LONDON (Alliance News) - UK shares traded higher Monday midday, while New York was called for a positive open, even as London's oil-related stocks remained firmly in the red hit after OPEC maintained its oil output on Friday.
The FTSE 100 index was up 0.4% at 6,263.02 points. The FTSE 250 also was up 0.4% at 17,438.95, while the All AIM-Share was up 0.1% at 741.22.
US futures pointed higher, with the Dow 30 and S&P 500 indices seen up 0.1% and the Nasdaq 100 called up 0.2%. A firm open would add to the strong gains posted on Friday, when a US robust jobs report renewed confidence in the world's leading economy and paved the way for an interest rate hike by the US Federal Reserve in its meeting scheduled for December 15-16.
The US Labor Department said non-farm payroll employment jumped by 211,000 jobs in November compared to economist estimates for an increase of about 200,000 jobs.
Job growth in September and October was upwardly revised to 145,000 jobs and 298,000 jobs, respectively, reflecting 35,000 more jobs than previously reported. The Labor Department pointed to notable job growth in the construction, professional and technical services, and health care sectors.
"Markets have gotten off to a good start this morning, taking their cue from a bullish US performance on Friday. We look set for an environment that will see the US dollar and global stock markets rise, so long as the Fed delivers on expectations to increase interest rates this month," said Chris Beauchamp, senior market analyst at IG.
In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 1.5% and 1.9%, respectively.
Eurozone investor confidence rose for a second straight month in December to its highest level in four months, results of a survey by Sentix revealed Monday, as the European Central Bank moved to add more stimulus to boost the region's economy. The Sentix investor confidence index climbed to 15.7 from 15.1 in November. However, economists had forecast a much higher score of 17.0.
Still ahead in a light economic calendar, the US labor market conditions index is at 1500 GMT. Bank of England Governor Mark Carney will be speaking in European Parliament at 1500 GMT ahead of the central bank's monetary policy decision on Thursday.
The Bank of England approved on Saturday Aviva's and Prudential's own capital models, among other 19 insurers, allowing them to have more control over the level of capital they hold.
The new Solvency II insurance rules, which are set to come into force on January 1, 2016, are designed to strengthen protection of insurance policyholders across the EU, and the Prudential Regulation Authority's stamp of approval enables insurers on the list of 19 to use their own internal models to calculate their capital levels from day one of the new regime.
Legal & General Group, RSA Insurance Group and Standard Life were three other listed insurers to have their full or partial internal capital models approved by the central bank's PRA. Scottish Widows, owned by Lloyds Banking Group, was another insurer to receive approval for its own model.
Aviva was up 0.8%, while Prudential was adding 1.3%. Legal & General was up 1.0%, RSA Insurance up 1.7% and Standard Life up 1.1%.
The Organisation of Petroleum Exporting Countries, which accounts for about a third of world oil output, decided to maintain production levels despite an oversupplied market and low prices. At its press conference on Friday following a meeting, Nigerian Petroleum Minister Emmanuel Kachikwu explained that the cartel would effectively maintain its actual current production level, which analysts said is 2 million barrels per day above the previously agreed target of 30 million barrels per day.
However, Abdallah Salem el-Badri, secretary general of OPEC refrained from putting an exact number on the cartel's production ceiling.
Oil prices plunged on Friday when reports first emerged suggesting OPEC would maintain its production levels, and they continued to trade lower on Monday. Brent oil was priced at USD42.70 a barrel at midday, down from USD43.04 at the London equities close on Friday, while West Texas Intermediate was at USD39.41 a barrel.
As a result, Royal Dutch Shell 'B' shares were at the bottom of the FTSE 100, down 2.9%, while Shell 'A' shares were down 2.6%. BP was off 2.3%, followed by BG Group, down 2.2%.
Meanwhile, Hammerson was up 2.6% at 617.50 pence after Deutsche Bank hiked its price target on the real estate developer to 775p from 750p and reiterated its Buy rating on the stock.
Deutsche said it favours Hammerson's prime retail exposure and attractive earnings growth prospects and said the company's quality assets offer "optionality" on rental growth. The company remains one of Deutsche's top picks in the real estate sector in the UK.
Shares in Land Securities Group, a rival of Hammerson, also were in favour, up 1.8%, as Deutsche upgraded the stock to Buy from Hold.
Meanwhile, DIY retailer Kingfisher was down 1.6%. The stock was downgraded to Reduce from Neutral by Nomura, which said the change in recommendation was driven by its caution on Kingfisher's fourth quarter trading to end January 2016 and reduced pretax profit estimates for financial 2017, as well as the potential costs of implementing its 'One Kingfisher' program.
Though in favour of Kingfisher's strategic plan, Nomura said it may be tough to execute and will be reliant on a cyclical recovery in the European market.
In the FTSE 250, AO World was the biggest gainer, up 10%. The online electrical appliances retailer that revealed prominent fund manager Ruane, Cunniff & Goldfarb has taken a 5.0% stake in the company. The investment firm, which runs the Sequoia Fund, took a 5.4% stake in the company last week, according to a stock exchange filing.
The investment came just over a week after AO World reported a swing to a first-half loss due to investments made in its German operation and start-up costs in other parts of Europe. In February, it issued a profit warning following a slowdown in sales in the fourth quarter of its financial year to the end of March, then missed those downgraded expectations in June, sending its share spiralling lower.
Serco Group was the worst mid-cap performer, down 6.7%. The outsourcer said its trading for 2015 is set to come in ahead of previous guidance, but projected another year of pain in 2016, with revenue and its trading profit set to fall.
Serco said trading in 2015 has been ahead of its expectations, but for 2016, it said it expects to generate revenue of around GBP2.8 billion, compared to around GBP3.5 billion for 2015, and said its trading profit will fall further to around GBP50.0 million, almost half the upgraded guidance for 2015 of GBP95 million.
In AIM, InternetQ was up 24%. The mobile marketing company issued a series of rebuttals in a response to a blog post about the company last week. Last Thursday, website ShareProphets published a blog questioning InternetQ's business model, causing shares in the company to drop sharply.
InternetQ refuted a number of claims made by the blog post, including that the company is "misleading" in capitalising "the majority" of its operating costs and therefore reporting "high" profits. The company said it only capitalises a minority of its operating costs and asserted that its accounting polices fully comply with International Financial Reporting Standards.
Shares in oil and gas company LGO Energy were down 32%. The oil and gas company said it has started a strategic review and entered an offer period following a separate statement in which it said its sale and purchase deal with Trinity Exploration & Production has been terminated. LGO said it would consider "all options" for the future of the company as it kicked off its strategic review.
The group owns production assets and reserves in both Trinidad and Spain. It has also entered into an offer period in order to facilitate discussions with potential suitors or partners, it said. Trinity, which also Monday said it has secured a further extension to repayments on its USD13.0 million debt facility, was down 9.4%. The extension is to this coming Friday.
By Daniel Ruiz; danielruiz@alliancenews.com
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1 Apr 2016 09:40
