LONDON (Alliance News) - Company updates from blue-chips Experian, National Grid, Vodafone and ITV have been taken well by the market, with all four stocks up early Tuesday. Less well received was a trading statement from Wolseley, with the stock down 4.3%.
Meanwhile, shares in grocer Morrisons were down 2.4%, after being downgraded to Sell from Hold by Deutsche Bank.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,320.82
FTSE 250: flat at 17,114.96
AIM ALL-SHARE: flat at 744.21
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Hang Seng: closed down 1.4% at 22,401.70
Nikkei 225: closed up 0.2% at 19,671.26
DJIA: closed down 1.0% at 17,730.48
S&P 500: closed down 1.0% at 2,078.58
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GBP: flat at USD1.5101 (USD1.5121)
EUR: flat at USD1.0753 (USD1.0770)
GOLD: up at USD1,092.34 per ounce (USD1,090.01)
OIL (Brent): flat at USD47.20 a barrel (USD47.09)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in GMT)
09:00 Italy Industrial Output
09:00 UK Inflation Report Hearings
11:00 US NFIB Business Optimism Index
13:30 US Export and Import Price indices
13:55 US Redbook index
15:00 US Wholesale Inventories
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China's inflation eased more than expected in October largely reflecting a slowdown in food inflation, while producer prices continued its downward trend giving room for the central bank to ease its monetary policy further. Consumer prices rose 1.3% year-on-year in October, slower than the 1.6% increase seen in September. Inflation was forecast to slow marginally to 1.5%. Inflation slowed for a second month in a row and stayed well below the government's full year target of around 3%. Another report from NBS showed that producer prices decreased for 44 consecutive months in October. Producer prices fell 5.9% year-on-year in October, the same rate of decline as seen a month ago and in line with expectations.
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Like-for-like sales in the UK fell 0.2% on year in October, the British Retail Consortium said. That was well shy of forecasts for an increase of 0.8% and down from 2.6% in September. Overall sales were up 0.9% - beneath the three-month average of 1.8% and the one-year average of 1.9%. Food sales were up 0.5% over the last three months, while non-food sales advanced 2.9%. "A number of categories which we'd typically expect to be popular on Black Friday saw a slowdown in October, suggesting that some shoppers may be holding out in the hope of some great deals at the end of November," said Helen Dickinson, chief executive, British Retail Consortium.
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Eurozone finance ministers gave Greece until the end of the week to finalize reforms needed to unlock its next bailout tranche of EUR2 billion, as well as urgently required money to shore up its banking sector. Athens was granted an EUR86 billion rescue package in August - its third bailout in five years - in exchange for far-reaching reform pledges. But implementation has been lagging, hampered in part by snap elections held in September.
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EU industry ministers pledged their support to Europe's declining steel industry, with part of its woes blamed on "fierce" competition, most notably from China. The ministers, who met in Brussels, called for further talks to take place this year and proposed launching discussions with other steel producing countries outside the EU, such as China, Russia, Belarus, Turkey and India.
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Eleven EU countries, including the bloc's economic powerhouse Germany, failed on Monday to reach agreement on a disputed financial transaction tax, according to Spanish Finance Minister Luis De Guindos, who expressed hope that a deal can be clinched next month. Supporters of the levy have argued that it will help make the financial sector - which many see as the source of recent financial crises - act more responsibly. But critics have said it could increase the cost of capital and drive investment away from Europe.
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Long-term low oil prices would benefit consumers but could "trigger energy-security concerns" by increasing reliance on a handful of low-cost producers, and carry the risk of a sharp rebound in prices if investment falls short, the International Energy Agency warned. Falling oil prices have catalysed "forces that lead the market to rebalance, via higher demand and lower growth in supply," the IEA said in its annual World Energy Outlook. The report said its "central scenario" for growth suggests crude oil prices are likely to rise to around USD80 per barrel by 2020, up from about USD45 per barrel now.
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Russian Prime Minister Dmitry Medvedev said for the first time that the crash of Metrojet Flight 9268 in the Sinai may have been the result of a terrorist attack. "A terrorist attack is among the number of possible reasons why this happened," Medvedev said in the government newspaper Rossiyskaya Gazeta.
