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LONDON (Alliance News) - UK shares have opened flat to higher Monday, as momentum from Friday's positive session starts to run out, amid no new macroeconomic drivers.
Cairn Energy is the leading riser in the FTSE 350 by far, up 7.7% after saying a second well offshore Senegal has discovered oil.
Serco shares are down 30% after cutting its profit guidance, announcing plans for a rights issue and saying it will pay no final dividend.
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 6,591.02
FTSE 250: flat at 15,469.37
AIM ALL-SHARE: flat at 722.15
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Hang Seng: closed up 0.8% at 23,744.70
Nikkei 225: closed down 0.6% at 16,780.53
DJIA: closed up 0.1% at 17,573.93
S&P 500: closed marginally higher at 2,031.92
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GBP-USD: up at USD1.5890
EUR-USD: down at USD1.2469
GOLD: down at USD1,171.78 per ounce
OIL (Brent): up at USD83.55 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
(all times in GMT)
09:00 Italy Industrial Output
09:30 EU Sentix Investor Confidence
10:00 Russia Foreign Trade
13:15 Canada Housing Starts
22:10 US Fed Boston President Rosengren Speech
23:50 Japan Bank lending
23:50 Japan Trade Balance and Current Account
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Chinese inflation remained unchanged near a 5-year low in October and exports grew at a slower pace from last year, reinforcing signs of a weak economic activity. Inflation held steady at 1.6% in October, which was the lowest rate seen since January 2010. The rate also matched economists' expectations. Another report from the NBS showed that factory gate prices continued its downward trend in October. Producer prices slid 2.2% from last year after decreasing 1.8% a month ago. The producer price index has been in negative territory for 32 consecutive months. Prices were expected to decline by 2%. Month-on-month, producer prices fell 0.4% in October.
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Chinese data over the weekend also showed that export growth decelerated in October. Exports advanced 11.6% from a year ago, slower than the 15.3% increase posted in September. Nonetheless, the rate of growth exceeded a 10.7% rise forecast by economists. Likewise, imports growth slowed to 4.6% from 7% in September. Economists had expected a 5% annual increase. Consequently, the trade surplus widened sharply to USD45.4 billion from USD30.9 billion in September and was above the expected level of USD42 billion.
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The recovery in the Irish construction sector gathered pace in October helped by increased new orders and improving economic conditions, survey data from Markit Economics showed. The Ulster Bank Construction Purchasing Managers' Index rose to a seasonally adjusted 64.9 in October from 61.5 in the prior month. The reading was the second highest since the survey began in June 2000.
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US President Barack Obama landed in Beijing early Monday ahead of a summit of Asian-Pacific regional leaders in the Chinese capital. He joins Russian President Vladimir Putin, Japanese Prime Minister Shinzo Abe and Australian Premier Tony Abbott - who arrived over the weekend - and other political leaders at the Asia-Pacific Economic Cooperation (APEC) summit meeting on Monday and Tuesday. Obama was due to hold talks with Abbott and new Indonesian President Joko Widodo on the sidelines of the summit. He is also expected to hold bilateral meetings with Chinese President Xi Jinping on Wednesday. One of the key topics during the regional forum will be trade, where the US and China are expected to push for progress on competing agreements.
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Chinese President Xi Jinping called for closer cooperation and greater economic integration at a meeting of business leaders of APEC Sunday. Xi dismissed concerns over a slowdown of growth in the second-largest economy. China's economic risks are "not that scary," he told executives of many of the world's largest companies ahead of the APEC summit. China's growth in the third quarter slid to 7.3%, its lowest level in five years.
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Obama on Sunday said the fight against Islamic State militants had entered a "new phase." US-led airstrikes have been "very effective" in halting the advances of the jihadist group while also diminishing its capacities, Obama said in an interview with CBS television. The time had come to go the offensive, the president said. "Now what we need is ground troops, Iraqi ground troops, that can start pushing them back," said Obama, who on Friday announced the deployment of another 1,500 US troops to Iraq.
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Ukraine on Sunday accused Russia of sending more troops and heavy weapons across the border into separatist-controlled areas in the country's east, and warned that Moscow was seeking a pretext to station peacekeepers there. The National Security Council said in Kiev that it believes that two convoys of heavy weapons and tanks observed by the Organization for Security and Co-operation in Europe (OSCE)came from Russia.
