LONDON (Alliance News) - Shares have opened lower Thursday, as markets around the world react to Fed Chair Janet Yellen's hint of an earlier-than-expected rise in US interest rates.
The CEO of handbag firm Mulberry has stepped down after only two years in the job.
Deutsche Bank has cut Partnership Assurance's price target by more than half to 130 pence from 325 pence, reflecting the firm's 53% decline on Wednesday, but retained its Hold recommendation. Partnership Assurance shares were down another 5.6% to 135.00 at the open Thursday, still reeling from the UK pension reform announced Wednesday that will remove the requirement for retirees to buy annuities.
Meanwhile, JPMorgan has raised London Stock Exchange Group shares to Neutral from Underweight with a 1,962 pence target. The LSE is up 0.8% at 2,022.00p at the open.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: down 0.4% at 6,545.65
FTSE 250: down 0.5% at 16,258.26
AIM ALL-SHARE: down 0.3% at 866.08
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Hang Seng: down 1.8% at 21,182.16
Nikkei 225: closed down 1.7% at 14,224.23
DJIA: closed down 0.7% at 16,222.17
S&P 500: closed down 0.6% at 1,860.77
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GBP-USD: up at USD1.6556
EUR-USD: up at USD1.3827
GOLD: up at USD1,331.35 per ounce
OIL (Brent): down at USD105.75 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
08:30 Switzerland SNB Interest Rate Decision
11:00 UK CBI Industrial Trends Survey
12:30 US Jobless Claims
14:00 US CB Leading Indicator
14:00 US Existing Home Sales
14:00 US Philadelphia Fed Manufacturing Survey
14:30 US EIA Natural Gas Storage change
19:00 US American Petroleum Institute Monthly Report
20:30 US Bank Stress Test Info
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The US central bank could end its buying spree of government-backed bonds by late this year and begin tightening its near-zero benchmark interest rate in the first half of 2015, Federal Reserve Chairwoman Janet Yellen said Wednesday. The Fed's monetary policy committee on Wednesday further reduced the pace of bond buying to USD55 billiona month starting in April, and said that its unprecedented interest rate target would likely remain near zero "for a considerable time" after the end of bond buying. Yellen noted later that "if we continued to reduce the pace of our asset purchases in the manner that we have in measured steps," bond purchases were on a path to conclude in autumn 2014, though not predetermined. She said the "considerable time" before raising interest rates was "hard to define, but, you know, probably means something on the order of around six months or that type of thing." Yellen noted that the labour market and inflation will be fluid and complicated factors: "It depends what conditions are like."
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Confidence among British households regarding their personal finances eased modestly in March, but hovered near February's record high signalling that the squeeze on finances remained less marked than seen over the past five years, survey data published by Markit Economics revealed. The seasonally adjusted household finance index, which measures the overall perception of financial well-being, dropped to 41.9 in March from 42.1 in February, which was the highest score in the history of the survey. Index readings below 50 suggest weakness in confidence.
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Germany's producer prices fell for the seventh successive month in February, and the rate of decline matched economists' forecast, latest data revealed. The industrial producer price index decreased 0.9% in February from the same month of last year, the Federal Statistical Office said. This followed a 1.1% contraction in January. The February outcome matched economists' expectations. Prices have now fallen for the seventh consecutive month.
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Representatives from the European Parliament and EU governments reached a provisional deal on a scheme to shield taxpayers from bank bailouts. The mechanism to wind down troubled eurozone banks is to become the second element of a crisis-thwarting banking union, considered key to restoring trust in the currency bloc. Details of the deal, which was reached after 16 hours of talks, were not immediately available. It still requires the support of the heads of the respective political groups in parliament, who were to meet later Thursday.
