LONDON (Alliance News) - Shares have opened higher in London Tuesday, cheered by better-than-expected Chinese trade figures and not-as-bad-as-expected Christmas sales by Wm Morrison Supermarkets.
Shares in Morrisons lead FTSE 100 gainers, up 5.9%, after the grocer announced that Chief Executive Dalton Philips will step down after five years at the helm, while at the same time revealing a 3.1% fall in like-for-like sales excluding fuel over the Christmas period, which it said represented an improvement over recent quarters.
Shares in fellow supermarkets Tesco and Sainsbury are benefitting, up 2.6% and 2.0%, respectively. The Kantar Worldpanel UK grocery market-share figures are out later Tuesday morning.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: up 0.2% at 6,515.26
FTSE 250: up 0.4% at 16,000.05
AIM ALL-SHARE: up 0.1% at 704.39
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Hang Seng: closed up 0.8% at 24,215.97
Nikkei 225: closed down 0.6% at 17,087.71
DJIA: closed down 0.5% at 17,640.84
S&P 500: closed down 0.8% at 2,028.26
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GBP-USD: down at USD1.5136
EUR-USD: up at USD1.1837
GOLD: up at USD1,241.80 per ounce
OIL (Brent): down at USD45.58 a barrel
(changes since end of previous GMT day)
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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
09:30 UK Consumer, Retail and Producer Price indices
12:30 US NFIB Business Optimism Index
13:55 US Redbook index
15:00 US IBD/TIPP Economic Optimism
15:00 US JOLTS Job Openings
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Like-for-like retail sales in the UK were down 0.4% on year in December, the British Retail Consortium said. That was well shy of forecasts for an increase of 1.0% on year following the 0.9% gain in November. Non-food sales provided support with a 7.0% online gain. Overall sales gained just 1.0%, slowing from 1.8% in November to mark the slowest December in six years.
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GERMANY DEC WHOLESALE PRICES DOWN 2.3% ON YEAR VS. -1.1% IN NOVEMBER
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The European Central Bank should act sooner rather than later to lift inflation, Governing Council member Ewald Nowotny said. He noted that there is a long lag in the effect of monetary policy action. Eurozone inflation turned negative for the first time in more than five years in December. The central bank is widely expected to unveil quantitative easing at its next meeting on January 22. Nowotny said discussions on range of options for quantitative easing are continuing at the central bank. He said it is important to have no legal concerns about quantitative easing.
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The US Federal Reserve is on track to raise interest rates by the middle of the year, according to Atlanta Fed President Dennis Lockhart. The US economy is now "hitting on all cylinders," Lockhart told the Rotary Club of Atlanta Monday morning. "The recovery that began in 2009 is well-advanced." Days after the Labor Department said US unemployment dropped to 5.6% in December, Lockhart acknowledged "more improvement in labor markets in 2014 than in any other year of the recovery." Perhaps as important, Lockhart said he expects wages to rise. Stagnant wages were a dark lining on December's otherwise strong jobs report, prompting some Fed officials to urge patience before hiking rates.
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China's trade surplus decreased slightly less than expected in December, figures from the customs office showed . The trade surplus fell to USD49.1 billion in December from USD54.48 billion in November. Economists had expected the trade surplus to decrease to USD49 billion. Exports grew 9.9% year-over-year in December, which was faster than the 6% rise expected by economists. In November, exports had increased 4.7%. Imports declined 2.3%, slower than the 6.2% drop forecast by economists. In November, imports had decreased 6.7%.
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Japan posted a current account surplus of JPY433.0 billion in November, the Ministry of Finance said. That beat expectations for a surplus of JPY139.5 billion following the JPY833.4 billion surplus in October. The trade balance showed a deficit of JPY636.8 billion versus forecasts for a shortfall of JPY734.0 billion following the JPY766.6 billion deficit in the previous month.
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A measure of people's assessment of the Japanese economy improved in December after worsening in the previous two months, survey figures from the Cabinet Office showed. The current index of the economy watchers survey rose by 3.7 points to 45.2 in December from 41.5 in November. Economists had forecast the index to rise to 44.0. A reading above 50 suggests optimism and a score below 50 indicates pessimism. The latest increase was the first in three months.
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Charlie Hebdo, the French satire magazine attacked by gunmen last week, will feature cartoons of the prophet Mohammed in its next edition, French news media said late Monday. The cover shows a turbanned man weeping under the caption "All is forgiven," in French, holding a sign saying "I am Charlie," according to a draft published by Liberation daily online. The French slogan "je suis Charlie" emerged as a message of solidarity after two masked gunmen killed 12 people at the magazine's office Wednesday, shouting "Allah is great" and "We have avenged the prophet."