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The north-eastern Spanish region of Catalonia held a non-binding 'referendum' Sunday on whether to separate from Spain, despite opposition from the central government in Madrid. According preliminary results provided early Monday by Catalan vice president Joana Ortega, 2.25 million people participated in the vote. Of those, 80.1% voted to separate entirely from Spain, while 10.1% agreed that Catalonia should be its own state though still affiliated with Spain. Another 4.6% voted against Catalan independence in any form. Madrid called the vote "worthless."
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BROKER RATING CHANGES
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BERNSTEIN RAISES TESCO TO 'OUTPERFORM' ('MARKET-PERFORM') - TARGET 235 PENCE
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TRADERS: JPMORGAN CUTS BP TO 'NEUTRAL' ('OVERWEIGHT')
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S&P CAPITAL IQ CUTS NATIONAL GRID TO 'SELL' ('HOLD') - TARGET 800 (900) PENCE
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S&P CAPITAL IQ CUTS AVIVA TO 'SELL' ('HOLD') - TARGET 490 (520) PENCE
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UBS RAISES GENEL ENERGY TO 'BUY' ('NEUTRAL') - TARGET 875 (800) PENCE
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CITIGROUP INITIATES BOOHOO WITH 'BUY' - TARGET 60 PENCE
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CITIGROUP CUTS ASOS TO 'NEUTRAL' ('BUY') - TARGET 3100 (2600) PENCE
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COMPANIES - FTSE 100
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Hammerson said conditions are improving in its UK retail estate, while conditions in its French market remain subdued, although stable. In a statement, the commercial property company said UK shopping centre sales are up 2.6% so far in 2014, while French sales are down 2.8%. It reported that total rent from new group lettings are up 37%, and the total area of lettings is up 21%. Long-term leases so far in 2014 have been struck at 9% above estimated rental value, it added.
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Over 5,000 investors have joined a class action-style lawsuit filed against Lloyds Banking Group, claiming they lost around GBP400 million in the government-arranged takeover of HBOS at the height of the financial crisis, the Financial Times reported Sunday. Lawyers representing the claimants say the group has increased by around a third of the number of shares owned in the company within a fortnight, the FT said.
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Aviva said it has closed the initial public offering for its joint venture AvivaSA Emeklilik ve Hayat AS in Turkey. Aviva said the business is expected to be listed on Borsa Istanbul from November 13. The final price on the deal is TRY47 per lot of 100 shares, towards the top end of guidance at TRY41 to TRY49, giving the business a value of TRY1.68 billion.
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COMPANIES - FTSE 250
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Outsourcing company Serco cut its operating profit guidance for 2014 and 2015, said it would book about GBP1.5 billion in impairments and onerous contract provisions, and said it would talk with its lenders about amending the covenants on its debt as it proposed a equity rights issue to shore up its balance sheet.
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Cairn Energy saw its shares rise at the open after it announced it has made a second oil discovery in its exploration programme offshore Senegal. The second well, SNE-1, is in the Sangomar offshore block, with a target depth of 3,000 metres to target the Shelf Edge prospect. Intermediate logging at the well has confirmed the presence of hydrocarbons that are similar to the oil discovery made at its first well, FAN-1, it said in a statement.
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Dignity posted a rise in revenue and underlying operating profit in the nine months to the end of September and maintained its full-year expectations as it said deaths came in line with guidance. The FTSE 250-listed funeral services company said its underlying operating profit in the 39 weeks to September 26 was GBP64 million, up 6.3% from the GBP60.2 million reported last year. Revenue in the period was up 3% to GBP196.4 million from GBP190.6 million. Dignity said the number of deaths in the third quarter was 129,000, up from the 122,000 a year earlier.
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International Public Partnerships said its portfolio of 112 public infrastructure investments continues to perform fully in line with expectations and it expects its net asset value to grow compared with its last report on June 30.
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Lonmin said it swung to a pretax loss after strike action in South Africa halted the company's production for five months of the year. For the year ended September 30, the company swung to a pretax loss of USD326 million, compared to a USD140 million profit in 2013. Revenue also fell to USD965 million compared to USD1.52 billion a year earlier. During the full year, Lonmin mined 6.1 million tonnes, a 48% decrease from the previous year.
