LONDON (Alliance News) - The FTSE 100 is shaking off concerns caused by a weak purchasing manager's index reading from China and lower commodity prices to trade higher midday Friday, while US futures also point to a firm open following upbeat results from online retailing giant Amazon.com.
The FTSE 100 trades up 0.1% at 6,664.26, the FTSE 250 is down 0.2% at 17,586.94, and the AIM All-Share is down 0.15 at 755.88.
In Europe, the French CAC 40 is up 0.4% and the German DAX 30 is flat.
Futures point to a higher open on Wall Street, with the DJIA pointed up 0.1%, the S&P 500 up 0.2%, and the Nasdaq 100 up 0.4%.
Amazon said Thursday after the US stock markets closed that it swung to a second quarter profit, as sales surged 20%. The company's quarterly earnings came as a surprise for Wall Street analysts, who had been expecting the company to report a loss. The company also gave an upbeat sales forecast for the current quarter. In pre-market trade Amazon is up 18%.
Reporting Friday in the US is Biogen, American Airlines and State Street, amongst others.
Activity in China's vast manufacturing sector slumped to a 15-month low in July, a preliminary private survey showed in a fresh sign of deterioration in the world's second largest economy. The flash Caixin/Markit PMI fell to 48.2 from a final reading of 49.4 in June as shrinking orders depressed output. It was the fifth straight month below 50, the level that separates expansion from contraction.
"The fifth month of contraction in a row for Chinese manufacturing PMI data has ensured renewed pressure on commodities, and as night follows day the mining sector has duly tumbled," says IG market analyst Alastair McCaig.
Gold has been particularly in focus, with the metal price tumbling amid a strong dollar and a supply glut. At midday Friday, gold remains under pressure, trading at USD1,081.91 an ounce.
In the FTSE 100, Antofagasta trades down 1.7% and BHP Billiton down 0.8%. Glencore is down 1.4%, having hit a new record low in intraday trade.
Bucking the downward trend among minders is Anglo American, which is the second-biggest gainer in the blue-chip index, up 2.1%. The multi-commodity miner said it swung to a pretax loss in the first half of 2015 after recording a substantial USD3.5 billion impairment, driven by the fall in commodity prices, and said it is aiming to cut 35% of its workforce as part of its cost-saving initiative.
The company said it would reduce costs through the reduction of its 6,000 overhead and indirect job roles. It said it will cut those jobs by 46%, some of which will come as a result of it selling its assets.
The miner also said it is on track to meet its long-term net debt target, even as net debt increased to USD13.5 billion at the end of June from USD12.9 billion at the end of December.
However, platinum group metals miner Lonmin leads the fallers in the FTSE 250, trading down 14%. Lonmin said it is planning to close or temporarily shut down numerous mine shafts in South Africa, threatening around 6,000 jobs, which will lead to production being around 100,000 platinum ounces less per year over the next two years.
It said it was taking the "necessary protective measures" to reduce its cost base in the current pricing environment so that it will be able to sustain a viable operation even if the current metal pricing environment continues for some time, it said.
Leading gainers in the FTSE 100 is Vodafone Group, up 3.7%. The mobile communications company confirmed its guidance for its current financial year, as it saw revenue fall 0.9% on a reported basis, saying it made a "good start to the year".
It attributed the decline in revenue to a 7.3 percentage point hit from foreign exchange movements offset a 3.1 percentage point boost from merger and acquisition activity. On an organic basis, which Vodafone defines as being on a comparable basis in terms of merger and acquisition activity and movements in foreign exchange rates, revenue rose 3.3%.
Shares in FTSE 100 drinks company Diageo trade down 1.9% after a report from The Daily Telegraph said the company is facing scrutiny in the US over claims it has artificially boosted its sales in the country. Diageo has been contacted by the Securities and Exchange Commission, the US financial regulator, for information on how it has shipped stock to distributors.
However, Nomura believes the inquiry is not going to become a major issue for Diageo.
Beazley leads mid-cap gainers, trading up 5.4%. The specialist insurer posted a higher pretax profit for the first half of 2015 on the back of a better return on equity and higher gross written premiums in the period. It said its pretax profit was USD154.5 million for the six months to the end of June, up from USD132.9 million a year earlier. The company said its return on equity in the half improved to 20%, compared to 17% a year ago.
Ladbrokes trades down 2.6% after the bookmaker and Gala Coral Group said they have agreed to merge to create a gambling company with a market capitalisation of around GBP2.1 billion.
Under the terms of the deal, Ladbrokes will issue new shares to Gala Coral shareholders representing 48.25% of the enlarged group, with Ladbrokes shareholders to own the other 51.75% of the business. Ladbrokes said it will launch a share placing, issuing 92.4 million shares, 9.99% of its existing total, via an accelerated bookbuild run by UBS and Deutsche Bank in order to strengthen the balance sheet of the new business.
In a separate statement, Playtech said it has struck a deal with Ladbrokes on an early determination on the funds it is owed under its marketing services agreement with the bookmaker. Playtech will receive GBP75 million following merge of Ladbrokes and Gala Coral, with GBP40 million of this to be satisfied in Ladbrokes shares and GBP35 million to be paid in cash. Playtech trades up 2.6%.
In the AIM All-Share index, vending machine company Snacktime, is down 14% after it said its 2015 financial year results may take a hit from increased provisions.
Snacktime said it is still waiting to publish its results for the year to March 31, 2015 as it finalises the results with its auditors. But the company said it expects that its forecast for earnings before interest, taxation, depreciation and amortisation of GBP550,000 and its exceptional items estimate of GBP650,000 could be impacted by around GBP270,000 more in provisions the company is set to make.
Global Petroleum said it remains in a "strong financial position relative to many of its peers" which will allow it to continue to progress its existing licenses whilst pursuing acquisition opportunities in new geographical regions of the world. The oil and gas exploration company said it has held detailed discussions with various parties about concluding an acquisition of assets which would add "significant near-term value". The company trades up 13%.
Still in the economic calendar Friday, in the US, manufacturing PMI is due at 1445 BST and new home sales are due at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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31 Oct 2016 09:39
