LONDON (Alliance News) - UK shares have opened broadly higher Thursday amid some supportive economic data and ahead of US retail sales figures in the afternoon.
US data is being closely watched amid speculation of a summer interest rate hike by the Federal Reserve.
Miners Fresnillo and Antofagasta are top FTSE 100 gainers, up 3.0% and 2.8%, respectively. Antofagasta said it has reached an agreement to resolve protests near its operations in Chile, and said normal operations will begin in "the coming days".
Smiths Group, up 3.1%, is the biggest blue-chip gainer, however, after Nomura initiated the engineering firm with a Buy recommendation.
In the FTSE 250, SOCO International shares are down 26% after reporting a big drop in annual profit and slashing its 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 0.7% at 6,766.57
FTSE 250: up 0.4% at 17,019.60
AIM ALL-SHARE: up 0.6% at 715.64
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Hang Seng: closed up 0.3% at 23,797.96
Nikkei 225: closed up 1.4% at 18,991.11
DJIA: closed down 0.2% at 17,635.39
S&P 500: closed down 0.2% at 2,040.24
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GBP-USD: up at USD1.4987
EUR-USD: up at USD1.0626
GOLD: up at USD1,159.63 per ounce
OIL (Brent): up at USD58.05 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
(all times in GMT)
09:30 UK Total Trade Balance
10:00 Germany German Buba President Weidmann speech
10:00 EU Industrial Production
11:00 Ireland Gross Domestic Product
12:30 US Import/Export Price Index
12:30 US Retail Sales
12:45 UK BOE's Governor Carney speech
13:30 US Jobless Claims
14:00 US Business Inventories
14:30 US EIA Natural Gas Storage change
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The house price balance for a home in the UK was up 14% in February, the latest survey from the Royal Institution of Chartered Surveyors showed on Thursday, with an index score of 14%. That beat forecasts for 6% and double from 7% in February. By region, house prices in London were down, while prices were higher in the south west and south east. "It is encouraging that the negative trend in buyer inquiries appears to be dissipating, perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer, but more worrying that instructions to sell property continue to drop," said RICS chief economist Simon Rubinsohn.
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The increase in self-employment may not represent any additional slack in the economy, the Bank of England said in a quarterly bulletin published on Thursday. "A large part of the increase in self-employment since 2008 does indeed seem to reflect trends that began before the recession," BoE Economist Srdan Tatomir said in the research paper. There was a trend increase in the female self-employment rate in the population, it noted. To the extent that most of the increase in self-employment can be accounted for by structural factors, the cyclical effects are not likely to represent any additional slack above what is incorporated in BoE staff estimates.
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The National Institute of Economic and Social Research on Wednesday said the UK economy grew 0.6% in three months to February, the same rate of growth as seen in three months to January.
On a monthly series, the expansion was in line with the average rate of growth of the UK economy since June 2014. In February, the institute projected 2.9% growth for 2015 and 2.3% expansion for 2016.
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Britain became the latest nation to require standard packaging of cigarettes on Wednesday after a large majority of lawmakers approved legislation banning tobacco firms' branding. Following the vote, branded packaging is expected to be banned from next year, putting Britain alongside Australia and Ireland as nations insisting on plain packaging in a bid to make smoking less attractive. The move was backed by 367 members of parliament in a free vote, with 113 voting against it. The opponents of the legislation included 104 members of the Conservative party. Prime Minister David Cameron and opposition Labour party leader Ed Miliband were among those who voted for the change.
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Confidence among Japanese consumers improved for the third straight month in February, exceeding expectations, data from the Cabinet Office showed. The consumer confidence index rose to 40.7 in February from 39.1 in January. Economists had forecast a 39.5 score for the month.
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The Bank of Korea's monetary policy board trimmed the nation's benchmark interest rate by 25 basis points to a record low 1.75% - defying expectations for a fifth straight month of no change at 2.00%.
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The International Monetary Fund on Wednesday signed off on a USD17.5 billion loan for cash-strapped Ukraine after President Petro Poroshenko said his country needs more than USD40 billion to keep its economy afloat. The money was approved by the IMF executive board and is meant to support the country's immediate economic stabilization and reforms aimed at restoring growth and improving living standards, IMF Director Christine Lagarde said in a statement issued in Berlin, where she held talks with German Chancellor Angela Merkel.
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Countries in the eurozone must pursue an "ambitious reform agenda," international financial institutions said following a meeting Wednesday in Berlin led by German Chancellor Angela Merkel.
The heads of the International Monetary Fund, World Bank and other agencies welcomed "ongoing efforts by many euro area countries to enhance their productivity, to raise employment and to improve fiscal positions," they said in a joint statement with Merkel. Further efforts are "urgently needed across euro area member states" to address youth employment, social inclusion and structural reforms, the statement said.
