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LONDON (Alliance News) - A surprisingly hawkish set of meeting minutes from the US Federal Reserve has put a June interest rate hike back on the table, lifting the dollar and depressing stock prices early Thursday. The London market also was digesting a smorgasbord of company reporting as the May earnings season nears its peak.
The reported crash of an Egyptair flight in the Mediterranean was providing an unsettling background to early trade.
However, it was broker rating changes that were producing the two top gainers, with insurance firms Admiral Group and RSA Insurance both up 1.8% after upgrades from JPMorgan.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.0% at 6,103.04
FTSE 250: down 0.5% at 16,790.49
AIM ALL-SHARE: flat at 725.15
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Hang Seng: down 0.6% at 19,710.07
Nikkei 225: closed flat at 16,646.66
DJIA: closed flat at 17,526.62
S&P 500: closed flat at 2,047.63
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GBP: down at USD1.4580 (USD1.4620)
EUR: down at USD1.1219 (USD1.1279)
GOLD: down at USD1,253.01 per ounce (USD1,272.11)
OIL (Brent): down at USD48.08 a barrel (USD49.54)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times in BST)
09:30 UK retail sales
10:00 EU construction output
12:30 EU ECB monetary policy meeting accounts
13:30 US Chicago Fed national activity index
13:30 US initial and continuing jobless claims
13:30 US Philadelphia Fed manufacturing survey
13:30 Canada wholesale sales
15:00 US Conference Board leading indicator
15:30 US EIA natural gas storage
15:30 US Fed's William Dudley speech
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A missing Egyptair flight crashed in the Mediterranean, officials in the Egyptian Ministry of Civil Aviation said. Egyptian and Greek air force planes had been searching over the Mediterranean Sea after an EgyptAir flight from Paris to Cairo disappeared with 66 people on board. The flight went missing 16 kilometres inside Egyptian air space, 20 minutes before its scheduled arrival time in Cairo of 3:05 am (0105 GMT) Thursday, according to the official, who spoke on condition of anonymity. The Airbus A320 with 56 passengers, seven air crew and three security officers on board took off from the French capital late Wednesday, the Egyptian national carrier said.
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A Brexit vote would hit the entire European economy and have a "significant impact on confidence", according to credit agency Moody's in its latest warning over the EU referendum. The group's quarterly report on the outlook for the global economy confirms that the June 23 vote is one of a number of "unique challenges" facing the European Union. It said Brexit was the "most immediate concern" and renewed its warning that in the event of a vote to leave the EU, "prolonged uncertainty until alternative agreements emerge would be a cause for economic stress".
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Doctors' leaders and the UK government have agreed a new deal for junior doctors, with a new pay structure for working weekends and evenings. The deal between the British Medical Association and the government will now be put to a ballot of medics after eight days of intense negotiations. Under the deal, Saturdays and Sundays will attract premium pay if doctors - the vast majority of whom are expected to - work seven or more weekends in a year.
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The rate of job losses in the UK offshore oil and gas industry is set to accelerate over the coming year, despite the industry already making significant job cuts, due to the impact of lower oil prices over recent years, as confidence in the North Sea remains low, a new report from Aberdeen's Chamber of Commerce has revealed. Oil and gas operators have cut their UK-based workforce by an average of 15% over the past 12 months. Despite oil prices trending upward since the middle of January, confidence remains low and more job cuts are set to come, with operators expecting to cut their workforce by an average of 17% over the next year.
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The French jobless rate held steady in the first quarter, the statistical office Insee showed. The ILO unemployment rate in metropolitan France and overseas departments held steady at 10.2% of active population, in line with expectations. The rate for the fourth quarter of 2015 was revised down from 10.3%. The jobless rate for the metropolitan France remained unchanged at 9.9% as the number of unemployed was stable at 2.8 million. The unemployment rate among youth aged between 15 and 24 rose to 24.2% from 23.9% in the prior quarter.
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Core machine orders in Japan climbed 5.5% on month in March, the Cabinet Office said - coming in at JPY895.1 billion. The headline figure topped forecasts for a decline of 2.0% following the 9.2% slide in February. On a yearly basis, core machine orders jumped 3.2% - also exceeding expectations for 0.8% following the 0.7% decline in the previous month.