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Indonesian divers retrieved the cockpit voice recorder of the crashed AirAsia flight, a news report said. The recorder had been recovered to a navy ship, a Transport Ministry official was quoted as saying by Metro TV. Indonesian search teams earlier Tuesday were deployed to a spot about 20 metres from where the flight data recorder was retrieved on Monday. The voice recorder was stuck underneath a large piece of wreckage, and the divers were sent down with inflatable lifting bags to free it, Air Commodore Suryadi Surpriyadi, the search operation director, was quoted as saying at the start of the operation.
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The Twitter and YouTube accounts of US Central Command were hacked on Monday, the Pentagon said. Hackers claiming to be from Islamic State had posted videos appearing to be from the terrorist group on YouTube, and posted Power Point slides on Twitter that it claimed it had hacked from military computers. The Twitter posts threatened US soldiers and their families, claiming "we broke into your networks and personal devices and know everything about you."
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BROKER RATING CHANGES
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BERNSTEIN RAISES SKY TO 'OUTPERFORM' ('MARKET-PERFORM') - TARGET 1050 (900) PENCE
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BERNSTEIN RAISES ITV TO 'OUTPERFORM' ('MARKET-PERFORM') - TARGET 250 (220) PENCE
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BARCLAYS REINITIATES LONDON STOCK EXCHANGE WITH 'OVERWEIGHT'
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TRADERS: JEFFERIES INITIATES TULLOW OIL WITH 'UNDERPERFORM' - TARGET 345 PENCE
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UBS CUTS PEARSON TO 'NEUTRAL' ('BUY') - TARGET 1200 PENCE
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SOCGEN CUTS ROLLS-ROYCE TO 'SELL' ('HOLD') - TARGET 770 (800) PENCE
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COMPANIES - FTSE 100
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Wm Morrison Supermarkets announced that Chief Executive Dalton Philips will step down after five years at the helm, while at the same time the supermarket chain revealed a 3.1% fall in like-for-like sales excluding fuel over the Christmas period. Philips will continue as CEO until the company's year-end results. Morrisons Chairman Ian Gibson will retire on January 22, with Chairman Elect Andrew Higginson succeeding him as chairman after that date. Morrisons also gave a trading update for the six-weeks to January 4, saying that like-for-like sales improved on recent quarters.
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Meggitt said its training systems business has won a USD31.7 million contract to provide indoor simulated marksmanship training systems from the US Marine Corps. In a statement, the aerospace, defence and energy market engineer said the five-year indefinite quantity deal covers the design, development, installation and support for some 670 systems and weapon simulators at US Marine Corps facilities in the US and abroad.
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COMPANIES - FTSE 250
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Debenhams reported good sales growth for the key Christmas trading period, and crucially said it had been less reliant on discounting to pull shoppers into its stores, although it warned that margin growth had been capped as sales of low-margin products were particularly strong. In its trading statement Tuesday, the company said like-for-like sales in the four weeks to January 10 rose 4.9% on the year, driven particularly by online sales which grew 28.9%. It said sales in 'Black Friday' week rose 10.3% thanks partly to its promotional event and online orders on Black Friday itself were up 125%. However, for the four weeks as a whole, it had 10 fewer days on promotion and it reported a 12.1% increase in own bought full-price sell-through.
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Greggs said it expects its full-year results to be ahead of expectations following a rise in sales over the year and a boost from a strong Christmas period. Greggs said total sales for the 53 weeks to January 3 are expected to be up 5.5%, with own-shop like-for-like sales expected to increase 4.5%. The rise in sales includes an extra trading week against the year before. Fourth quarter own-shop like-for-like sales rose 6%, it said, boosted by an 8.2% rise in the five weeks to January 3. Greggs said it expects its results to be ahead of its expectations for the full year and said conditions for the first half of 2015 were strong, with low input-cost inflation and an improved outlook for its disposable income.
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Rathbone Brothers reported a rise in funds under management over the course of the fourth quarter, bolstered by its main investment management business and helped by the performance of its unit trusts. The investment manager also said it expects results for 2014 to be in line with expectations. In a statement, the FTSE 250 constituent, which manages the investments and wealth of private clients, charities and trustees, said total funds under management increased to GBP27.2 billion at the end of 2014, up from GBP26.3 billion at the end of September, and GBP22.0 billion at the end of 2013.
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Ashmore Group reported a drop in assets under management during the last three months of 2014, hit by a negative investment performance stemming from the markets sell-off in early December, as well as net outflows. In a statement, the emerging markets asset manager reported USD63.7 billion of assets under management at the end of 2014, a drop from the USD71.3 billion in assets managed at the end of September. Ashmore reported a negative investment performance of USD2.8 billion, net outflows of USD4.2 billion, and the disposal of its stake in a Chinese real estate joint venture that reduced alternatives assets under management by USD0.6 billion.
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Galliford Try said its Morrison Construction arm has reached financial close on the GBP31.2 million Hub South West Scotland Ltd contract. Morrison will handle the construction of the new Greenfaulds High School on behalf of North Lanarkshire Council, part of its Schools and Centres 21 scheme. Galliford will invest GBP0.7 million in funding for the project.
