LONDON (Alliance News) - Shares have opened mostly lower Friday, following weak Chinese house price data and amid caution ahead of the results of EU bank stress tests due at the weekend.
Troubled grocer Tesco continues to lead FTSE 100 losers, down 3.6% at the open, after falling 6.6% on Thursday.
BT is the second leading faller, down 3.2%, after Morgan Stanley cut the telecom stock to Underweight from Equal-Weight.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: down 0.6% at 6,383.84
FTSE 250: down 0.3% at 15,094.79
AIM ALL-SHARE: flat at 708.57
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Hang Seng: down 0.3% at 23,268.91
Nikkei 225: closed up 1.0% at 15,291.64
DJIA: closed up 1.3% at 16,677.90
S&P 500: closed up 1.2% at 1,950.82
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GBP-USD: flat at USD1.6036
EUR-USD: flat at USD1.2645
GOLD: flat at USD1,231.93 per ounce
OIL (Brent): down at USD86.24 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times British Summer Time)
09:00 Italy Retail Sales
09:30 UK Gross Domestic Product preliminary
09:30 UK Index of Services
10:00 Italy Consumer Confidence
10:00 Italy Wage Inflation
15:00 US New Home Sales
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House prices declined in almost all major Chinese cities in September, data compiled by the National Bureau of Statistics showed. Compared to August, prices decreased in 69 and remained stable in one out of the 70 cities surveyed by the statistical office in September. House prices in Beijing dropped 0.7% and fell 0.9% in Shanghai. On a yearly comparison, house prices increased in 10 cities in September.
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A leading index for China's economy climbed 0.9% in September, the latest survey from the Conference Board revealed - following the 0.7% gain in August and the 1.3% jump in July. The coincident index advanced 0.5% in September following the flat reading in August and the 1.1% spike in July.
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The UK has been told it must pay an extra GBP1.7 billion, or EUR2.1 billion, towards the EU's budget because the economy has performed better than expected in recent years, the BBC reports Friday. The payment follows new calculations by the EU, which determines how much each member state should contribute based on gross national incomes and would add about a fifth to the UK's annual net contribution of GBP8.6 billion, the BBC said. Under the new calculations, the UK and the Netherlands are both being asked to pay more, while France and Germany are both set to receive rebates, it added.
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Italy, France and Austria defended themselves Thursday after their 2015 budget plans came under EU scrutiny, with a new dispute over the bloc's fiscal rules expected to come up at a summit of the EU's leaders in Brussels. The European Commission, the bloc's executive, is currently assessing draft budget plans submitted by eurozone countries, under a system meant to spot financial trouble early on. Italy and France are expected to run afoul of the EU's debt and deficit reduction rules.
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EU leaders agreed early Friday to a new set of climate targets for 2030, after months of negotiations to deliver a benchmark for international climate talks next year, but the deal was immediately slammed by environmental groups. Under the agreement, carbon dioxide emissions are to be cut by at least 40% by 2030, compared to 1990 levels, and at least 27% of EU energy is to be derived from renewable sources by then.
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Pro-Russian separatists in eastern Ukraine said Thursday that they intend to retake key cities from government troops in the region. "Kramatorsk, Mariupol, Sloviansk will be ours. We are ready to capture them. Heavy battles are not excluded," Alexander Zakharchenko, the leader of the self-declared Donetsk People's Republic, said at a news briefing, a video of which was posted online.
Zakharchenko said talks to find a political solution had failed, and he accused the government of violating a truce.
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A doctor who recently returned from volunteering in West Africa was being treated in a New York City hospital early Friday after he tested positive for the Ebola virus in the first confirmed case in the city, officials said. The doctor in New York, identified by local media as Craig Spencer, 33, was taken to an isolation ward at Bellevue Hospital Center for treatment after he suffering a fever and exhibiting gastrointestinal symptoms characteristic of Ebola.
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Brazilian President Dilma Rousseff, seeking re-election in Sunday's run-off election, has seen her lead widen over challenger Aecio Neves, according to the latest opinion polls issued Thursday. According to the private polling institute Datafolha, 48% of voters surveyed supported Rousseff, the incumbent from the centre-left Workers' Party (PT), in Sunday's second-round vote, while 42% favour Neves, a senator from the centre-right Party of Brazilian Social Democracy (PSDB).
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Prime Minister Stephen Harper declared Thursday that the two deadly attacks this week in Canada were acts of terrorism carried out by Canadian citizens. Harper said Canada's security laws needed to be strengthened, and that work on revisions was "already under way and will be expedited." Royal Canadian Mounted Police Commissioner Bob Paulson said the suspect in Wednesday's Parliament shooting in Ottawa, Michael Zehef-Bibeau, had planned to go to Syria. The commissioner said investigators had found no link between Zehef-Bibeau, 32, and a hit-and-run Monday in Quebec.
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The Islamic State militant group gained ground Thursday around the Syrian town of Kobane, despite more than two weeks of US-led airstrikes and an airdrop of weapons and ammunition to its Kurdish defenders. The jihadists recaptured high ground west of the town and pressed their assault inside Kobane's northern districts, the Syrian Observatory for Human Rights, a monitoring group, said.
