LONDON (Alliance News) - Share prices have opened firmly in London Thursday, after the Greek Parliament passed the measures required for its new debt bailout agreement with the eurozone.
Later Thursday, at midday, the European Central Bank issues its interest rate decision and monetary policy statement.
Amid a raft of UK company news early Thursday, the UK media and communications regulator dropped a somewhat-expected bombshell.
Ofcom said it has completed the first phase of its Strategic Review of Digital Communications and said it will seek views on a number of potential changes, including on the possible break-up of BT Group.
The regulator outlined a range of potential options to improve competition in the communications market and will seek views and evidence on a series of future regulatory approaches as regards BT.
These would include retaining the current model, where BT's Openreach infrastructure business is required to provide access to the network to competing providers, or strengthening the current regulatory model, which would impose new rules on BT, including controls on its wholesale charges with stronger incentives to improve quality of services and tougher penalties should it fail to meet targets.
The option also includes separating the Openreach business from BT, something rival Sky recently called for. Ofcom said this could deliver competition and wider benefits for consumers and would "remove BT's underlying incentive to discriminate against competitors". It added, however, that the "process would be challenging and it may not address some concerns relating to Openreach".
BT shares are down 0.7% in early trade, while Sky shares are up 0.3%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 6,758.84
FTSE 250: up 0.3% at 17,682.06
AIM ALL-SHARE: up 0.1% at 757.26
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Hang Seng: up 0.2% at 25,098.90
Nikkei 225: closed up 0.7% at 20,600.12
DJIA: closed flat at 18,050.17
S&P 500: closed down 0.1% at 2,107.40
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GBP: down at USD1.5624
EUR: down at USD1.0931
GOLD: down at USD1,147.37 per ounce
OIL (Brent): down at USD57.22 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times in BST)
Ireland Gross Domestic Product
09:00 Italy Trade
10:00 EU Consumer Price Index
10:00 EU Trade Balance
12:45 EU ECB Interest Rate Decision
13:30 EU ECB Monetary Policy Statement and press conference
13:30 US Jobless Claims
14:30 UK CB Leading Economic Index
15:00 US Philadelphia Fed Manufacturing Survey
15:00 US NAHB Housing Market Index
15:00 US Fed Chair Yellen testifies to Congress
15:30 US EIA Natural Gas Storage
21:00 US Net TIC Flows
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Greek lawmakers approved the tough austerity measures required by the EU, to enable Athens avail the badly needed bailout loans of EUR86 billion. Nevertheless, the approval was not without some stiff opposition from key members of Prime Minister Alexis Tsipras's Syriza party, betraying the inherent contradictions in the left-wing political entity. The approval of the economic measures passed with 229 votes in favor in the 300-seat chamber, but 38 Syriza lawmakers abstained or voted against the government. This included former Finance Minister Yanis Varoufakis and the current Energy Minister Panagiotis Lafazanis, Deputy Labour Minister Dimitris Stratoulis and speaker of parliament Zoe Constantopoulou. The measures includes tax hikes and raising the retirement age, among others. The focus now shifts to the European Central Bank and other eurozone members to release emergency funds to enable reopen Greek banks and buffer up its literally empty coffers. The ECB's Governing Council meets in Frankfurt later on Thursday, while Germany's Parliament will reconvene to vote Friday on whether to start bailout negotiations.
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The US Federal Reserve is getting more optimistic that the US economy is on the right track after a second straight rough winter. With the jobs market improving, each of the Fed's 12 districts reporting activity expanded from mid-May through June, according to the most recent Beige Book. Respondents told the Fed that consumer spending is picking up, the housing market is steady, and lending activity in on the rise. The Beige Book is expected to give the Fed another reason to raise interest rates, perhaps as early as September. Fed Chair Janet Yellen said as much Wednesday when she gave a relatively upbeat assessment of the U.S economy to Congress. She said the Fed was going to raise rates this year if the recovery proceeds.
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The Asian Development Bank cut its economic growth forecast for developing Asia amid slower-than-expected growth in the US and China. The Manila-based bank said the region's gross domestic product was projected to grow by only 6.1% from the original forecast of 6.3% in its annual Asian Development Outlook published in March.
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US President Barack Obama defended the Iranian nuclear deal as meeting the top US priority of preventing Tehran from getting a nuclear bomb, even as the agreement came under fire Wednesday from lawmakers in Washington and key US ally Israel. "Without a deal, we risk even more war in the Middle East," he said. Congress has 60 days to approve the deal.
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French security forces foiled a terrorist attack on several military installations, Home Minister Bernard Cazeneuve told reporters. Four suspects aged 16 to 23 were arrested across the country on Monday, he said, including a former member of the military special forces. One of them was known to be in contact with French jihadists, and was under scrutiny by authorities following his activities on social networks and an alleged intention to travel to Syria, Cazeneuve said. The suspects planned to capture and behead a high-ranking soldier from a military base, newspaper Le Monde reported.
