LONDON (Alliance News) - As stock investors remain wary about the situations in Greece and Ukraine, they received on Friday a broad-based reading of the economic health of eurozone economies, with Germany again providing almost all the impetus.
Fourth quarter gross domestic product data for the eurozone as a whole and for key members Germany, France and Italy provided a mixed but generally better-than-expected growth picture.
The euro area expanded by more than expected in the fourth quarter, flash estimates released by Eurostat showed. Gross domestic product advanced 0.3% sequentially, faster than the 0.2% growth seen in the third quarter. The rate had been expected to remain unchanged at 0.2%.
On a yearly basis, eurozone GDP grew 0.9% following third quarter's 0.8% expansion. Economists had forecast GDP to grow 0.8% again in the fourth quarter.
Among big eurozone members, Germany's economic growth accelerated by more-than-expected on the back of domestic spending and exports in the fourth quarter, while investment dragged expansion in France and Italy's economy stagnated.
German GDP advanced 0.7% sequentially in the fourth quarter, much faster than a modest 0.1% rise in the prior quarter, data from Destatis revealed. This was the fastest growth in three quarters and also exceeded a 0.3% rise forecast by economists.
German households markedly raised their spending, and investment increased from the prior quarter in machinery and equipment as well as construction. Exports of goods improved further.
The statistical office raised its whole-year growth for 2014 to 1.6% from 1.5% estimated on January 15. The European Commission expects the largest Eurozone economy to grow by 1.5% this year and by 2% in 2016.
Germany looks set to continue surfing on a wave of economic well-being, Carsten Brzeski, an economist at ING Bank NV said. With the strong labour market, wage increases, low energy prices and extremely low interest rates, consumers should continue to spend, the economist said. Brzeski also expects the weak euro to benefit German exports.
One negative note sounded on Germany Friday was a reading of wholesale prices, whose decline accelerated for the third straight month in January, figures from Destatis showed. The wholesale price index fell 2.6% year-on-year in January, faster than December's 2.3% decline. In November, prices dropped 1.1%.
Meanwhile, French economic growth slowed as expected in the fourth quarter, the statistical office Insee reported. Gross domestic product rose 0.1% sequentially, in line with forecast, but slower than third quarter's 0.3% expansion. In 2014, the economy expanded 0.4%, the same rate of growth as seen in 2013. The European Commission has forecast the French economy to expand 1% in 2015 and 1.8% next year.
Italy's GDP remained flat on a sequential basis in the fourth quarter, following a 0.1% fall in the third quarter, preliminary data from the statistical office Insee showed. The economy last expanded in the second quarter of 2011.
On a yearly basis, Italian GDP slid 0.3% after declining 0.4% in the previous quarter. This was the thirteenth consecutive fall in GDP. Economists had forecast GDP to fall 0.1% sequentially and 0.5% on a yearly basis in the fourth quarter. For all of 2014, Italian GDP was down 0.4%.
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Markets: London equities have pushed higher with oil-related stocks benefiting from a rise in the price of oil, while a positive reaction to the ceasefire agreement reached for Ukraine Thursday continues to be offset by the uncertainty still surrounding the future of Greece. US futures point to a higher opening, with the DJIA and Nasdaq 100 are pointed up 0.2% with the S&P 500 up 0.1%.
FTSE 100: up 0.6% at 6,868.74
FTSE 250: up 0.5% at 16,892.07
AIM ALL-SHARE: up 0.3% at 700.04
GBP-USD: down at 1.5379
EUR-USD: down at 1.1399
GOLD: up at USD1,225.10 an ounce
OIL (Brent): up at USD60.03 a barrel
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Top Corporate News
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Anglo American reported an expected drop in underlying earnings in 2014 on the back of weaker commodity prices and reduced its capital expenditure budget for 2015. The miner also took a USD3.9 billion impairment charge, mainly related to its iron ore mine in Brazil, which led to a wider net loss. However, the company maintained its dividend unchanged. For the year ended December 31, Anglo American reported underlying earnings before interest and tax of USD4.9 billion, a 25% reduction from GBP6.62 billion in 2013, due to weaker commodity prices which were partially offset by a small foreign exchange gain and increased production and sales.
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Rolls-Royce Holdings reported a drop in pretax profit and revenue for the year, hit by negative currency translation, reduced defence spending and world macroeconomic uncertainty. The FTSE 100-listed aerospace group said its reported pretax profit for the year to the end of December was GBP67 million, a massive decline against the GBP1.7 billion reported a year earlier. Its reported revenue for the year declined to GBP13.74 billion from GBP14.64 billion in 2013, hit by a decline in defence spending in governments in many countries and a weaker performance from its land and sea business, owing to weaker end markets. The drop was partially offset by growth in its Civil Aerospace business and by an improvement in its Defence aerospace services unit.
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Fresnillo said a number of items including foreign exchange and write-downs will impact its financial results for 2014. The silver producer said foreign exchange movement in 2014 between the dollar and the Mexican peso will lead to a deferred tax charge of around USD55 million, but said it will have "no corresponding effect on cashflow during the period". Fresnillo also is expecting to record a USD25 million foreign exchange loss on the devaluation of the Mexican peso, which also is not expected to effect cashflow in the period.
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Shire is understood to be in preparations towards making a bid for US drugmaker Salix Pharmaceuticals and is working with advisers on a potential offer, Reuters reported. Citing people familiar with the matter, Reuters said Shire is evaluating how to finance a bid for Salix, which makes drugs to treat gastrointestinal disorders, though they cautioned the Irish pharmaceuticals company could still decide against proceeding due to the complexity of the deal and owing to a potential rival offer set to emerge from Valeant Pharmaceuticals International.
