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LONDON (Alliance News) - Shares have opened firmly in London Friday, continuing their rebound from losses earlier in the week, following a strong lead from Wall Street and Asian markets.
JD Wetherspoon shares are down 2.7%, after the FTSE 250 pub chain reported higher interim revenue and profit but continued pressure on profit margins.
Oil explorer Afren, soon to leave the mid-cap index, said it has reached an agreement in principle to address its short- and longer-term funding needs and recapitalise its capital structure, but also warned it will be making significant impairments in 2014 followed by significant budget cuts in 2015.
The stock is down 9.3% Friday, shrinking its market cap to just GBP65 million.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: up 0.1% at 6,765.30
FTSE 250: up 0.2% at 17,101.10
AIM ALL-SHARE: up 0.2% at 717.72
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Hang Seng: closed up 0.1% at 23,823.21
Nikkei 225: closed up 1.4% at 19,254.25
DJIA: closed up 1.5% at 17,895.22
S&P 500: closed up 1.3% at 2,065.95
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GBP-USD: down at USD1.4873
EUR-USD: down at USD1.0619
GOLD: up at USD1,159.68 per ounce
OIL (Brent): down at USD56.82 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times in GMT)
09:00 Italy Consumer Price Index
12:30 Canada Unemployment Rate
12:30 US Producer Price Index
13:55 US Reuters/Michigan Consumer Sentiment Index Preliminary
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Japan's industrial production increased less than initially estimated in January, final data from the Ministry of Economy, Trade and Industry showed. Industrial output advanced 3.7% month-on-month in January, slower than the 4% expansion estimated initially. In December, production grew 0.8%. On a yearly basis, industrial production declined 2.8% in January. The capacity utilisation rate grew 3.6% from the prior month, following a 2% rise in December.
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Germany's wholesale prices declined at a slower pace in February, data from Destatis showed. Wholesale prices decreased 2.1% year-on-year in February, slower than the 2.6% decline seen in January. Nonetheless, the wholesale price index has been declining since July 2013. The annual decline was largely driven by a 15.7% fall in the wholesale prices of solid fuels and related products.
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European Central Bank's Benoit Coeure said in a speech that the quantitative easing programme has gotten off to a smooth start and that the bank did not face any problems in finding bonds. The banks have purchased EUR9.8 billion of debt in the first three days of the easing programme with an average maturity of nine years, he said. "QE is working, there is no doubt it will work," he said in his speech in Paris.
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The Indian parliament opened the country's insurance sector to greater foreign investment, in the first new business law by the government that came to power in May promising economic reform.
Foreign investors will be able to increase their participation in Indian insurance companies to 49%, up from the previous cap of 26%, under the bill passed by the upper house, Finance Ministry DS Malik said.
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The shooting of two Missouri police officers early Thursday stirred anew worries in the racially troubled town of Ferguson, Missouri, and drew condemnation from around the country. Tactical police launched a massive manhunt for the shooter and swarmed a house not far from where the shooting occurred, according to the St Louis Post Dispatch newspaper. In the assault, the two officers narrowly escaped serious injury and have been released from hospital. They had been standing guard during a midnight protest in front of the Ferguson police department. Just hours before, Ferguson's controversial police chief, Thomas Jackson, had resigned.
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BROKER RATING CHANGES
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UBS RAISES WHITBREAD TO 'NEUTRAL' ('SELL') - TARGET 5400 (4700) PENCE
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SOCGEN CUTS SAGE GROUP TO 'SELL' ('HOLD') - TARGET 435 (430) PENCE
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SOCGEN RAISES ASOS PRICE TARGET TO 4666 (4450) PENCE - 'BUY'
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COMPANIES - FTSE 100
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The United Steelworkers announced it has reached a tentative agreement on a new four-year contract with Royal Dutch Shell's Shell Oil as a pattern agreement for the rest of the industry. The agreement accomplishes the major goals as directed by the USW's oil conference in October of last year, it said, and has been approved by union's lead negotiators and National Oil Bargaining Policy Committee. The tentative agreement calls for yearly wages increases as well as maintaining the current health care plan cost-sharing ratio.
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US healthcare company Johnson & Johnson has sued UK rival GlaxoSmithKline, alleging Glaxo is attempting to unlawfully win market share with false advertising at the start of the spring allergy season in the US, Reuters reports. Two units of J&J, McNeil-PPC Inc and McNeil Consumer Healthcare, filed the suit in Manhattan, accusing Glaxo os making unsupported claims about its allergy nasal spray Flonase at the expense of McNeil's Benadryl and Zyrtec drugs. A spokeswoman for Glaxo told Reuters the company is reviewing the lawsuit.
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COMPANIES - FTSE 250
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JD Wetherspoon reported strong sales growth in the first half of its financial year but a lower operating margin owing to higher rates of pay for pub staff and higher utility costs. The pub chain said revenue was up 9.0% at GBP744.4 million in the 26 weeks to 25 January from GBP683.2 million a year earlier. Like-for-like sales were up 4.5%. However, operating margin narrowed to 7.4% from 8.2%. Pretax profit rose 4.1% to GBP37.5 million in the half year from GBP36.0 million in the same period the year before. Wetherspoon left its interim dividend flat at 4.0 pence per share.