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China confirmed it was assessing a report that at least two of its air force jets carried out an unsafe intercept of a US military spy plane over the contested South China Sea. The Pentagon said on Wednesday that the Chinese J-11 tactical aircraft intercepted a US military spy plane Tuesday. The incident comes amid heightened tensions in the region as China has sought to assert its control in the face of competing territorial claims from countries in the region. The Chinese jets came within about 15 metres of the US aircraft at one point, according to an unidentified defence official quoted in US news reports.
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Donald Trump reported an income of more than USD557 million and a net worth of USD10 billion to US election officials, his campaign said. In a 104-page document sent to the Federal Election Commission that the agency made public Wednesday, Trump details his vast business interests, including more than 500 positions he holds outside of government at his companies and on boards of other organizations. More details about Trump's finances would be revealed in his tax return, but Trump has refused to release it, which US presidential candidates usually do voluntarily. He has said he may not disclose the return before the November elections due to an ongoing audit.
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BROKER RATING CHANGES
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GOLDMAN RAISES BT GROUP TO 'CONVICTION BUY' (BUY) - PRICE TARGET 650 (640) PENCE
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TRADERS: MACQUARIE CUTS BURBERRY GROUP TO 'NEUTRAL' ('OUTPERFORM')
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TRADERS: JPMORGAN RAISES RSA INSURANCE TO 'OVERWEIGHT' ('NEUTRAL')
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TRADERS: JPMORGAN RAISES ADMIRAL TO 'NEUTRAL' ('UNDERWEIGHT')
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TRADERS: JPMORGAN CUTS SAGA TO 'UNDERWEIGHT' ('NEUTRAL')
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TRADERS: CREDIT SUISSE RAISES COMPASS GROUP TO 'NEUTRAL' ('UNDERPERFORM')
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GOLDMAN RESUMES VEDANTA RESOURCES WITH 'NEUTRAL' - TARGET 400 PENCE
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COMPANIES - FTSE 100
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Royal Mail reported a sharp fall in annual pretax profit as it pursues its business transformation plan, but it pushed up its dividend as it said it had delivered a resilient performance within a challenging market. The postal and logistics operator said pretax profit for the 52 weeks to March 27 was GBP267.0 million, down from GBP400.0 million the year earlier, due to the costs related to its ongoing restructuring. Stripping out those costs and in constant currencies, operating profit grew to GBP742.0 million in the financial year from GBP740.0 million the year before. Royal Mail declared a total dividend for the year of 22.1 pence, up 5.2% from 21.0p the year before.
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Merlin Entertainments said trading in the year to date has been broadly in line with expectations. The theme park and attractions operator said the key underlying trends seen in 2015 have continued into 2016, with market conditions in London remaining challenging despite recent favourable movements in foreign exchange rates.
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National Grid said its pretax profit rose by 16% in its recently completed financial year, as the FTSE 100 company posted results that beat market expectations and confirmed its dividend has increased in line with its policy. The gas and electric utility firm said its pretax profit rose to GBP3.03 billion in the financial year ended in March from the GBP2.62 billion reported a year earlier, whilst pretax profit before exceptional items rose by 9.0% to GBP3.14 billion from GBP2.87 billion. The adjusted pretax profit came in ahead of analyst forecasts of GBP3.07 billion. As expected, National Grid increased its dividend for the year in line with inflation, increasing it by 1.1% to 43.34 pence from the 42.87 pence paid last year.
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Fund supermarket Hargreaves Lansdown said its assets under administration grew in the first four months of 2016, though net inflows slowed year-on-year. The wealth manager, which enables retail investors to invest in stocks and other financial assets through its execution-only platform, said total assets under administration grew to GBP60.3 billion at the end of April from GBP58.8 billion at the end of December. Net inflows in the first four months hit GBP2.30 billion, less than the GBP2.75 billion that Hargreaves saw flow in during the first four months of 2015.
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Events and publishing group Informa said it remains confident it will meet its expectations for the full year as it has continued to make good progress in 2016 to date despite some macroeconomic uncertainty weighing on markets. Informa, which joined the FTSE 100 index in March, said its saw a strong operating performance and profit growth in its Global Exhibitions business, where 45% of the annual revenue for the business has already traded. Annualised contract values grew in the Business Intelligence division, with client renewal rates approaching 90%, Informa said.