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Ukraine is drawing up plans to withdraw its military forces from Russian-controlled Crimea, a top government official said Wednesday. National Security and Defence Council chief Andriy Parubiy said the government was preparing a plan to relocate troops from the peninsula to mainland Ukraine, local media reported. He added that Ukraine would ask the United Nations to declare Crimea a demilitarised zone. The Council also ordered a plan to evacuate Ukrainian citizens who do not want to remain in Crimea.
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Objects possibly related to the missing Malaysia Airlines plane have been spotted in the southern Indian Ocean, Australian officials said. "Following specialist analysis of this satellite imagery, two possible objects related to the search have been identified," Prime Minister Tony Abbott told parliament. One of the objects floating 2,500 kilometres south-west of Perth was 24 metres long, an official of the Australian Maritime Safety Authority (AMSA) told reporters.
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The Dutch grand coalition of liberals and social democrats suffered wide losses in Wednesday's local elections amid resistance to austerity measures, with left-leaning opposition parties making gains, according to news reports. The social-democratic Labour Party, PvdA, lost the cities of The Hague and Amsterdam to the centre-left party Democrats 66 (D66), as well as Rotterdam to a green party, according to a report on DutchNews.nl, with more than 90% of the votes counted.
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Greek banks may require more capital than the Bank of Greece estimated this month, the European Commission, European Central Bank and International Monetary Fund said in a joint statement. The lenders, known as Troika, on Wednesday reached a preliminary agreement to unlock the next tranche of bailout funds. Authorities observed that the economy is beginning to stabilize and is poised for a gradual resumption of growth.
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BROKER RATING CHANGES
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CITIGROUP CUTS BABCOCK TO 'NEUTRAL' ('BUY') - TARGET 1500 (1185) PENCE
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EXANE BNP CUTS ANTOFAGASTA TO 'NEUTRAL' ('OUTPERFORM') - TARGET 900 (1,050) PENCE
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DEUTSCHE BANK CUTS PARTNERSHIP ASSURANCE TARGET TO 130 (325) PENCE - 'HOLD'
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JPMORGAN RAISES LONDON STOCK EXCHANGE TO 'NEUTRAL' ('UNDERW,') - PRICE TARGET 1962 PENCE
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CITIGROUP RAISES VICTREX TO 'BUY' ('NEUTRAL') - TARGET 2100 (1550) PENCE
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COMPANIES - FTSE 100
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Homeware and clothing retailer Next PLC Thursday reported higher profits and revenues for the financial year ended January 2014 driven by its online business, raised its dividend by 23%, and said it expects the UK consumer environment to remain far from buoyant. Although the retailer said the consumer economy steadily improved over the course of the last year, it remained fairly cautious on the UK consumer spending outlook, targeting brand sales growth of between 4% and 8% in the current financial year, with a pretax profit of between GBP730 million and GBP770 million. For the year ended January 24, Next increased its full year dividend by 23% to 129 pence, in line with earnings per share growth, as revenue excluding VAT increased 5.4% to GBP3.74 billion, up from GBP3.55 billion the prior year, and profits excluding exceptional costs rose 12% to GBP695.2 million, up from GBP621.6 million a year earlier, when excluding a GBP44.9 million profit gain.
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Lloyds Banking Group PLC said it has sold a portfolio of European commercial real estate loans for about EUR280 million as part of its strategy to scale down its non-core run-off portfolio. Separately, Lloyds said the exchange offer it recently made to bondholders it tapped for much-needed capital in 2009 will be larger than previously expected as a result of "substantial" demand.
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United Utilities Group PLC said it expects to report revenue and underlying profit in its upcoming full-year results that are higher than the year before. The major water firm said trading is currently in line with the group's expectations for the year ending March 31. It said customer service continues to improve, and it remains ahead of schedule in delivering its 2010-15 regulatory outperformance targets.
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GlaxoSmithKline PLC said that a late stage trial of its MAGE-A3 cancer immunotherapeutic for patients with non-small-cell lung cancer did not meet two of its co-primary endpoints, as it failed to extend disease-free survival compared to a placebo.
