LONDON (Alliance News) - Shares have opened lower Thursday, amid a slew UK corporate updates but a dearth of economic data. Some attention is being paid as well to Greece, whose credit rating has been downgraded by Standard & Poor's.
Aerospace firms Meggitt and BAE Systems are top FTSE 100 decliners, both down about 4%. UBS analysts have cut Meggitt shares to Sell from Neutral and BAE shares to Neutral from Buy.
Diageo shares are down 3%, after the drinks giant said net sales grew in the nine months to March 31, but organic sales and volume declined following difficulties in the Asia Pacific region. However, shares in brewer SABMiller are up 2%, after it provided a more upbeat sales report.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: down 0.1% at 7,088.57
FTSE 250: down 0.4% at 17,801.67
AIM ALL-SHARE: flat at 746.57
----------
Hang Seng: up 0.4% at 27,717.14
Nikkei 225: closed up 0.1% at 19,885.77
DJIA: closed up 0.4% at 18,112.61
S&P 500: closed up 0.5% at 2,106.63
----------
GBP: up at USD1.4842
EUR: down at USD1.0654
GOLD: flat at USD1,205.01 per ounce
OIL (Brent): down at USD62.63 a barrel
(changes since end of previous GMT day)
----------
ECONOMICS AND GENERAL
----------
Thursday's Key Economic Events still to come
(all times in BST)
09:00 Italy Trade Balance EU
13:30 US Housing Starts and Building Permits
13:30 US Initial and Continuing Jobless Claims
15:00 US Philadelphia Fed Manufacturing Survey
15:30 US EIA Natural Gas Storage
18:00 US Fed's Lockhart speech
18:10 US FOMC Member Mester speech
18:30 US Fed Boston President Rosengren Speech
20:00 US Fed's Stanley Fischer speech
----------
The monthly house price balance in the UK came in at +21% in March, the latest survey from the Royal Institution of Chartered Surveyors revealed. Now at a five-month high, that beat expectations for a score of 15% after coming in at 14% in February. The main reason for the increase in house prices is a shortage of available properties, RICS said.
----------
The leading economic index in the UK, which measures the future economic activity, increased for the second straight month in February, the results of a survey by the Conference Board showed. The Conference Board leading economic index climbed 0.6% in February, following a 0.2% rise in the previous month. The latest figure marked its largest monthly increase since June 2014.
----------
Global ratings agency Standard & Poor's downgraded Greece's credit rating and said the outlook for the debt-laden eurozone nation was "negative." Greece's credit, already in junk territory, was lowered from B- to CCC+ due to growing cash constraints on the government and banks. "Without deep economic reform or further relief, we expect Greece's debt and other financial commitments will be unsustainable," the company said in a statement.
----------
Foreign direct investment in China increased in March from a year ago, the Commerce Ministry said. In March, foreign direct investment climbed 2.2% year-over-year to USD12.4 billion, which was much higher than February's 0.9% rise. Total FDI for the March quarter marked an increase of 11.3% to USD34.88 billion.
----------
The collapse in oil prices has cost jobs in certain regions of the US, according to the latest Beige Book report from the Federal Reserve. Layoffs were reported throughout the Fed's Midwest regions, including Minneapolis, which contains the key North Dakota shale fields, and Dallas, where weakness in the Texas oil sector was apparent. Although the Fed said the broader US economy expanded at a moderate or modest pace in the period including most of February through March, the manufacturing sector was hurt by the strong dollar and a harsh winter.
----------
Facing pressure from both Republican and Democratic lawmakers, the White House has indicated that US President Barack Obama is willing to sign legislation giving Congress the power to review a potential agreement regarding Iran's nuclear program. In his daily briefing, White House Press Secretary Josh Earnest told reporters the administration was not going to be particularly thrilled about the legislation but suggested that Obama could support a compromise bill. Earnest noted that Obama previously threatened to veto similar legislation but said the leaders of the Senate Foreign Relations Committee agreed to make a substantial number of changes to address the president's concerns.