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Private equity investor 3i Group said it delivered a higher total return and net asset value per share for the year to the end of March as it continued its momentum in realising value from its assets. The group said its total return for the year to the end of March was GBP824.0 million, up from GBP659.0 million a year earlier, while its net asset value per share was 463.0 pence at the end of the financial year, compared to 396.0p at the same point a year earlier. 3i said it will pay a final dividend of 16.0p for the year, taking the total payout to 22.0p, up 10% from 20.0p a year earlier.
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COMPANIES - FTSE 250
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Thomas Cook Group reported a narrowed pretax loss in the first half of its financial year although revenue slipped and it warned on the outlook for the full year due to reduced demand for Turkey and Belgium. The travel operator said its pretax loss in the six months ended March 31 narrowed to GBP288 million from GBP303 million in the same period the year before, although revenue slipped to GBP2.67 billion from GBP2.74 billion.
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Cinema operator Cineworld Group said revenue grew year-on-year in the first 19 weeks of 2016 amid good performances from a number of film releases. Cineworld said revenue for the 19 weeks to May 12 grew 9.8% year-on-year, with Box Office revenue up 7.6%, retail revenue up 12% and other income growing 18%. Cineworld said its remains confident on meeting market expectations for the half year to the end of June.
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Anglo-South African financial services group Investec said pretax profit grew in the financial year to the end of March thanks to a solid performance in its banking arm, while assets held by its investment management units declined. Investec said its operating profit before tax edged up to GBP567.4 million from GBP562.5 million a year earlier. Total funds under management in the Asset Management division fell to GBP75.7 billion from GBP77.5 billion a year earlier, while funds under management in the Wealth Management arm fell to GBP45.5 billion from GBP46.1 billion. Net inflows for the two businesses hit GBP5.3 billion, but the total under management was dragged lower by market performance. Investec said it will pay a final dividend of 11.5 pence per share, taking its total payout to 21.0p, up 5.0% from 20.0p a year earlier.
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Wealth manager Brewin Dolphin Holdings said pretax profit fell in the first half of its financial year due to tough market conditions and one-offs booked a year earlier, though total funds on its books grew. Brewin Dolphin said its pretax profit for the half year to the end of March was GBP21.5 million, 42% down from the GBP37.2 million it made a year earlier. The previous year had included a GBP9.7 million one-off gain. Brewin said its total funds under management at the end of the half was GBP32.8 billion, up 2.5% from GBP32.0 billion at the end of September, while discretionary funds grew 4.4% to GBP25.9 billion. The company declared an interim dividend of 3.85 pence, up 2.7% from 3.75p a year earlier.
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Grainger said it has adopted a new dividend policy that will see payouts increase significantly, forecasting more than a 45% rise to the dividend this year, as the company reported a rise in profit during the first half. The company also said it expects recurring profit to be ahead of expectations for the full year.
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COMPANIES - INTERNATIONAL
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In response to recent media reports, Monsanto disclosed that it has received an unsolicited, non-binding proposal from Bayer for a potential acquisition of Monsanto, subject to due diligence, regulatory approvals and other conditions. Monsanto noted that it is reviewing the proposal, in consultation with its financial and legal advisors.
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German drug maker Merck reported its first-quarter net income more than doubled to EUR591 million from last year's EUR282 million. Earnings per share climbed to EUR1.36 from EUR0.65 a year ago. Group net sales increased 20.5% to EUR3.67 billion from prior year's EUR3.04 billion. Organically, group sales rose 4.7% thanks to the strong operating performance of the Healthcare and Life Science business sectors, Merck said.
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Thursday's Scheduled AGMs/EGMs
Next
Merlin Entertainments
Informa
Balfour Beatty
Prudential
Glencore
Petrofac
Ferrexpo
Hiscox
Computacenter
PPHE Hotel Group
Cineworld Group
Learning Technologies
StatPro Group
ProPhotonix
Sherborne Investors
Revolymer
Crossrider
Science Group
Safestyle UK
GLI Finance
Staffline Group
Riverstone Energy
Gamma Communications
HaloSource (re recreational water business sale)
North Midland Construction
Portmeiron Group
Concurrent Technology
Game Digital (re loan facility with Lajedosa Investments)
Conviviality (re acquisition of Bibendum PLB & proposed placing)
Exova Group
LMS Capital
PV Crystalox Solar
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