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Greece and its international creditors on Wednesday held a new round of negotiations on which kind of reforms the country will have to implement in return for further bailout aid. The talks in Brussels between Greek authorities and representatives of the European Commission, the European Central Bank and the International Monetary Fund took place amid fears that Athens could soon run out of money. The two sides have made halting progress on the bailout since the new government of leftist Prime Minister Alexis Tsipras came to power in January on a platform of ending bailout-related austerity. Tsipras is expected to visit the Belgian capital on Friday for talks with commission President Jean-Claude Juncker and European Parliament President Martin Schulz.
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Two police officers in the US city of Ferguson, Missouri were shot near the police station early Thursday, local media reported. Witnesses said the shots came from a hill across the street from the police station, according to local reporter Jeff Bernthal, who posted comments on Twitter.
Police units were reportedly at a house located on the hill, the reporter for KPLR/FOX 2 said. Tensions between local residents and police in Ferguson have remained high since last year's fatal police shooting of a black teenager. On Wednesday, Ferguson's police chief announced his resignation after federal officials blamed his police force for practising systematic racial discrimination.
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BROKER RATING CHANGES
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TRADERS: NOMURA INITIATES SMITHS GROUP WITH 'BUY'
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GOLDMAN CUTS CAIRN ENERGY TO 'NEUTRAL' ('BUY') - TARGET 170 (234) PENCE
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TRADERS: NOMURA INITIATES IMI WITH 'REDUCE' - TARGET 1175 PENCE
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TRADERS: NOMURA INITIATES ROTORK WITH 'NEUTRAL' - TARGET 2500 PENCE
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COMPANIES - FTSE 100
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Antofagasta said it has reached an agreement to resolve protests near its operations in Chile, and said normal operations will begin in "the coming days". On Monday, the miner said copper production at its Los Pelambres mine in Chile had been reduced by about 5,000 tonnes due to ongoing protests that are causing limited disruption at the site after a small group of protesters from the the local Choapa valley community established intermittent blockades at several points on the access road. On Thursday, the company said the final impact of the protests will be around 8,000 tonnes of lost copper production in 2015, but said it will try to mitigate the impact over the year when operations recommence soon.
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Wm Morrison Supermarkets reported a widened loss for its last financial year, as revenue fell as it lost customers to rivals and it was forced to invest heavily in lowering prices, and it also booked a massive writedown on property. Morrisons raised its dividend for the recent year by 5%, meeting a commitment it had given last March, but suggested it will cut the payout sharply in the current financial year as it preserves cash to spend on its turnaround efforts.
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ITV said it has agreed to acquire buy Dutch media tycoon John De Mol Jr's production company Talpa Media BV for an initial cash consideration of around EUR500 million, funded from its existing cash resources and new debt facilities. The maximum consideration ITV will pay for the Netherlands-based production firm is up to EUR1.1 billion, contingent on Talpa delivering "significant profit growth" over an eight-year period, and de Mol's continued commitment to the business during this period. Talpa is behind reality television programmes 'The Voice', 'Utopia', and 'Dating in the Dark'.
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COMPANIES - FTSE 250
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Outsourcing company Serco Group reported a massive pretax loss for 2014 as the group booked huge provisions against onerous contracts, forcing it to cut its dividend payout and to confirm its plan to launch a GBP555 million rights issue and a refinancing of its debt pile. Serco said its pretax loss for 2014 was GBP1.35 billion, compared to a GBP108.3 million profit a year earlier. The loss was driven by a total of GBP1.31 billion in one-off provisions the company made in the year on asset impairments and other charges. Revenue also ticked down for the company to GBP3.96 billion from GBP4.28 billion. The provisions and loss mean Serco also scrapped its final dividend, meaning its total payout for the year is 3.1 pence from its interim dividend. In 2013, it paid 10.55 pence per share in total dividends.
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Interserve said its joint venture with Babcock & Wilcox Vølund has won a GBP150 million contract to build a biomass-fired power plant in Rotherham, north east England. Interserve said the joint venture has been awarded the contract by the Brite Partnership North East, and it will cover the construction of a 45-megawatt plant based in Templeborough which will be fired by locally-sourced waste wood. It expects work on the project to start in coming weeks and for the plant to be fully operational in the second quarter of 2017. Interserve's portion of the project is worth around GBP50 million.
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Building products distributor SIG reported higher pretax profit on the back of the non-recurrence of one-off writedowns booked last year and hiked its dividend on the back of the results, even as its revenue for the year fell. SIG said its pretax profit for 2014 was GBP39 million, compared to a GBP2.1 million profit in 2013 when the company booked more than GBP80 million in writedowns and impairment charges on businesses it sold. Revenue fell to GBP2.63 billion from GBP2.72 billion for the group, though revenue from its continuing operations, excluding the German roofing, Miller Pattison and Ice Energy businesses it divested, increased to GBP2.60 billion from GBP2.54 billion.
SIG said it will pay a final dividend of 2.98 pence per share, up 24% year-on-year. Its total dividend payout for the year is 4.4 pence, up 24% on the 3.55 pence paid out in 2013.