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Afren said it has reached an agreement in principle to address its short- and longer-term funding needs and recapitalise its capital structure, but also warned it will be making significant impairments in 2014 followed by significant budget cuts in 2015. The oil company said it has entered into an agreement with some holders of its 2016, 2019 and 2020 notes, and with the majority of its lenders under the company's existing USD300 million Ebok credit facility, to secure interim funding and recapitalise the business. The net funding of the agreement will total USD300 million if approved by shareholders, and Afren is hoping to secure the deal by the end of June.
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Vedanta Resources joined Cairn Energy in announcing Cairn India Ltd is facing a substantial tax order from the Indian Income Tax Department in relation to the fiscal year 2006 to 2007. On Tuesday, Cairn Energy, which holds a 10% stake in Cairn India, said it is disputing a draft assessment order from the Indian Income Tax Department calling for it to pay USD1.6 billion plus interest and any penalties for the fiscal year 2006 to 2007 in an effort to "protect its legal position and shareholder interests". Vedanta, which holds a far more significant 59.8% stake in Cairn India, said the subsidiary released a statement on Thursday which confirmed the order from the Income Tax Department for an alleged failure to deduct withholding tax on alleged capital gains arising during 2006 to 2007 "in the hands of Cairn UK Holdings Limited, our erstwhile parent company, a subsidiary of Cairn Energy PLC," it said. Vedanta did not state what it will do regarding the order, or how it will directly affect the company.
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Oil services company John Wood Group said it has been awarded a contract by Norwegian oil company Statoil to handle engineering modifications and upgrades to the Kollsnes process plant in Norway. Wood Group said the estimated value of the contract, including options and procurement, is NOK500 million, or GBP41.3 million. Wood Group's Mustang Norway unit started the work earlier this month, and the work is scheduled to finish in 2017.
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Diploma said it has struck a deal to buy the Kubo Group for up to CHF39.9 million in cash before acquisition costs. Kubo is a seals, O-Rings, gaskets and moulded rubber parts company with operations in Switzerland and Austria. Diploma is acquiring the business via Rutin AG, the non-trading holding company of Kubo based in Switzerland. Diploma said it will pay the consideration due on the deal in cash from its existing cash resources and revolving debt facility. It expects the deal to be immediately earnings accretive and will integrate the business into its Seals division.
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Cable & Wireless Communications said it has agreed to extend the longstop date once more on the acquisition of Barbados-based telecommunications and technology services group Columbus International. Cable & Wireless is acquiring the company in a USD1.85 billion deal. The company said it has agreed with Columbus shareholders to extend the longstop date for the receipt of required approvals and consents for the deal to March 31.
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COMPANIES - LONDON MAIN MARKET AND AIM
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SThree reported a rise in gross profit in the first quarter but said its performance was held back by adverse currency translation and by weakness in its permanent staffing business due to a slowdown in energy sector activity. The recruitment company said its group gross profit was up in the quarter to the end of February to GBP53.5 million from GBP47.8 million, but increased 17% in constant currencies.
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Dee Valley Group said it expects its pretax profit and revenue for the full year to be slightly ahead of expectations on the back of favourable consumption variances in its Dee Valley Water utility business. Dee Valley said pretax profit for the year is expected to be ahead of its expectations, helped by better-than-expected group interest charges due to the impact of lower retail price inflation on its non-cash loan indexation charge and a lower level of short-term borrowings than had been forecast.
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Dart Group said it expects its underlying operating profit for the year to beat market expectations on the back of lower-than-expected losses over the winter. Dart, the leisure travel and distribution and logistics company, said it expects its underlying operating profit, excluding exceptional items, to be ahead of current market expectations for the financial year to the end of March and broadly in line with the GBP49.2 million it posted last year. The company said forward bookings in its leisure travel business for summer 2015 are encouraging, with more than 50% of the season already sold, ahead of the sale volumes at the same time a year earlier.
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COMPANIES - INTERNATIONAL
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Surprising absolutely nobody, Disney is set to make a sequel to its smash hit children's film Frozen. Frozen 2 was announced during the Disney's shareholders call Thursday, with Chris Buck and Jennifer Lee returning to develop the film. Josh Gad will reprise the role of Olaf. There were few other details offered by the company today and no release date has been announced.
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German lender Commerzbank has agreed to pay USD1.45 billion to settlement with US regulators for violating sanctions on Iran and Sudan as well as money-laundering laws, the DoJ announced. The bank entered into a deferred prosecution agreement with the Justice Department for violations of the International Emergency Economic Powers Act and the Bank Secrecy Act. The bank also agreed to pay penalties to settle other violations to the Treasury Department and the Federal Reserve System. Commerzbank was alleged to have had transactions with Iran and Sudan, countries that have been blacklisted by the US.
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The Uber car-sharing service has filed a complaint with the European Commission against Germany, saying that it is being treated unfairly in the country, the company told dpa. The passenger service was first launched in the US, but now operates in cities around the world. It has run into legal trouble in several countries amid opposition from established transport firms. In Germany, the company has been hampered by court rulings that have restricted its operations. The country has strict taxi regulations.
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Friday's Scheduled AGMs/EGMs
Standard Life
Chenavari Capital Solutions
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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