----------
BROKER RATING CHANGES
---------
GOLDMAN CUTS ANGLO AMERICAN TO 'SELL' ('NEUTRAL') - TARGET 880 (1120) PENCE
----------
TRADERS: LIBERUM ADDS ANGLO AMERICAN TO 'CONVICTION SELL LIST'
----------
GOLDMAN CUTS BHP BILLITON TO 'NEUTRAL' ('CONVICTION LIST BUY') - PRICE TARGET 1400 (1600) PENCE
----------
UBS CUTS MEGGITT TO 'SELL' ('NEUTRAL') - TARGET 520 (500) PENCE
----------
UBS CUTS BAE SYSTEMS TO 'NEUTRAL' ('BUY') - TARGET 540 PENCE
----------
TRADERS: LIBERUM REMOVES RECKITT BENCKISER FROM 'CONVICTION BUY LIST'
----------
TRADERS: LIBERUM ADDS AB FOODS TO 'CONVICTION BUY LIST'
----------
SOCGEN STARTS GLAXOSMITHKLINE WITH 'SELL' - PRICE TARGET 1550 PENCE
----------
SOCGEN STARTS ASTRAZENECA WITH 'BUY' - PRICE TARGET 6600 PENCE
----------
COMPANIES - FTSE 100
----------
Diageo said net sales grew in the nine months to March 31, but organic sales and volume declined following difficulties in the Asia Pacific region. The drinks giant said net sales grew 4.6% in the nine month period but declined 0.3% on an organic basis and were down 0.7% in its third quarter. Volume was down 1.7% in the nine month period and dropped 0.8% in the third quarter. It said that acquisitions, principally of United Spirits Ltd, contributed GBP700 million in sales, which was partially offset by an "adverse impact of currency movements" of GBP298 million and a reduction of GBP28 million due to disposals.
----------
Housebuilder Persimmon said 2015 has got off to a strong start, with private sales rates and average selling prices continuing to rise after the strong growth it reported in 2014, although it warned the industry is struggling to get new planning permissions ahead of the UK General Election. The company said total forward sales revenue in the first 15 weeks of 2015, including legal completions taken so far this year, are up 7% at GBP2.00 billion, compared with GBP1.87 billion in the year earlier period.
----------
Unilever reported an increase in sales for the first quarter of 2015, helped by movements in currency and underlying sales growth, and said it is making a good start to the year. The consumer goods company said revenue increased for its first quarter by 12% to EUR12.8 billion, which it said was helped by "favourable currency movements" and an improvement in underlying sales. Underlying sales grew 2.8%, with emerging markets sales up 5.4%. Underlying sales are at constant currencies and exclude acquisitions and disposals. Of the 2.8% underlying sales growth, 1.9 percentage points came from price increases and 0.9 point from higher sales volume.
----------
SABMiller said revenue rose 4% in its recently-ended financial year, after growth accelerated in the fourth quarter thanks partly to double-digit growth in Africa and a return to lager volume growth in China. The brewer of brands including Grolsch, Peroni, Coors Light and Bulmers cider said group net producer revenue for the year to end-March rose 4% and beverage volume growth was 1%, helped by an improvement in the fiscal fourth quarter when revenue grew 6% and lager volume grew 2%.
----------
J Sainsbury is planning to convert the equivalent of around 40 supermarkets of shop space into non-food, The Daily Telegraph reported. Chief Financial Officer John Rogers said at an event at a south London store on Wednesday that the company has identified 1.5 million square feet of space across the UK, representing around 6% of its portfolio, that it no longer needs for food. It intends to use the space to sell its collection of own-brand non-food products, including kitchenware and homeware.
----------
COMPANIES - FTSE 250
----------
WH Smith said its pretax profit ticked higher in the first half of its financial year, as its trading profit in both its travel and high-street divisions increased on the back of a big improvement in margins, despite total sales in the high-street arm falling. The FTSE 250-listed retailer said its pretax profit in the six months to the end of February rose 4.3% to GBP72 million from GBP69 million a year earlier. Revenue in the half fell slightly to GBP611 million from GBP613 million a year earlier, as sales in its travel division rose 7% but its high street division saw sales fall 5%. WH Smith hiked its interim dividend payout on the back of the results, up 12% to 12.1p.
----------
Russia and Kazakhstan-focused gold and silver miner Polymetal International said its first quarter production fell due to grade declines at its Dukat and Omolon mines and a temporary suspension at the Varvara site but maintained its production guidance for the year. Polymetal said its gold equivalent production was 299,000 ounces in the first quarter to the end of March, down 5% year-on-year. The company said this was primarily down to planned grade declines at the Dukat and Omolon sites and a temporary suspension of the float circuit at Varvara.
