Monitise Share News (MONI)

LONDON (Alliance News) - Stocks in the UK and Europe traded higher midday Wednesday, following a positive lead from Asian markets amid expectations of further policy easing in China, while the pound dived against other currencies following worse-than-expected UK economic data.

The Office for National Statistics said UK industrial output dropped 0.4% on a monthly basis in July, confounding expectations for a marginal growth of 0.1%. Production decreased by 0.4% in June. On a yearly basis, growth in industrial production slowed notably to 0.8% in July from 1.5% in June. Output was expected to grow by 1.4% year-on-year in July.

Manufacturing output also added to the bleak picture as it declined 0.8% month-on-month in July. Economists had expected it to grow 0.2% again as seen in June.

Furthermore, the UK deficit in the trade in goods rose to GBP11.08 billion in July from GBP8.51 billion in June. Economists had forecast just a GBP9.5 billion shortfall. The latest deficit figure was the biggest since the GBP11.24 billion shortfall logged in July 2014.

The total trade deficit widened to GBP3.4 billion from GBP2.6 billion in the previous month. The widening was largely due to the increase in the visible trade deficit, the ONS said.

Kallum Pickering, senior UK economist at Berenberg ,said the strength of sterling is raising the price of UK goods and is weighing heavily on demand for UK exports.

Looking ahead, Pickering believes that the trade deficit will get worse. The economist believes the Bank of England will raise interest rates by 25 basis points in February 2016, causing more upward pressure on sterling which will not only damage demand for UK exports but will probably see imports rise as the purchasing power of UK consumers increases.

"In addition, the recent [emerging markets] weakness and China slowdown will exacerbate the negative trade gap, albeit by a modest amount. Thus, weak trade is set to drag on UK growth more heavily than normal in the near-term and is the key risk to our Q3 outlook of 0.6% GDP growth [quarter-on-quarter]," Pickering said.

The pound declined against the dollar following the data, falling to a low of USD1.5348.

The FTSE 100 index was up 1.9% at 6,264.56, the FTSE 250 up 1.0% at 17,168.40, and the AIM All-Share up 0.2% at 736.35.

In Europe, the French CAC 40 index was up 2.3% and the German DAX 30 was up 1.6%.

US futures were pointing to a higher open. The Dow 30 and Nasdaq 100 were both indicated up 1.0% and the S&P 500 was up 0.9%. Focus is likely to be on Apple as it is widely expected to unveil the new iPhone 6S and a new iPad at an event in San Francisco at 1800 BST.

Over in Asia, the Japanese Nikkei closed up 7.7%, its biggest one-day percentage gain since October 2008. The Hang Seng rose 4.1% and the Shanghai Composite rose 2.3%. Stocks in Asia were boosted by expectations of further Chinese stimulus to support the economy.

The Chinese Ministry of Finance late Tuesday announced a number of new measures to reform taxes, boost infrastructure spending, and bring in private financing through increased use of the public-private partnership model. The article made no mention of the actual size of the stimulus.

The Japanese market was supported by Prime Minister Shinzo Abe's pledge to cut corporate tax rates to shore up economic growth.

On the London Stock Exchange, Hargreaves Lansdown was the best performer in the FTSE 100, up 6.3%. The fund supermarket stated its intent to return to "health profit growth" after reporting a drop in earnings in its most recently ended financial year.

Pretax profit amounted to GBP199.0 million in the year ended June 30, down from GBP209.8 million in the prior year, and the company raised its dividend for the year to 33 pence per share from 32.0p.

Net revenue, a closely watched measure of year-on-year comparative performance, edged up to GBP294.2 million from GBP291.9 million, bolstered by higher assets under administration, which rose to GBP55.2 billion from GBP46.9 billion over the year, net new business inflows of GBP6.1 billion, 84,000 new active clients and transaction volumes.

Anglo American traded up 5.8% after the miner said its Rustenberg Platinum Mines arm has entered into a deal to sell the Rustenberg mine and concentrating operations in South Africa to Sibanye Gold. Anglo said it has sold the stake for at least ZAR4.5 billion, or about GBP215.6 million at current exchange rates.

The miner's share price rise also was benefiting from expectations of the further stimulus measures in China, which helped miners up across the board. Joining Anglo American, Glencore shares were up 3.6%, BHP Billiton was up 5.0% and Rio Tinto was up 4.4%.

GlaxoSmithKline was one of the few FTSE 100 companies trading lower, down 0.3%. The drugmaker and partner Theravance Inc late on Tuesday announced the initial results from the Study to Understand Mortality and MorbidITy, or SUMMIT, trials conducted on the Relvar/Breo Ellipta drugs for the treatment of chronic obstructive pulmonary disease (COPD).

Glaxo said the risk of dying taking the drug dose was 12.2% lower than on placebo over the study period, which is not statistically significant and therefore meant the drug did not meet its primary endpoint. The treatment also missed two secondary endpoint goals.

Shares in Crest Nicholson Holdings, up 5.1% and Foxtons Group, up 3.4%, were given a boost after upgrades from Goldman Sachs. The bank upgraded Crest to Conviction Buy from Neutral and Foxtons to Neutral from Sell.

Entertainment One was down 4.4% and the worst performer in the FTSE 250. The media company said it traded in line with its expectations in its first quarter, seeing revenue rise 1% on a reported basis, driven by a strong performance in its Television segment that offset a weaker performance in Film.

The company said its full-year underlying earnings continue to be in line with its expectations, although it cautioned that its reported revenues and earnings remain subject to continued pressure from the appreciation of sterling.

On AIM, Monitise shares were hit after the payments services company said Elizabeth Buse has resigned to return to the US just months after the former Visa executive was named its sole chief executive. Monitise also reported a significantly larger loss in its recently completed financial year.

The company said it made a GBP227.4 million pretax loss in the year ended June 30. That widened from the GBP63.4 million pretax loss reported for the prior financial year, as Monitise recognised GBP94.3 million in impairments.

Monitise said it does not expect revenue growth in the new financial year. However, the company expects operating costs to continue to fall, primarily due to cuts to the workforce, lower IT costs, exiting non-core geographies, and "property rationalisation". Shares in the company were down 36%.

Goals Soccer Centres traded 20% lower after the company reported growth in profit in the first half of 2015, but revised its guidance for the full year as it faced tough trading conditions in the UK which it said have continued into the second half of the year.

The five-a-side football centre operator said UK sales declined 1% due to adverse weather conditions, while US sales demonstrated strong growth of 22%. Goals added that sales for the first nine weeks of the second half remained challenging in the UK, with like-for-like sales over the summer holiday period declining by 10% as it faced a tough comparable period last year which included the football World Cup and due to a significant increase in both league and casual teams cancelling over the holiday period.

Still ahead in the economic calendar, US JOLTS job openings data is at 1500 BST and the Redbook index is at 1355 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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