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SOCO International reported a huge reduction in profit after its revenue fell on the back of lower oil prices, lower production and significant impairments, causing the company to slash its dividend nearly in half. The FTSE 250 oil and gas company also warned that production will fall again in 2015, and it is expecting oil prices throughout the year to be below what it achieved in 2014, suggesting the company will have a difficult year ahead of it. SOCO reported a profit after tax of USD14 million in 2014, down over 86% from the USD104.1 million profit it recorded in 2013. The company slashed its full year dividend to 22.0 pence per share, nearly half the 40.0 pence per share paid at the end of 2013.
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Computacenter said it is determined to make 2015 "a year of progress", and posted a rise in pretax profit for 2014, as a strong performance in the UK helped offset declines in Germany and a continued weak performance in France. The company proposed a final dividend of 13.1 pence, taking its total dividend for 2014 to 19.8 pence, compared to 17.5 pence a year before. Computacenter reported pretax profit of GBP76.4 million, up from GBP50.5 million a year before, as revenue rose 1.4% to GBP3.11 billion from GBP3.07 billion, and it posted lower exceptional costs.
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Home Retail Group said it expects its benchmark pretax profit in the recently-ended financial year to be at the top end of current market expectations, after sales in the last eight weeks of the year fell but it said it had made progress on gross margin and costs. The company said Argos sales in the eight weeks to the end of the financial year on February 28 were down 4.0% at GBP505 million, bringing the total for the year to GBP4.10 billion, up 1.1%. Sales at Homebase in the final two months were down 3.8% at GBP193 million, as that chain also faced strong comparatives and it also traded from fewer stores. Sales for the year as a whole fell 3.0% to GBP1.48 billion.
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Cineworld Group said its pretax profit more than doubled in 2014 on the back of higher revenue, prompting the cinema chain to hike its dividend by more than 30%. Cineworld said its pretax profit for the 53 weeks to January 1, 2015 was GBP67.3 million, compared to GBP30.9 million in the 52 weeks to December 26, 2013. On the back of the results, the company said it would pay a final dividend of 9.7 pence per share, bringing its total dividend to 13.5 pence against 10.1 pence a year earlier, a 34% hike.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Online fashion retailer ASOS reported strong sales growth during the second quarter of its financial year, driven by strong growth in the UK, and Chief Executive Nick Robertson also said its new pricing strategy in international markets is also showing signs of paying off. The fast-growing retailer said revenue was up 20% at GBP298.3 million in the three months to February 28, from GBP249.0 million a year earlier, an acceleration from the first quarter that meant revenue for the first half was up 14% at GBP550.5 million.
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Fenner said trading in its Advanced Engineered Products business remained good while its Engineered Conveyor Solutions arm continued to face challenging market conditions in the first half of its financial year, and it expects earnings per share for the full year to be slightly below its expectations due to a charge for cost cutting.
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Bioquell shares were up by a third at the open after the company said it will sell its specialist testing subsidiary TRaC to Element Materials Technology Group Holdings for GBP44.5 million in cash, and will return most of the proceeds to its shareholders. In a statement, the specialist microbiological control technologies company that will now be focused on biological contamination control, said the gross cash proceeds from the disposal equate to about 105 pence per Bioquell share, well above the 82 pence closing price for the stock on Wednesday.
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COMPANIES - INTERNATIONAL
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The US Federal Reserve has raised objections to the capital plans of 3 of 31 large bank holding companies that underwent latest stress tests, the central bank said. Two of the three banks denied Fed approval for their capital plans - which is needed to pay dividends or other returns to stockholders - are subsidiaries of European banks. The Federal Reserve objected to the capital plans of Deutsche Bank Trust Corp and Santander Holdings USA, citing "qualitative" concerns focusing on "deficiencies" in the institutions' risk management strategies, though not their financial reserves. One holding company, Bank of America Corp, was given conditional approval despite some Fed objections, but required to strengthen and resubmit its capital management plans by September.
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Diversified conglomerate General Electric Co is considering making deeper cuts in its huge banking business, the Wall Street Journal reported, citing people familiar with the matter. According to the WSJ report, GE has decided that the returns from its lending business are not worth the discontent the business causes among its investors. Shareholders of the company consider GE Capital to be too large and risky, and GE's stock price has languished below USD30 since the financial crisis.
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Technology giant Apple has restored service from its digital stores, the iTunes Store, App Store, iCloud, iBooks Store and Mac App Store, after an unusually long global outage. The outage left millions of Apple users stranded for nearly 12 hours from 5 am US Eastern Time on Wednesday.
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Chinese e-commerce giant Alibaba Group Holding plans to invest USD200 million in Snapchat, the mobile application for sending disappearing photos, at a valuation of USD15 billion, Bloomberg reported citing people familiar with the matter.
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German clothing maker Hugo Boss reported that its fourth-quarter net income attributable to the shareholders of the parent company declined 11% to EUR75 million from EUR84 million in the prior year. In the fourth quarter of last year, HUGO BOSS was able to increase group sales by 3% after currency adjustments. In euro terms, this corresponds to an increase of 5% to EUR684 million, compared to EUR649 million last year.
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Thursday's Scheduled AGMs/EGMs
No Events Scheduled
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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