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LONDON (Alliance News) - London shares have opened lower Thursday, following weak leads from Wall Street and Asia and as voting gets underway in a too-close-to-call UK General Election.
RSA Insurance and BT Group are top FTSE 100 gainers, up 2.7% and 1.0%, respectively. RSA reported an encouraging start to the year, while BT posted results in line with expectations for its recently ended financial year, and said it expects to achieve "modest" growth in earnings for the current year.
TeleCity leads the FTSE 250 by a mile, up 20%, after receiving a takeover offer that it is considering.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.8% at 6,880.83
FTSE 250: down 0.4% at 17,342.31
AIM ALL-SHARE: down 0.1% at 750.96
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Hang Seng: down 1.3% at 27,284.90
Nikkei 225: closed down 1.2% at 19,291.99
DJIA: closed down 0.5% at 17,841.98
S&P 500: closed down 0.5% at 2,080.15
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GBP: down at USD1.5216
EUR: up at USD1.1362
GOLD: down at USD1,183.99 per ounce
OIL (Brent): up at USD67.84 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 BST)
12:30 US Challenger Job Cuts
13:30 US Initial and Continuing Jobless Claims
13:30 Canada Building Permits
15:30 US EIA Natural Gas Storage
20:00 US Consumer Credit
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German factory orders recovered in March after falling for two straight months, data from Destatis showed. Factory orders grew 0.9% month-on-month in March, offsetting February's 0.9% fall. Domestic orders increased 4.3%, while foreign orders declined 1.6%.
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Six weeks after his conservative Likud party won parliamentary elections, Israeli Prime Minister Benjamin Netanyahu late Wednesday - in the 11th hour - finalized a right-wing, religious coalition with a majority of just one seat. The coalition of the Likud, the centre-right Kulanu party of Finance Minister-designate Moshe Kahlon, two ultra-Orthodox parties, and - finally - the pro-settler Jewish Home party has 61 seats in Israel's 120-seat parliament.
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The United Nations is initiating fresh efforts for peace in Yemen with the UN Special Envoy on Yemen, Ismail Ould Cheikh Ahmed, conducting intensive consultations to put the political process back on track for the country, where conflict erupted in late March.
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BROKER RATING CHANGES
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S&P CAPITAL IQ CUTS GLAXOSMITHKLINE TO 'SELL' ('HOLD') - PRICE TARGET 1420 PENCE
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TRADERS: JEFFERIES INITIATES PREMIER OIL WITH 'HOLD'
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COMPANIES - FTSE 100
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BT Group posted results in line with expectations for its recently ended financial year, and said it expects to achieve "modest" growth in earnings for the current year, despite some additional costs from the launch of its UEFA Champions League and UEFA Europa League content in the year. BT reported pretax profit of GBP2.65 billion for the year to the end of March, up from GBP2.31 billion a year before, as a decline in revenue to GBP17.98 billion from GBP18.29 billion was offset by a reduction in operating costs of 7%. According to broker forecasts provided by the company, BT was expected to post a pretax profit of GBP2.65 billion on revenue of GBP17.90 billion. The company proposed a final dividend of 8.5 pence, giving it a total dividend for the year of 12.4p, up 14% from 10.9 pence the year before.
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Wm Morrison Supermarkets reported a drop in sales in its first quarter but said the company's financial position remains "strong" as it predicted higher profit in the second half of its financial year than in the first. The grocer said total sales in the 13 weeks to May 3 were down 5.1% on the same period a year earlier, while like-for-like sales were down 6.6%. It said more stores were closed in the period than opened, as part of its restructuring plans, leading to a net reduction in selling space of over 50,000 square feet. Steps to "simplify" the head office, which is resulting in a number of job cuts, is anticipated to incur costs of GBP30 million to GBP40 million during the financial year.
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BAE Systems said its outlook remains unchanged and trading so far in 2015 has been in line with management expectations. In a statement ahead of its Annual General Meeting, the defence contractor reiterated that it expects its underlying earnings per share to be marginally higher in 2015 than 2014, "including some reliance on anticipated naval and aircraft orders".
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Aviva reported higher levels of new business, bolstered by operations in the UK & Ireland, Europe and Asia. The group said its integration of Friends Life is ahead of schedule, following the GBP5.6 billion acquisition of its former rival. In a statement, the life insurer and FTSE 100 constituent said value of new business increased to GBP247 million in the three months ended March 31, compared with GBP224 million in the corresponding quarter of the prior year.