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Redrow became the latest housebuilder to say that the UK housing market has returned to a more normal seasonal pattern after its recent boom and price rises have moderated, as it also cautioned that planning permissions were being hampered by political posturing ahead of next year's general election. In a statement ahead of the company's annual general meeting Chairman Steve Morgan said Redrow's sales rate per outlet per week for its regional businesses is 0.65, compared with the "abnormally high rate" of 0.87 in the summer of 2013.
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Just Retirement Group posted a big drop in sales in the first quarter after the group saw its individually written annuity volumes plummet following the pension reforms announced in the spring in the UK Budget. Total sales in the quarter to the end of September dropped 42% year-on-year, the FTSE 250-listed company said, with individually written annuity volumes dropping 59% in the wake of the pension reforms introduced in Chancellor George Osborne that removed the effective requirement for individuals in the UK to buy annuities to provide income in retirement.
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Workspace Group said it has acquired 160 Fleet Street in London for GBP29.7 million from administrators acting for the National Asset Management Agency. It is being acquired with an overall occupancy of 48%, at a net initial yield of 3.7%, and at a capital value of GBP549 per square foot. A banking hall in the building is let to NatWest Bank until 2023.
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Aveva Group reiterated its full-year expectations, despite seeing a "disappointing" first half performance, as it saw pretax profit fall in the half year to end September on lower revenues. The engineering data and design IT system provider company upped its interim dividend to 5.5 pence per share from 5.0 pence a year before. AVEVA posted a pretax profit of GBP14.2 million, down from GBP27.3 million a year before, as revenue fell 21% to GBP85.9 million from GBP108.5 million.
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Residential property owner and manager Grainger said it has signed a deal with residential and urban regeneration specialist Sigma Capital Group that will help it create a large private rental sector portfolio in key English cities outside London. In a statement, Grainger said the deal grants it the exclusive option for an initial four year term to acquire development opportunities of 100 units or more sourced by Sigma.
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Bodycote said it has won an eight-year deal with aircraft landing and braking systems company Messier-Bugatti-Dowty, to provide the Safran SA unit with thermal spray coating services for major commercial and military airframe component programs, including the Boeing 787 and Airbus A350. Bodycote didn't give any financial details about the contract.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Trinity Mirror said it expects its profit for the full year to meet its expectations, and to reinstate dividend payments for the year, as it saw revenues decline 5% during the 17 weeks to October 26. The company saw overall revenues drop 5% for the period, compared to a 2% decline in its first half. The company said that whilst growth in its digital publishing segment remains strong, rising 44%, this was more than offset by a decline in print publishing revenues of 7%, due to slowing print revenue trends.
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COMPANIES - INTERNATIONAL
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Danish brewer Carlsberg reported its third-quarter consolidated profit attributable to shareholders declined to 2.10 billion Danish kronor from last year's 2.21 billion kroner. Net revenue increased to 18.120 billion kroner from 17.419 billion kroner last year. Organic net revenue increased 2%, despite challenging Eastern European markets.
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Financial services giant JPMorgan Chase & Co plans to cut 3,000 more jobs this year than previously estimated across its mortgage and credit-card divisions. Gordon Smith, chief executive officer of Chase Consumer & Community Banking, said in a presentation that JPMorgan expects to cut 7,000 jobs in its mortgage-banking arm, compared with a prior forecast of about 6,000 job reduction. The company also expects to cut about 4,000 jobs across the rest of its consumer and community banking arm, including in its merchant services, cards and auto units by the end of this year, up from about 2,000 previously announced.
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Billionaire Warren Buffett's Berkshire Hathaway Inc said Friday after the markets closed that its third quarter profit fell 8.6% from last year, hurt mainly by impairment charges related to its investments in equity securities of the UK's Tesco. However, the company's operating earnings for the quarter rose from last year, helped by strong earnings from the company's non-insurance businesses.
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AT&T Inc said it has entered into an agreement with Grupo Salinas to buy Mexican wireless company Iusacell for USD2.5 billion, inclusive of Iusacell debt. Under the deal, AT&T will acquire all of Iusacell's wireless properties, including licenses, network assets, retail stores and about 8.6 million subscribers.
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Monday's Scheduled AGMs/EGMs
Redrow
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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