problems in paying the IMF and the other financial commitments we have in March," government spokesman Gavriil Sakellaridis said. He said the government would not have any trouble meeting its financial obligations, including a EUR1.5 billion International Monetary Fund repayment, this month.
German retail sales came in Tuesday better-than-expected for the month of January, rising 5.3% year-on-year, with consensus expecting it to rise by 2.7%, after a previous reading in December of 4.8%, while month-on-month data rose 2.9%, with consensus expecting 0.4%, after a previous reading of 0.6%.
In London, Barclays reported an improvement in last year's adjusted pretax profit figures but said results were dragged down by a new GBP750 million provision for ongoing investigations and litigation into alleged manipulation of the foreign exchange market, as well as a further GBP200 million provision relating to mis-sold insurance. Barclays maintained its dividend at 6.5 pence per share.
British American Tobacco said its Brazilian unit British American Tobacco Prestação de Serviços has filed a request with the Brazilian securities regulator to register a public tender offer to acquire up to all of the 24.7% of Souza Cruz shares which are not currently owned by BAT and to delist the company.
In a statement, the tobacco company said it is offering BRL26.75 a share in cash for the remaining Souza Cruz stake, minus any dividend paid by Souza Cruz. That price would be a 30% premium to Souza Curz's volume weighted average closing share price over the three months to February 20.
Ashtead Group said it now expects its full-year results will be above its previous expectations, after it reported strong growth in third-quarter earnings driven by strong revenue growth in both its US and UK operations.
The equipment rental company reported a pretax profit of GBP109.9 million for the three months to January 31, the third quarter of its financial year, up from GBP77.9 million a year earlier, as revenue rose to GBP512.9 million, from GBP400.1 million. Rental revenue rose by a quarter to GBP462.9 million, from GBP354.2 million.
Wall Street ended higher Monday. The DJIA, up 0.9%, and the Nasdaq Composite, up 0.9%, reached new record closes. The S&P 500 ended up 0.6%.
In Asia on Tuesday, the Japanese Nikkei 225 closed down 0.1%, and the Hang Seng trades down 0.4%. The Shanghai Composite is trading down 2.2%.
Brent crude is quoted at around USD60.27 a barrel Tuesday, and US benchmark West Texas Intermediate is quoted at USD49.90 a barrel. Gold is quoted early Tuesday at USD1,208.95 an ounce.
In the economic calendar Tuesday, UK construction PMI is at 0930 GMT. Eurozone producer prices are at 1000 GMT. In the US, Redbook index is at 1350 GMT, and ISM New York index is at 1445 GMT.
Also in the corporate calendar Tuesday, Glencore, Direct Line Insurance Group, Clinigen Group, Costain Group, Impellam Group, Breedon Aggregates, Devro, Jardine Lloyd Thompson, James Fisher & Sons, Laird and Moneysupermarket.com Group released full-year results. Johnson Service Group provided first-quarter results, and Stagecoach Group issued an interim management statement.
By Daniel Ruiz; danielruiz@alliancenews.com
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