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BROKER RATING CHANGES
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DEUTSCHE BANK CUTS TESCO TO 'HOLD' ('BUY') - TARGET 210 (240) PENCE
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DEUTSCHE BANK CUTS MORRISON TO 'SELL' ('HOLD') - TARGET 155 (180) PENCE
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BARCLAYS RAISES RIO TINTO TO 'OVERWEIGHT' ('EQUAL WEIGHT') - PRICE TARGET 2800 (2850) PENCE
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BARCLAYS CUTS BHP BILLITON TO 'EQUAL WEIGHT' ('OVERWEIGHT') - PRICE TARGET 1155 (1580) PENCE
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TRADERS: BARCLAYS CUTS PREMIER OIL TO 'EQUAL WEIGHT' ('OVERWEIGHT')
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TRADERS: BARCLAYS INITIATES FAROE PETROLEUM WITH 'EQUAL WEIGHT'
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TRADERS: LIBERUM CUTS FAROE PETROLEUM TO 'HOLD' ('BUY')
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TRADERS: BARCLAYS CUTS CAIRN ENERGY TO 'UNDERWEIGHT' ('EQUAL WEIGHT')
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TRADERS: BARCLAYS CUTS VEDANTA TO 'UNDERWEIGHT' ('OVERWEIGHT')
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COMPANIES - FTSE 100
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National Grid confirmed media speculation that it is looking to sell its UK gas distribution business in order to rebalance its portfolio, with the proceeds being returned to shareholders. The process is likely to be completed in early 2017, National Grid said. National Grid's comments came as it reported a rise in pretax profit for the six months ended September 30 to GBP1.34 billion from GBP1.17 billion a year earlier. Revenue rose to GBP6.85 billion from GBP6.36 billion. The utility raised its interim dividend to 15.0 pence per share from the 14.71p a year earlier.
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Vodafone Group said its pretax profit and earnings both fell in the first half thanks to currency effects, though its underlying performance was relatively robust and it edged up its interim dividend. The telecommunications company said its pretax profit for the half to the end of September was GBP232.0 million, down from GBP406.0 million, thanks to slightly higher financing costs and lower investment income in the half. Vodafone said it will pay an interim dividend of 3.68 pence per share, up 2.2% from a year earlier.
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ITV said it expects to deliver strong double-digit profit growth for the full year and said its initial outlook for 2016 is encouraging, as it said revenue increased across the business in the first nine months of 2015. The blue-chip broadcaster said total external revenue for the nine months to the end of September was GBP2.05 billion, up from GBP1.80 billion a year earlier, while broadcast and online revenue rose 7.0% to GBP1.53 billion from GBP1.43 billion.
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Experian said foreign exchange will continue to exert an unwelcome pressure on the business at the full year, although it expects to see organic revenue growth at constant currency. The information services company said that as well as organic revenue growth in the mid-single digit range, it anticipates "stable" margins and further progress in its closely-watched benchmark earnings per share in its full 2016 financial year, all at constant current. The guidance came as Experian reported that pretax profit fell to USD458.0 million in the six months to September 30 from USD534.0 million in the corresponding half the prior year. Experian will pay a first interim dividend of 12.5 US cents, up 2%.
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Wolseley said revenue increased in the first quarter of the new financial year thanks to a strong performance in the UK, with trading profit also increasing. The building materials company said revenue for the three months to the end of October rose to GBP3.56 billion, up from GBP3.38 billion a year earlier. The growth in revenue was driven by the US, where construction markets remain very strong. Revenue from its UK and Nordic businesses was broadly flat in the quarter, but revenue from Canada and Europe fell due to soft markets and currency effects.
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Property developer Land Securities Group said its total property return underperformed the market in the first half but said it had pushed up its interim dividend as its revenue profit increased. The trust said its total business return for the half to the end of September was 7.0%, with an ungeared total property return of 5.9%, which underperformed the benchmark IPD Quarterly Universe return of 6.8%. Land Securities said it will pay an interim dividend of 16.3 pence per share, up from 15.8p a year earlier. Land Securities also said it has pre-let 92,000 square feet at the Zig Zag Building in Victoria in London to Deutsche Bank on a 15-year lease.