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RSA Insurance Group cautioned that lower interest rates and currency moves in its vital areas of business are having an unwelcome effect on business, but the insurer said its net profit in the first quarter of 2015 was "a little ahead" of plans and included gains it is expecting to make on asset sales. In a statement, RSA said net written premiums decreased to GBP1.59 billion in the three months ended March 31, compared with GBP1.73 billion in the corresponding period of the prior year. Excluding the group's new reinsurance coverage programme, discontinued and non-core operations, core group net written premium fell to GBP1.58 billion from GBP1.62 billion.
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Randgold Resources reported a steep drop in profit for the first quarter of 2015, as cost cutting only partially offset an impact from the fall in the gold price and the rise in the dollar against currencies including the euro, South African rand and Canadian dollar. The gold producer reported a net profit of USD48.2 million for the three months to end-March, down from USD74.3 million a year earlier. Gold sales declined to USD344.6 million from USD362.9 million, as the average gold price it received dropped to USD1,215 an ounce from USD1,296 an ounce.
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Low-cost airline easyJet joined the African airline backed by its founder, fastjet, in reporting another increase in passenger numbers in April, while traffic at Irish airline Aer Lingus fell in the month as a drop in its short-haul operations more than offset growth in long-haul. EasyJet said it flew 6.0 million passengers in April, up from 5.8 million a year earlier, while its load factor, a measure of how many paid seats are filled on its planes, rose to 90.8% from 89.8%.
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Four big banks are expected to plead guilty to rigging foreign-currency exchange rates and pay billions in combined penalties as part of settlement agreements expected to be announced as early as next week, the Wall Street Journal reported citing people familiar with the matter. The report indicated that US prosecutors are preparing to announce separate settlements simultaneously with Citigroup, Barclays, JPMorgan Chase and The Royal Bank of Scotland Group. The banks are expected to plead guilty to criminal antitrust charges for alleged collusion by traders in foreign-currency markets. UBS also is expected to reach a settlement but will receive immunity from prosecution.
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Production workers at ITV and other staff at the broadcaster have voted to strike on May 14 in a dispute over pay, the BBC reported. The 24-hour strike by members of the Bectu union could impact ITV's live programmes, including Good Morning Britain and ITV News bulletins. Bectu said staff had voted in favour of the strike in protest over ITV's offer of a 2% pay rise, which the union described at "miserly".
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COMPANIES - FTSE 250
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Bookmaker Ladbrokes said Chairman Peter Erskine will step down from his role later in 2015. Ladbrokes said it has started a search to identify a successor to Erskine, with the process being led by senior non-executive director John Kelly. Erskine has been Ladbrokes' chairman since 2009 and will work with the board on the transition to a new chairman.
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Petra Diamonds announced the pricing for its USD300 million notes issue. FTSE 250-listed Petra said interest on the USD300 million of senior secured second-lien notes due 2020 will accrue at 8.25% per year, payable semi-annually.
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Derwent London said it has secured more lettings in the first four months of the year than in the whole of 2014, as its vacancy rate fell and the group said it has a robust development pipeline in place. The property company said it has secured 225,400 square feet of lettings in the four months to the end of April, securing GBP11.3 million per year in rent. The rental income secured in the year so far is 23% ahead of the total the company secured across 2014, it said.
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TeleCity Group said it has received a takeover approach from American data-centre provider Equinix Inc, a few months after agreeing an all-share deal to acquire data-centre services provider Interxion Holding NV. Telecity also reiterated its guidance for 2015. Equinix has approached with a potential offer of 1,145 pence per share, payable in a mixture of cash and stock in Equinix. Around 54% of the consideration would be payable in cash, and 46% in Equinix stock. TeleCity shares closed at 899.50 pence Wednesday and opened at 1,073.00p Thursday.
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Millennium & Copthorne Hotels reported lower profit in its first quarter, despite a rise in revenue and in revenue per available room, as profit was hit by labour cost pressures and a tough comparative in 2014. The hotels operator said pretax profit in the three months to March 31 declined to GBP19 million from GBP20 million the year before. This was despite an increase in revenue to GBP189 million from GBP175 million and a rise in revenue per available room to GBP61.60 from GBP58.23.