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BROKER RATING CHANGES
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UBS RAISES SHELL TO 'BUY' ('NEUTRAL') - PRICE TARGET 2450 PENCE
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TRADERS: SOCGEN CUTS ANGLO AMERICAN TO 'SELL' ('HOLD')
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TRADERS: MORGAN STANLEY CUTS BT GROUP TO 'UNDERWEIGHT' ('EQUAL-WEIGHT')
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TRADERS: EXANE BNP RAISES BOOKER GROUP TO 'OUTPERFORM' ('UNDERPERFORM')
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TRADERS: BARCLAYS INITIATES SOCO INTERNATIONAL WITH 'EQUAL WEIGHT'
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BARCLAYS INITIATES PREMIER OIL WITH 'OVERWEIGHT'
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COMPANIES - FTSE 100
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Publisher Pearson said Chief Financial Officer Robin Freestone will step down by the end of 2015 to explore other interests, as it eked out a 1% rise in sales in the first nine months of the year at constant currency rates. In a statement, the company said it was retaining its full year guidance for adjusted earnings per share to come in between 62 pence and 67 pence in 2014, even though sales in the first nine months of the year were down 6% excluding Penguin and Mergermarket at actual exchange rates, due to the strength of the pound against the US dollar and emerging market currencies.
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Rolls-Royce Holdings and Safran unit Hispano-Suiza have signed a 25-year deal to set up a company to produce accessory drive train transmission units for all the UK company's civilian aircraft engines, the companies said. The new company, headquartered at Hispano-Suiza's site in Paris, will cover all civil aircraft, particularly its Trent 7000 engine used on the Airbus A330neo.
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Five Prime Therapeutics announced an expansion of its respiratory disease research collaboration with GlaxoSmithKline. The collaboration was established in 2012 to identify first-in-class agents and new mechanisms for the treatment of refractory asthma and chronic obstructive pulmonary disease or COPD. The scope of the collaboration was increased in April 2014 to include two additional respiratory disease discovery programs for a six-month evaluation period. Glaxo has now committed to continue these two discovery programs for another 18 months.
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COMPANIES - FTSE 250
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Amlin said it has increased its stake in Leadenhall Capital Partners LLP, an investment manager in insurance- and reinsurance-linked securities, to 75%, from 40%. In a statement, the FTSE 250 insurer said it made a partial acquisition of each individual partner’s stake in Leadenhall, with the final amount paid to be determined by the business's future profitability. It will be payable in three instalments over the period to May 2016.
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Vesuvius has seen increased activity in the US, but European markets continue to be weak and South America and Asia remain challenging, the engineering company said Friday as it maintained its guidance for the full-year. The company said the strength of sterling will have a negative effect on its results but revenue growth in its steel operations outperformed the industry's 1% growth in the third quarter and 2.1% in the first nine months of the year. The Foundry market remains challenging, with slowing growth and low investment in the high-value mining end market, the company added.
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Dechra Pharmaceuticals reiterated confidence that the "execution of [its] strategy will continue to deliver growth", as it traded in line with expectations in its financial first quarter to end-September, and said it had terminated development of its feline endocrine drug. The company said that, following suspension of clinical trials for the feline endocrine drug in the fourth quarter of 2014, it had opted to terminate further work on the product. Dechra saw revenue rise 6% in the first quarter, or 12% at constant currency, although it noted this was against a soft comparative period that had been hit by the phasing of export orders and supply issues in the US.
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Hikma Pharmaceuticals said it has received a warning letter from the US Food and Drug Administration related to an inspection of its manufacturing facility in Portugal conducted in March, although it stressed it does not believe this will impact its financial guidance for the full year. In the letter, the FDA raised issues related to investigations and environmental monitoring at the facility, Hikma said.
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Pets At Home Group said like-for-like sales growth increased in the second quarter and the first half, driven by strong performances across its business units. The FTSE 250-listed pet retailer said like-for-like sales growth hit 4.2% both in the second quarter and in the first half to October 9, with strong performances from its Advanced Nutrition, Health & Hygiene and VIP Club units. It also said it had seen continued sales growth in its veterinary practices and from its Groom Rooms. Total revenue was up 10.2% to GBP381.5 million, with its core Merchandise business seeing revenues increase 8.9% to GBP348.3 million.
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TSB Banking Group reported an increase in pretax profit from the second quarter to the third, as lower income was more than offset by a drop in operating expenses and less money being set aside for bad customer debts. In a statement, the bank, in which Lloyds Banking Group PLC still has a 50% stake, said it made a GBP33.1 million pretax profit in the three months ended September 30 and GBP161.6 million in the first nine months of the year as a whole. It made a GBP25.7 million pretax profit in the three months ended June 30.
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Ophir Energy said it has signed a sharing contract to conduct exploration and production at two additional blocks in offshore Gabon. The new blocks are situated outside of Ophir's existing acerage and are to be called Nkouere PSC and Nkawa PSC. Nkouere covers 675 square kilometres and Nkawa covers an area of 2,085 square kilometres and both cover water depths varying between 2,000 metres and 2,500 metres, it said in a statement.
