LONDON (Alliance News) - UK and other major European indices are higher Tuesday midday, while Wall Street is called for a positive open ahead of a busy day in terms of US earning updates and economic data releases.
The FTSE 100 index trades up 0.8% at 6,557.48, the FTSE 250 is up 0.7% at 17,395.85, and the AIM All-Share index is flat at 748.50. In Europe, the CAC 40 in Paris is up 1.3% and DAX 30 in Frankfurt is up 1.4%.
US stock futures point the Dow Jones Industrial Average and the Nasdaq 100 to open up 0.5% and the S&P 500 up 0.6%.
Chemical company DuPont, automaker Ford, and package delivery company UPS are among the companies due to report their results before the start of US trading on Tuesday. Pharmaceutical giants Merck and Pfizer also are expected to release updates before the bell, while Twitter, Gilead Sciences and Yelp are due to announce earnings after the New York market close.
Attention also will be on US economic data. The US Markit services and composite purchasing managers' indices are due at 1445 BST, while consumer confidence is expected at 1500 BST.
A small improvement is expected in the Markit's services PMI reading, to 55 from 54.8. Meanwhile, consumer confidence is expected to come in at 100.0 in July, after after a reading of 101.4 a month ago.
In addition, the US Federal Open Market Committee begins its two-day meeting ahead of its interest rate announcement on Wednesday at 1900 BST.
The Fed is widely expected to leave US interest rates unchanged following the meeting. However, investors will pay attention to the accompanying monetary policy statement, after a recent hawkish speech and Congressional testimony by Fed Chair Janet Yellen intensified expectations that the bank would hike rates later this year.
Many analysts still expect the Fed to raise interest rates at its next meeting in September and will be closely scrutinizing the statement for any hints about the timing of the first rate hike.
"No change in rates is expected just yet, especially with it not hosting a press conference with Chair Janet Yellen afterwards, an unlikely move for the first rate hike in more than nine years," says Oanda analyst Craig Erlam.
Meanwhile, in the UK, the Bank of England's Monetary Policy Committee will meet next week to make a decision on interest rates and asset purchases, with economists largely expecting no changes to be made.
"The BoE is clearly more concerned with the pace of rate hikes rather than the timing of the first as this would be a greater threat to the recovery," writes Erlam. "Still, the first quarter of next year looks the most likely at this stage barring an unexpected rise in spending and inflation in the coming months."
The pound rose sharply against other major currencies following UK GDP data, which came in as expected, coming off session lows of USD1.5526 against the dollar to trade at USD1.5594.
The UK economy expanded at a faster pace in the second quarter, largely driven by an improvement in services output, the preliminary estimate from the Office for National Statistics showed. Gross domestic product grew 0.7% quarter-on-quarter, in line with forecasts, following a 0.4% rise in the first quarter.
Services expanded 0.7% and production increased 1%. Construction growth came in flat, and agriculture contracted 0.7%. UK GDP was 2.6% higher in the second quarter compared with the same quarter a year ago. The annual growth figure also matched expectations.
On the London Stock Exchange, RSA Insurance Group shares have surged 15% after Zurich Insurance Group expressed interest in purchasing the FTSE 100 firm. In a short statement, the Swiss insurer confirmed it is evaluating a potential offer for RSA. It added that the announcement does not represent a firm offer to buy RSA and said there is no assurance that any offer will be made.
Hikma Pharmaceuticals is up 7.8% after it said it agreed a USD2.65 billion deal to acquire Roxane Laboratories and Boehringer Ingelheim Roxane from Boehringer Ingelheim, the German pharmaceutical company. The Roxane businesses are a US specialty generics operation, Hikma said.
Under the terms of the deal, Hikma will issue 40 million shares to Boehringer at 2,350 pence per share, along with a USD1.18 billion cash payment. Hikma shares closed Monday at 2,080.00p and trade at 2,242.00p Tuesday midday.
GKN is also one of the biggest gainers in the blue-chip index, up 6.7%. The engineer said it has agreed a EUR706 million deal to acquire Netherlands-based Fokker Technologies Group, as GKN reported a fall in pretax profit for the first half of 2015 thanks to weakness in some of its key end markets.
News of the acquisition eclipsed any concerns about GKN's first-half results. GKN said it will pay EUR706 million to acquire Fokker Technologies, a Dutch maker of aerostructures, electrical wiring systems, landing gear and associated services. GKN said the deal will strengthen its position in the aerospace market and will expand its presence in the Chinese, Turkish, Indian and Mexican markets.
Royal Mail is the biggest decliner in the FTSE 100, down 2.7% after UK media and communications regulator Ofcom said it has issued a statement of objections to the postal service operator, with a provisional view that the company breached competition law by discriminating in its wholesale pricing against postal operators that competed with it on delivery.
Ofcom said its provisional findings, part of the investigation launched following a complaint by Whistl, a former competitor of Royal Mail, are that Royal Mail's changes to prices, terms and conditions for the provision of access services included "unlawful price discrimination".
In the AIM All-Share, Trap Oil Group is down 27% at 0.23p. The company said it has agreed to acquire Jersey Oil and Gas E&P, for a total of GBP495,000, which will be satisfied by the issuance of 2.25 million new Trap Oil shares. Trap Oil said it will reorganise its share capital, conduct a placing, shuffle its board, and change its name once the deal has been closed to Jersey Oil and Gas. Trap Oil also will conduct a further placing of over 3.7 million new shares at 22.0 pence per share to raise a further GBP820,000 to provide it with additional working capital.
Magnolia Petroleum is down 15%. The company said the Shimanek-2 well in Oklahoma has been drilled and has encountered hydrocarbons in targeted conventional zones but that high salt water saturations meant the well will be plugged.
By Daniel Ruiz; danielruiz@alliancenews.com
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28 Sep 2016 11:33