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Big Yellow Group reported strong growth in revenue during its fiscal third quarter, partly driven by its acquisition of the whole of the Big Yellow Limited Partnership, and said the decline in occupancy in what is traditionally a weaker quarter was lower than in the previous year. In a trading update Tuesday, it said revenue was GBP21.3 million in the three months to December 31 including those stores, up from GBP18.3 million a year earlier. Excluding the partnership stores, revenue for the latest quarter was GBP20.3 million.
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Building products group SIG said it expects an improvement in underlying pretax profit and revenue for 2014, despite being held back by currency movements. The FTSE 250-listed company said it expects its underlying pretax profit for the year to December 31 to be marginally ahead of what it cited as the Bloomberg market consensus of GBP96.5 million. That would be an increase on the GBP90 million posted for the year earlier. The company said it expects revenue from continuing operations for the year to be GBP2.6 billion, up 2.5% year-on-year despite adverse foreign currency translation effects which cut sales by 3.1%.
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Cairn Energy said it is focusing on delivering a multi-well appraisal and exploration programme in Senegal during 2015, alongside developing its two projects in the UK North Sea. The company said it was committed to its exploration programme in Senegal, in which it holds a 40% interest, after successful drilling on the Atlantic basin during 2014, saying it has potential for short-term growth.
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Michael Page International reported profit growth across all its operating regions in the fourth quarter, with gross profit for the full year expected to increase in spite of a drag from currency. For the fourth quarter to December 31, the FTSE 250-listed recruitment group said gross profit increased to GBP136.2 million, up 8.9% against the GBP125.1 million reported last year.
For the full year, the group expects to post gross profit of GBP532.7 million, up 3.7% from the GBP513.9 million reported last year, when it had posted a 2.5% fall.
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Pace said it expects its 2014 profits to be above its previous guidance, after revenue growth was particularly strong in the second half of the year thanks partly to new product launches and its acquisition of networks infrastructure company Aurora Networks. The company also said it is confident of making "further progress" in 2015 and beyond.
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Spire Healthcare Group upgraded its revenue expectations for the year after strong trading in the fourth quarter and said it expects its earnings for the year to increase on the back of the contribution from the St Anthony's hospital acquisition. Spire said its trading in the fourth quarter was positive, meaning it now expects revenue for 2014 to be between GBP850 million and GBP855 million, an upgrade on the GBP825 million to GBP840 million guidance it gave in its interim statement in November. The group expects its earnings before income, taxation, depreciation and amortisation for the full year to be GBP157 million to GBP160 million. That compares to EBITDA of GBP150 million for 2013.
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The government is set to strip the consortium handling the GBP9 billion nuclear decommissioning contract for Sellafield of its mandate, the BBC reported. The BBC said a spokesman for the Department of Energy and Climate Change said it was "working with industry experts on alternative options". The Nuclear Management Partners consortium includes AMEC Foster Wheeler, French engineer Areva and US engineering group URS Corp.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Online fashion retailer ASOS reported a 15% rise in retail sales for the six-week period covering the all-important Christmas trading season, bolstered by double-digit growth in the UK. However, retail gross margin was down circa 200 basis points on the prior year. Chief Executive Nick Robertson said that trading in the last six weeks was in line with expectations, and explained the fall in retail gross margin. "UK sales remained strong at plus 27%. Improved international sales at plus 5% indicates an initial encouraging response to our planned price investments, also reflected in the retail gross margin performance which is in line with expectations for the period," Robertson said in a statement.
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UK Mail Group said trading in its main businesses had met its expectations in the Christmas quarter and it has taken on some volumes from former City Link customers, while it has also decided to close its struggling pallets business. City Link went into administration over the Christmas period, which UK Mail said is likely to have a positive impact on the overall UK parcels market. In a trading update, the smaller competitor to Royal Mail said its main businesses performed well in its fiscal third quarter to end-December, with its parcels operation handling "record" volumes during the peak weeks in the run-up to Christmas. It said its expectations for the core businesses remain unchanged for the whole of the financial year.
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COMPANIES - INTERNATIONAL
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Alcoa Inc, the largest US aluminium producer, said Monday after the markets closed that it swung to a fourth quarter profit, helped by higher aluminium prices and strong demand from the automotive and aerospace markets, as well as the absence of a hefty goodwill impairment charge that the company took in the prior year period. The company's quarterly earnings per share, excluding items, also handily beat analyst estimates as did its quarterly sales.
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Chinese telecommunications giant Huawei said its turnover for 2014 was 20% higher than 2013. Revenue topped CNY287 billion (USD46.2 billion), company finance chief Cathy Meng said in Beijing. Consumer products saw sales increase by 32%, while network products generated 15% more revenue than the previous year, it said. Operating profits were expected to reach CNY34 billion, up around 17%, the company was quoted by the Wall Street Journal as saying.
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Tuesday's Scheduled AGMs/EGMs
Carrs Milling Industries
Spirit Pub Company
Greene King
Gulfsands Petroleum
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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