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Spectris said it now expects its full year earnings before interest, tax, and amortisation to be "modestly" below current company-compiled consensus of GBP200 million, as weaker than expected trading patterns from its second quarter continued into the third. The instrumentation and controls company said sales in its third quarter to end-September fell 5%, as growth contributed by acquisitions of 2% was offset by the strength of sterling, which had a negative effect of 7%. At constant currency and on an organic or like-for-like basis, sales were flat.
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Cobham said it has won a AUD640 million contract to provide airborne search and rescue services to the Australian Maritime Safety Authority. The deal runs for 12 years from 2016, and it will start modifying and mobilising aircraft later this year. It said the deal price includes estimated flying charges, and could rise to over AUD700 million if three additional optional years are exercised by the Australian Maritime Safety Authority.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Omega Diagnostics Group lowered its expectations for its full-year financial performance, as it does not expect to see any revenue from its Visitect CD4 rapid test for HIV due to setbacks, although it reiterated confidence in the product's future prospects. Shares in Omega Diagnostics are trading down 27% at 14.01 pence at the market open Friday. The medical diagnostics company said its first half to end-September trading is in line with its expectations, with pretax profit before acquisitions costs, share payments, and amortisation to be around GBP560,000, ahead of GBP430,000 a year before.
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The oil companies behind the Horse Hill project in the Weald Basin in the UK said they have made a conventional oil discovery at the Horse Hill-1 well. The oil was discovered at depth of 1,791 feet true vertical depth and a preliminary estimate suggests there is 3.1 million barrels with the possibility of a further 16.8 million barrels of oil in a separate sand lower down in the Portland basin, yet this has not been tested yet. Further analysis is underway to establish the recoverable volume of oil that has been discovered, the companies said.
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Construction company Morgan Sindall Group issued a profit warning, saying it expects its full-year results to come in below previous expectations due to problems faced with contracts in its London and South business. The company said that, while it saw a good performance in its Affordable Housing, Urban Regeneration, Fit Out and Infrastructure arms in recent months, its full-year results would be below its previous expectations, issued on August 5, due to construction contracts in London and the South, which have been delayed and for which the company has incurred extra costs in order to complete.
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Chiquita Brands International Inc confirmed Thursday that it has received a revised offer from entities affiliated with the Brazil's Cutrale Group and the Safra Group to acquire all of the outstanding common stock of Chiquita at a price of USD14.50 per share in cash. On October 15, Chiquita's board had rejected Cutrale/Safra's previous offer of USD14.00 per share and reaffirmed its recommendation that Chiquita shareholders vote to approve the definitive deal between Chiquita and Ireland's Fyffes.
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Spirit Pub Co's potential takeover by Greene King took a twist late Thursday after it confirmed that it had received a preliminary approach from C&C Group PLC over a possible offer. Spirit said its board had reviewed C&C's proposal and rejected it. The confirmation comes after Spirit said Monday that it was open to recommending an increased takeover offer from FTSE 250-listed rival Greene King. The new deal values Spirit at around GBP723 million, above the GBP661 million approach Greene King had made a month earlier. Prior to the open Friday, C&C Group confirmed its approach and said it has until November 20 to make a firm offer or walk away.
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COMPANIES - INTERNATIONAL
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Online retailer Amazon reported Thursday a net loss of USD437 million for the third quarter, compared to USD41 million in the year-ago quarter. Revenue rose by 20% to USD20.58 billion, up from USD17.1 billion. The Seattle-based internet giant had expected losses due to heavy investments in new businesses and services.
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Microsoft reported a profit of USD4.5 billion in the July-September quarter, down from USD5.2 billion a year earlier, the Redmond, Washington-based company said Thursday. Sales rose 25% to USD23.2 billion, up from USD18.5 billion a year ago. Revenue from cloud services rose 128%, according to the statement.
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Pharmaceutical giant Pfizer said Thursday its board approved a new USD11 billion share repurchase program and declared a fourth-quarter dividend. The company also said that a US court has ruled in its favour in a patent lawsuit filed against generic drug maker Mylan Inc related to Pfizer's cancer drug Sutent.
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German chemical giant BASF said third-quarter net income slipped to EUR1.043 billion from EUR1.096 billion in the previous year because of a higher tax rate and increased minority interests. Earnings per share fell to EUR1.14 from EUR1.20. Sales for the quarter grew to EUR18.312 billion from EUR17.733 billion generated last year, due mainly to a sharp rise in volumes in the Natural Gas Trading business sector.
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Swedish mobile network equipment maker Ericsson reported a 13% decline in third-quarter net income to SEK2.6 billion from last year's SEK3 billion. Earnings per share were SEK0.81, down 10% from last year's SEK0.90.
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Friday's Scheduled AGMs/EGMs
Greenko Group
Immedia Group
Hargreaves Lansdown
Dechra Pharmaceuticals
Go-Ahead Group
Stobart Group
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2014 Alliance News Limited. All Rights Reserved.
6 Aug 2014 11:28