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The outgoing chief of Whitbread, owner of Premier Inn, said the UK government is giving start-up technology companies an unfair advantage by allowing them to take a more relaxed approach to the rules than established players, The Times reported. Andy Harrison, due to step down from Whitbread in December to be replaced by Alison Brittain, said both the government and new industry players could do more to ensure a level playing field in complying with the law, including on paying tax. His comments were aimed primarily at Airbnb, which allows people to list their properties for holiday rentals.
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Tesco's chief executive attacked the business rates system of property taxes in the UK as "unsustainable" and in need of "urgent reform" when speaking at the Confederation of British Industry Conference on Monday, the Financial Times reported. Dave Lewis said over the past five years, property values have fallen and profit has dropped, but business rates have increased "quietly but dramatically". He added the GBP8.0 billion a year paid by UK retailers accounted for more than a quarter of the rates bill and was significantly higher than any other sectors. As a result, Lewis said retailers are facing a "potentially lethal cocktail" from business rates and the introduction of the National Living Wage, an effective minimum wage for workers in the UK over the age of 25.
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Sky late Monday said it has successfully priced EUR500 million of euro-denominated bonds to be issued under its GBP5 billion global medium-term note programme. The net proceeds will be used to refinance existing bond maturities and for general corporate purposes, Sky said.
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COMPANIES - FTSE 250
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AVEVA Group said that it hopes to reach definitive terms over the acquisition of industrial software assets from Schneider Electric in December, with completion expected by mid-2016, as it said it swung to an interim pretax loss. The update on the deal came as AVEVA said it swung to a pretax loss of GBP773,000 in the six months to September 30 from a GBP14.2 million pretax profit in the corresponding half the prior year. AVEVA increased its interim dividend per share to 6.0 pence from 5.5p.
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Publishing and events company UBM said it has continued to trade in line with its expectations in 2015 and its profit outlook for the year is unchanged. The company said its largest events have continued to drive its performance. PR Newswire and the group's other marketing service brands continue to trade in line, it said, while the Advanstar business is trading in line. It added the talks on the potential sale of PR Newswire are ongoing.
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Distribution and logistics company DCC said its revenue dipped in the first half but said pretax profit increased thanks to an improvement in its gross margin. DCC said its pretax profit for the half to the end of September was GBP52.5 million, up from GBP42.6 million a year earlier. DCC said it will pay an interim dividend of 33.04 pence per share, up 15% year-on-year. DCC said it expects its operating profit and earnings will be "very significantly" ahead year-on-year for the full year to the end of March 2016 and "modestly" ahead of market expectations assuming normal winter weather conditions prevail for the remainder of the financial year.
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Specialist healthcare company BTG reported a rise in pretax profit in the first half of its financial year after all four of its business segments posted higher revenue, leaving it set to produce double-digit revenue growth for the full year. BTG reported a rise in pretax profit in the six months ended September 30 to GBP52.9 million from the GBP37.6 million profit reported a year earlier as revenue increased 20% to GBP229.6 million from GBP191.2 million.
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COMPANIES - INTERNATIONAL
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Strikes by flight attendants at German carrier Lufthansa will last into a fourth day on Tuesday, the flight attendants' union, Ufo, union said. Lufthansa said late Monday that 136 flights already had been cancelled, affecting about 27,300 passengers.
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Cable giant Comcast has asked 200,000 of its customers to reset their login information, following a suspected security breach. However, the company denies that it was hacked. CSO, which specializes in security and risk management, said a post on the Dark Web claimed to sell some 590,000 Comcast user emails and passwords for USD1,000. Of these, only some 200,000 were reportedly active.
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Facebook reportedly said it would appeal a privacy decision by a Brussels court to stop tracking its users in Belgium without their consent. The reports said that a Brussels commercial court, Belgium had ruled that Facebook must stop within 48 hours the collection of data on users' Internet browsing when they are not logged in. If they didn't stop, then Facebook would face a daily fine of EUR250,000.
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Tuesday's Scheduled AGMs/EGMs
A&J Mucklow
Redrow
Hutchison China Meditech
International Public Partnerships
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
24 May 2016 08:20