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COMPANIES - FTSE 250
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Mitie Group PLC said it expects to deliver results for the current financial year that are in line with market expectations after it continued to perform strongly in recent weeks, particularly in facilities management. In a trading update, the outsourcing company said it won a new contract in February with the UK Home Office to manage and maintain two immigration removal centres, valued at GBP180 million over eight years, with a potential further three year extension that would take the total value to GBP250 million.
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Ophir Energy PLC said its pretax loss widened significantly in its full year 2013 as exploration write-offs and impairments hit the company. The FTSE 250 oil and gas exploration company said its pretax loss widened to USD280.5 million from USD40.9 million the previous year as exploration expenses sky-rocketed to USD229.1 million from USD4.5 million in 2012.
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Crest Nicholson Says Forward Sales For 2014 And Beyond GBP330M, Up 50%;Says Rising Sales, Open Market ASPs Delivering Strong Revenue Growth
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Premier Farnell FY Pretax Profit GBP74.8M Vs Restated GBP69.0M; Revenue GBP968.0M Vs Restated GBP952.0M; FY Dividend Flat At 10.4p; Says New Year Has Started Well Despite Adverse Weather In North America; To Acquire AVID Technologies For USD13M
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Ted Baker FY Pretax Profit GBP38.9M Vs GBP28.9M; Profit Before Tax, Exceptional Costs At GBP40.0M Vs GBP31.5M; Revenue Up 27% To GBP321.9M Vs GBP254.5M; Total Dividend Up 26.7% To 33.7P Vs 26.6P
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Savills 2013 Pretax Profit Up 35% To GBP70.1M, Vs Restated GBP52.0M; Revenue Up 12% To GBP904.8M, Vs GBP806.4M In 2012; Total Dividend Up 19% To 19.0p From 16.0p; Says Has Made Solid Start To 2014, With Performance In Line With Management Expectations
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COMPANIES - ALL-SHARE AND AIM
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British luxury brand Mulberry Group PLC said Chief Executive Officer Bruno Guillon is stepping down with immediate effect, after only two years at the helm. Mulberry said that Godfrey Davis, who is currently non-executive chairman and was previously chief executive officer, will become executive chairman until a successor is found.
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Cello Group 2013 Statutory Pretax Profit GBP5.5M, Up From GBP1.4M; Revenue Up 18% To GBP159.7M From GBP135.1M; Full-Year Dividend Up 13% To 2.25p From 2.00p; Says Confident Expectations For 2014 Will Be Met
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WANdisco Names Paul Walker As Non-Executive Chairman; David Richards To Remain CEO As Roles Split; Says British Gas To Use Its Technology; FY Pretax Loss USD20.0M Vs Pretax Loss USD8.0M; Revenue USD8.0M Vs USD6.0M
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Majestic Wine: 10 Week Christmas Trading Period Was "Satisfactory", Like-For-Like Sales Growth Of 2.8%; Now Expects FY Like-For-Like Sales To Be Flat
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F W Thorpe H1 Pretax Profit GBP5.4M Vs GBP5.1M; Revenue GBP30.4M Vs GBP27.1M; Interim Dividend 1.05p Vs 1.00p
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Pure Wafer Chief Executive Peter Harrington To Become Non-Executive Chairman, Replacing Stephen Boyd; Boyd To Remain Non-Executive Director; CFO Richard Howells To Become Chief Executive; All Changes From July 1
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M&C Saatchi FY Pretax Profit GBP18.6M Vs GBP17.2M; Revenue GBP177.4M Vs GBP169.5M; FY Dividend 5.45p Vs 4.95p
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James Latham Says Revenue For FY Expected To Be Broadly In Line With Market Expectations; Says Pretax Profit For FY Likely To Be Higher Than Market Expectations
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Thursday's Scheduled AGMs/EGMs
Crest Nicholson
Chemring Group
Premier Foods
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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