----------
Unite Group said it intends to raise about GBP115 million gross in a share placing to help fund new asset acquisitions. The student accommodation developer and manager said it is proposing to place up to 20.1 million new shares, or 9.99% of its existing share capital. It said it will use half the proceeds to acquire new units in the Unite Student Accommodation Fund, which is currently doing its own equity raising of up to GBP275 million, and will use the rest to help fund its own acquisitions. It wants to keep its stake in USAF at about 22%.
----------
Petra Diamonds said its results for the current financial year are expected to be below the range of current market estimates due to poorer diamond grades it is finding at one of its mines, although it reiterated it is trying to tackle the issue and expects grades at that mine to improve in coming quarters. The diamond miner is suffering lower run-of-mine grades at its Cullinanin mine in South Africa, an old mine where the production areas are increasingly mature and highly diluted and it's having to deal with high-density waste material.
----------
Water utility and waste management company Pennon Group said it has struck a deal to acquire Bournemouth Water from Sembcorp Holdings for GBP100.3 million and will launch a share issue to fund the deal. FTSE 250-listed Pennon, which owns South West Water, said it has acquired the entire share capital of Sembcorp Bournemouth Water Investments Ltd for GBP100.3 million in cash. To finance the deal, Pennon will launch a share issue to raise around GBP100.3 million via an accelerated bookbuild. The pricing of the issued shares will be determined by the bookrunners on the deal, Morgan Stanley and Credit Suisse, after the bookbuild is completed.
----------
Debenhams reported a rise in profits for the first half of its financial year as sales grew following a refocus on its promotional strategy and service improvements. The retailer posted pretax profit growth of 4.3% for the 26 weeks to February 28 to GBP88.9 million from GBP85.2 million the year before, as revenue grew to GBP1.33 billion from GBP1.30 billion. Like-for-like sales were up 1.3%, it said.
----------
Telecom Plus said its profit in the recently-ended financial year will come in below its expectations due to energy price cuts it made in the fourth quarter and as warm weather cut energy usage by its customers.
----------
COMPANIES - LONDON MAIN MARKET AND AIM
----------
Plus500, which enables retail clients to trade contracts for difference through its online platform, said it is confident about meeting market expectations for the year after reporting growth in revenue and active customers in the first quarter on the back of market volatility. In a statement, Plus500 said it recorded USD82.1 million in revenue in the three months ended March 31, compared with USD60.7 million in the corresponding period the prior year.
----------
Xchanging left its outlook for 2015 unchanged despite warning that there will be a heavier reliance on the second half of the year than usual as a result of a "disappointing" first quarter for its procurement business. In a statement, Xchanging said it is still "focused" on its objectives of growing underlying revenue and profit, improving cash generation and increasing returns on investments made last year.
----------
COMPANIES - INTERNATIONAL
----------
Online-video streaming service Netflix reported a decline in first-quarter profit, hurt largely by foreign currency impact even as revenue climbed on the back of some better-than-expected subscriber growth. Revenues for the quarter were in line with Wall Street estimates. Looking ahead, Netflix detailed some weak earnings outlook for the second quarter, due to the expected content expenses related to Australia and New Zealand. Netflix, based in Los Gatos, California, said it added 4.9 million streaming subscribers globally in the first quarter, above its forecast of 4.1 million, to end the quarter with 62.3 million subscribers.
----------
MasterCard said it has reached a settlement with Target Corp to resolve claims by MasterCard and its issuers related to the retailer's 2013 data breach. As per the agreement, Target will make available up to USD19 million in alternative recovery offers to eligible banks and credit unions across the globe. These funds will settle their claims for operational costs and fraud-related losses on MasterCard-branded cards believed by MasterCard to have been affected by the data breach.
Upon accepting the offer, each issuer will release MasterCard, Target and its acquiring banks from all claims related to the data breach.
----------
French catering and vouchers company Sodexo reported that its profit attributable to equity holders of the parent for the first half of fiscal 2015 was EUR343 million, up 23% from last year's EUR278 million, while it was up 18% excluding the currency effect.
----------
Thursday's Scheduled AGMs/EGMs
Persimmon
BP
Rio Tinto
Lavendon
Optimal Payments
Pinewood
Manx Financial Group
----------
By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
27 Jan 2017 15:22