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Severn Trent said it is on track to meet its expectations for the full year, despite a forecast for top-line growth to moderate in the second half. The FTSE 100-listed water utility said it expects to meet its expectations for pretax profit in the year to March 31, though it does expect growth to moderate in the second half. Consumption across its measured income base is expected to be slightly higher year-on-year owing to the warmer weather conditions in the UK.
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British Land Co said it has started development work on the 4 Kingdom Street site near Paddington Station in London. The FTSE 100-listed property group acquired the site in 2013 and said the core of the nine-storey building has been relocated in order to increase space and efficiency in the building. British Land expects practical completion of the scheme to occur in early 2017.
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Riverstone Energy said its net asset value grew during 2014 despite falling oil prices hitting the energy sector. Riverstone said the low world price of crude will allow the company to continue to invest on favourable terms. The investment company with a focus on the energy sector said its net asset value at December 31, was USD1.24 billion, up from USD1.13 billion at the same point in 2013. That represents a net asset value per share of USD16.31 from USD16.04 per share a year earlier.
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Jardine Lloyd Thompson Group said it has struck a deal with French private equity house Ardian to sell its 26.2% stake in Milestone, the holding company of JLT's French associate, Siaci St Honoré. The sale of the stake will provide an exceptional gain for JLT of GBP21 million in 2015, the company said, with the net proceeds of the sale of GBP82.1 million to be paid in cash and to be used to repay debt.
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Intel Foundation sold its 4.9% interest in Imagination Technologies for GBP32.8 million, according to a statement from JP Morgan Securities PLC. The 13.4 million shares were placed at a price of 245 pence per share, JP Morgan said
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Property, residential, construction and services firm Kier Group said it has secured new contracts worth GBP177 million. GBP89 million of these contracts were awarded under the Procure 21+ framework, the company said.
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Energy consultancy RPS Group said it has acquired Texas-based Klotz Associates Inc in a USD24.1 million all-cash deal. Klotz provides engineering, planning and environmental consultancy services. For the year to the end of December, Klotz reported a pretax profit of USD3.6 million on revenue of USD26.2 million, RPS said.
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AIM Movers
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Mariana Resources, up 27%. The company has continued to rise, having gained 85% on Thursday following strong test results at its Hot Maden prospect in Turkey. Fitbug, up 20%. The health and fitness wearables and online services company said that it expects to post a wider full-year loss in line with its forecasts, as increased investment in the development of its products offset a near quintupling of product sales in its second half. Fitbug said its sales in the second half were GBP1.4 million, taking its full year sales to GBP2.34 million compared to just GBP749,000 in all of 2013. The stock is trading at 6.84 pence, compared to 0.35p as recently as mid-October. Cluff Natural Resources, up 9.1%. The company said it has entered a memorandum of understanding with a unit of US oil services company Halliburton related to developing Cluff's underground coal gasification and southern North Sea assets in the UK.
Aeorema Communications, off 24%. The company said it anticipates a stronger second half, after it posted a drop in pretax profit due to lower revenues in its first half. In the half year to end-December the live events agency posted a pretax profit of GBP101,316, more than halved from GBP225,941 a year before, as revenue fell to GBP1.7 million from GBP1.8 million.
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Other Top Economics And General
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The EU agreed to press ahead with sanctions aimed at eastern Ukrainian separatists and their Russian backers, amid wariness over an agreement brokered hours earlier to halt the escalating violence. The deal, struck between Moscow, Kiev and pro-Russian separatists after 17 hours of talks in Minsk, is widely seen as a last chance to end the conflict between Ukrainian government troops and pro-Russian separatists, in which more than 5,400 people have died. EU leaders later stressed at a summit in Brussels that actions must now follow, after a previous Minsk agreement - struck in September - was never implemented.
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European and Greek officials are headed for "very difficult" negotiations on Greece's bailout, a top eurozone official said, with the two sides locked in a standoff that observers worry could destabilize the currency area. "Don't get your hopes up yet...We are politically far apart," Jeroen Dijsselbloem, chief of the Eurogroup panel of eurozone finance ministers, told journalists in Brussels after meeting with new Greek Prime Minister Alexis Tsipras at an EU summit. "We still need to unravel serious political problems. But it helps to know how far apart we are."
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A leading indicator of economic activity in China rose at a slower pace in January, the results of a survey by the Conference Board showed. The Conference Board's leading economic indicators index for China increased 0.9% month-on-month in January following the 1.1% rise in December.
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Afternoon Watchlist (all times in GMT)
13:30 US Export and Import Price indices
13:30 Canada Manufacturing Shipments
14:55 US Reuters/Michigan Consumer Sentiment Index preliminary
18:30 US Fed's Richard Fisher's speech
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Monday's Key UK Corporate Events
Fidessa Group - Full Year Results
Hammerson - Full Year Results
Acacia Mining - Full Year Results
Infinis Energy - Interim Management Statement
DX Group - Half Year Results
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Monday's Key Economic Events (all times in GMT)
EU Eurogroup meeting
US President's Day
23:50 Japan Gross Domestic Product preliminary
00:01 UK Rightmove House Price Index
02:00 China New Loans and M2 Money Supply
04:30 Japan Industrial Production and Capacity Utilization
10:00 EU Trade Balance
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25 Jan 2017 09:47