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Galliford Try said it has won two contracts in the education sector worth up to GBP55 million.
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Engineering company IMI said its market conditions remained challenging in the first quarter of 2015 and said its revenue dropped on the back of foreign exchange movements and contract delays. IMI said its revenue in the first quarter to the end of March was down 4% year-on-year. Based on its current performance and market conditions, FTSE 250-listed IMI said it expects organic revenue and margins in the first half to be weaker year-on-year, though it expects an improvement in the second half. Despite that improvement, however, it said organic revenue and margins will be slightly weaker year-on-year for the full year.
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COMPANIES - LONDON MAIN MARKET AND AIM
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ScS Group said trading in the 10 weeks to April 4 was in line with expectations, with like-for-like order intake up 7.6%, but like-for-like order intake in the four weeks to May 2 was 15.9% below last year. The furniture retailer said trading over the Easter Bank Holiday weekend and the first May Bank Holiday weekend was hit by warmer weather coinciding with peak sales periods, resulting in lower footfall in stores.
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COMPANIES - INTERNATIONAL
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German conglomerate Siemens reported that its net income attributable to shareholders for the second-quarter significantly increased to EUR3.887 billion from the previous year's EUR1.124 billion. The latest-quarter result included EUR1.6 billion, EUR1.4 billion and EUR0.2 billion, respectively, on the sale of the hearing aid business, Siemens' stake in BSH Bosch und Siemens Hausgeräte and the hospital information business. Quarterly revenue grew to EUR18.049 billion from last year's EUR16.695 billion.
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German lender Commerzbank reported that its net profit for the first quarter of 2015 increased to EUR366 million from EUR200 million euros in the prior year. This included restructuring expenses of EUR66 million for the Corporates & Markets and Non-Core Assets or NCA segments. Operating profit for the quarter more than doubled to EUR685 million from EUR324 million in the previous year. Quarterly revenue before loan loss provisions increased by 23% to about EUR2.8 billion from EUR2.3 billion in the prior year.
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Dutch banking firm ING Group posted a profit of EUR1.769 billion for the first quarter, including Insurance results. This compares to last year's loss of EUR1.917 billion. On an underlying basis, ING's net result grew 43% to EUR1.187 billion, driven by robust growth in the lending book and a seasonally strong first quarter in Financial Markets. Net result from banking surged to EUR1.173 billion from last year's EUR264 million. For the quarter, total underlying income rose more than 13% to EUR4.335 billion.
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National Australia Bank reported that net profit attributable to owners of the company for the half year ended 31 March 2015 was AUD3.44 billion, an increase of AUD584 million or 20% from last year.
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Life insurer MetLife reported first-quarter net income of USD2.1 billion, compared with USD1.3 billion. Results for the quarter included USD534 million in net derivative gains, reflecting the weakening of foreign currencies against the dollar and lower interest rates. Total revenue for the quarter marginally fell to USD17.03 billion from USD17.12 billion a year ago. Analysts expected revenue of USD17.53 billion.
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Swiss insurance company Zurich Insurance Group reported that first-quarter business operating profit or BOP, declined 6% to USD1.30 billion from USD1.38 billion in the year-ago quarter, largely due to a stronger US dollar. The company reported first-quarter combined ratio was 96.7%, compared to 95.9% in prior year, benefiting from low level of catastrophe losses. Total revenue for the quarter increased to USD22.91 billion from last year's USD16.87 billion.
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Electric car maker Tesla Motors said its first quarter loss widened from last year, as higher costs and expenses more than offset a 51% increase in revenue. However, the company's adjusted quarterly loss per share was narrower than analysts estimated and its quarterly revenue beat analysts' forecast. At the same time, the company reaffirmed its delivery target for the current year.
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Thursday's Scheduled AGMs/EGMs
Glencore
CRH
GKN
IMI
Millennium & Copthorne Hotels
BAE Systems
Provident Financial Group
William Hill
GlaxoSmithKline
Ladbrokes
Gresham Computing
Rightmove
BrainJuicer
Charles Taylor
Kaz Minerals
Morgan Sindall
Reckitt Benckiser
Communisis
Trinity Mirror
Alent
Oxford Biomedica
Fevertree Drinks
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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