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LONDON MARKET MIDDAY: US Stocks Seen Up Ahead Of Data, Earnings

Wed, 4th Nov 2015 12:19

LONDON (Alliance News) - London shares were higher Wednesday midday, driven by gains in miners and drillers, while Wall Street was seen opening flat to higher ahead of busy US economic and earnings calendars.

The FTSE 100 index was up 1.1% at 6,450.57 points, the FTSE 250 was up 0.3% at 17,240.13, and the AIM All-Share was up 0.5% at 747.80. In Europe, the CAC 40 index in Paris was up 0.9%, while the DAX 30 in Frankfurt was down 0.2%.

US stocks were called for a positive open, with the Dow 30 seen up 0.1%, the S&P 500 pointed up 0.1% and the Nasdaq 100 indicated up 0.2%. Such an open would add to the gains seen on Tuesday, with the Dow ending up 0.5%, the S&P up 0.3% and the Nasdaq Composite up 0.4%. US shares also gained on Monday, like the UK market starting November on the front foot.

The US earnings season continues with third-quarter results from social network Facebook, expected after the US market close, while media companies Time Warner and Twenty-First Century Fox are due to release updates before the US open.

In the US economic calendar, the Mortgage Bankers Association releases its MBA mortgage applications data at 1200 GMT, with employment data from Automatic Data Processing due shortly after at 1315 GMT. Trade balance data is scheduled to be released at 1330 GMT, with Markit services and composite Purchasing Manager's Index readings at 1445 GMT. The ISM non-manufacturing PMI is published at 1500 GMT.

Investors also will be keeping a close eye on remarks by US central bankers. Federal Reserve Chair Janet Yellen is due to testify in Washington before the House Financial Services Committee starting at 1500 GMT. Meanwhile, Fed Vice-Chair Stanley Fisher gives a speech at 2200 GMT.

Increasing appetite for risk among investors in London was a better-than-expected UK service sector report, with growth strengthening for the first time in four months in October, survey results from Markit showed Wednesday. The Chartered Institute of Procurement & Supply/Markit services Purchasing Managers' Index rose more-than-expected to 54.9 in October from 53.3 in September. It was forecast to rise to 54.5.

Eurozone's services PMI rose to 54.1 from 53.7 in September. However, the final reading was slightly below the flash score of 54.2. Germany's final services PMI improved to 54.5 from 54.1 in September, but was below the flash score of 55.2. The French final services PMI climbed to 52.7 from 51.9 in September, above the flash reading of 52.3.

Asian stocks ended higher after positive services PMI readings from China and Japan released overnight. The Nikkei 225 index in Tokyo closed up 1.3%, after the market was shuttered on Tuesday for a holiday. Meanwhile, the Shanghai Composite index ended up 4.3%, while the Hang Seng in Hong Kong closed up 2.2%.

China's services PMI rose to 52 in October from a 14-month low of 50.5 in September. Meanwhile, the services sector in Japan continued to expand in October, with a PMI score of 52.2, above the previous reading of 51.4 seen in September.

London-listed miners were benefiting from the positive data from China. Anglo American was up 7.0%, Glencore up 6.9%, BHP Billiton up 4.0% and Antofagasta up 3.1%.

Multi-commodities miner and trading house Glencore reiterated its full-year earnings guidance and said it aims to have reduced its net debt by up to 15% before the end of the year. It said it aims to have its net debt down to below USD25.00 billion before the end of 2015 and to have net funding of around USD40.00 billion.

The miner has been trying to reduce its USD30.0 billion debt pile in an attempt to make the company more competitive in light of lower commodity prices and tougher trading conditions. It announced debt reduction plans in September to save more than USD10.00 billion in cost savings through a capital raising, asset disposals, suspending its dividend, working capital reductions and other measures.

Oil-related stocks also were in demand, after Brent oil prices rose above the USD50 line. Brent oil was at USD50.71 a barrel, having stood at USD49.75 at the London equities close Tuesday.

Royal Dutch Shell 'B' shares were up 1.7%, BG Group was up 1.4% and BP was up 1.7%. In the FTSE 250, Premier Oil was up 9.4%, Ophir Energy up 3.6% and Cairn Energy up 3.3%.

Also among risers was Marks & Spencer Group, up 3.2%. The clothing, food and homewares retailer reported a drop in profit in the first half of its financial year, but a slight rise in sales at its food business once again outperformed the weaker general merchandise division.

M&S said pretax profit in the 26 weeks ended September 26 fell 23% to GBP216.0 million from GBP279.4 million the year before, although revenue grew 1.0% to GBP4.95 billion from GBP4.90 billion. It said its food business delivered sales growth of 3.3%, offsetting a 0.4% decline in general merchandise, but profit was hit by a GBP68.0 million net charge, having benefited from a GBP11.8 million net credit the prior year.

At the other end of the FTSE 100 index, housebuilder Persimmon was down 3.1%. It said activity in the UK housing market improved as expected into the autumn season, driving up its private sales rate in the second half so far and keeping pricing robust across its regional markets.

However, despite the robust trading, other housebuilders also followed Persimmon lower, with Berkeley Group Holdings and Taylor Wimpey both down 3.4% and Barratt Developments down 2.3%.

In AIM, Plethora Solutions Holdings shares were more than doubling to 6.48 pence. The specialty pharmaceutical company said it has reached an agreement to be acquired by Hong Kong-based Regent Pacific for GBP122.6 million, or 12.5p per share. The offer is a 39% premium to the last time Plethora sold shares in August 2014, and a massive premium to its closing price of 2.75p per share on Tuesday.

Meanwhile, Galasys was down 31%. The theme park technology provider said it has received a court order in Malaysia contending two former directors should remain with the company. Hee Chee Keong and Chin Chee Seong have entered the order with the High Court in Kuala Lumpur, Galasys said.

Keong stepped down as chief financial officer in October, while Seong is a non-executive director. The order requires the pair to be reinstated to the board of the company until a hearing is held on November 17. Galasys said it has hired a solicitor to help it resolve the situation.

Also in the economic calendar, after the UK equity market close, the Bank of Japan is set to release its monetary policy meeting minutes at 2350 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2015 Alliance News Limited. All Rights Reserved.

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