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BROKER RATING CHANGES
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BERENBERG CUTS STANDARD LIFE TO 'SELL' ('HOLD') - TARGET 400 PENCE
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BERENBERG CUTS ROLLS-ROYCE TO 'HOLD' ('BUY') - TARGET 805 (1012) PENCE
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BERENBERG RESUMES SHIRE WITH 'BUY' - TARGET 6300 PENCE
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Investec Upgrades Virgin Money To Buy From Hold, Lifts Price Target To 420p From 395p
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HSBC CUTS PZ CUSSONS TO 'HOLD' ('BUY') - TARGET 400 PENCE
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COMPANIES - FTSE 100
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Anglo American said it had a "solid" production performance in the second quarter of 2015 that was in line with its expectations but said it will report a substantial impairment charge in the first half totalling between USD3.0 billion to USD4.0 billion. The multi-commodity miner said iron ore production from its Kumba operations in South Africa fell 9% year-on-year to 10.4 million tonnes from 11.5 million tonnes due to mining feedstock constraints, but iron ore production from Minas Rio in Brazil totalled 1.8 million wet tonnes, up 55% as it continues to ramp-up.
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Anglo-Australian mining giant Rio Tinto reported that its global iron ore production for the second quarter grew 9% from last year, while shipments increased 8%. However, the company lowered its forecast for full-year iron ore shipments, citing weather disruption in the first half of the year at its Pilbara operations. Rio Tinto, the world's second-largest iron-ore producer, said its global iron ore production for the second quarter increased 9% on a 100% basis to 79.7 million tons. The company's second quarter iron-ore production also rose 7% sequentially. Iron ore sales account for roughly 90% of the profit of Rio Tinto.
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Dixons Carphone reported growth in profit in its recently-ended financial year as sales continued to grow following the merger of Dixons Retail and Carphone Warehouse last year. The electricals and telecoms retailer said pretax profit in the year to May 2 rose to GBP287 million from GBP77 million the year before, as revenue grew to GBP8.3 billion from GBP1.9 billion. Total like-for-like sales were up 6% on the prior year. Dixons Carphone said that the integration of the two businesses is progressing well and is expected to deliver at least GBP80 million of synergies by the financial year 2017, one year ahead of plan. Dixons Carphone will pay a final dividend of 6 pence, up from the 4p it paid the year before, taking the total dividend for the year to 8.5p from 6p, a 42% increase.
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Sports Direct International reported growth in profit in its recently ended financial year, boosted by a rise in revenue as it extends its portfolio across the UK and Europe. The sporting goods retailer reported a 31% rise in pretax profit in the year ended April 26 to GBP313.4 million from GBP239.5 million the year before, as revenue grew 4.7% to GBP2.8 billion from GBP2.7 billion. It said revenue and profit growth was driven by continued expansion in the UK and across Europe. Sports Direct will not pay a dividend for the year, saying the payment of dividends remains under review.
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The UK government sold off just shy of a further 1% of its stake in Lloyds Banking Group. The government now holds a 14.98% stake in Lloyds, cutting its stake from the 15.90% it held after it sold down its stake earlier this month.
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Information services and credit reports company Experian said it has made an encouraging start to its current financial year, with progress made across the business, even as foreign exchange translation challenges continue. Experian said it has seen good progress in its software and analytics, fraud and identity management, consumer and business information arms and has seen improved trading in Brazil in the first quarter to the end of June.
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Imperial Tobacco Group is considering selling an additional stake in its Spanish logistics unit Cia de Distribution Integral Logista Holdings, Bloomberg reported, citing people with knowledge of the matter. Imperial Tobacco, which owns about 70% of Logista, may reduce its holding to just over 50% via a sale to institutions, the report stated. The company could also seek a buyer for the entire stake, the report added. Spokesmen for Imperial and Logista declined to comment.
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COMPANIES - FTSE 250
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Premier Oil said it has been awarded two blocks in round one of the licensing round in Mexico through its joint venture. The FTSE 250-listed oil company said Blocks 2 and 7, which the joint venture has been awarded, contain "numerous leads in established and emerging plays". The blocks are located in the shallow water Sureste Basin in the Gulf of Mexico.
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Self-storage provider Big Yellow Group said its revenue increased in the first quarter of its financial year, boosted by the acquisition of its regional portfolio joint venture, though like-for-like revenue also increased. Big Yellow said its total revenue in the first quarter to the end of June was GBP24.1 million, up from GBP18.9 million a year earlier, thanks to the company acquiring the 67% of the Big Yellow Partnership Ltd, its regional joint venture, that it did not already own in December. But like-for-like revenue, which does not include those regional stores, also increased, up to GBP20.7 million from GBP18.9 million.
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COMPANIES - LONDON MAIN MARKET AND AIM
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BrainJuicer Group warned its pretax profit in the first six months of 2015 will be around 25% lower year-on-year due to one-off cost and rising costs but said it is still confident of hitting its full year expectations. The online market research company said overheads grew faster than revenue in the first half, in part due to the amount of staff increasing by 10%, including the appointment of two senior managers to "spearhead" its brand strategy initiative.
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COMPANIES - INTERNATIONAL
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EBay is closing in on a deal to sell its Enterprise unit to a group led by private-equity firm Permira for around USD900 million, the Wall Street Journal reported, citing people familiar with the matter. The deal, which was being finalized late Wednesday, could be announced as soon as Thursday, when eBay is scheduled to release second-quarter financial results, the report said. EBay also plans to complete the spinoff of its PayPal payments unit on Friday. The sale to the group, which includes private-equity firm Sterling Partners, could end up around USD925 million, the report added, citing one of the people. EBay has been seeking a buyer for the Enterprise unit since at least January, when it said it could also spin it off.
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Netflix reported a decline in second-quarter profit, despite growth in revenues, on content expenses and the impact of a stronger dollar. However, both earnings and revenues for the quarter topped Wall Street estimates. The online-video streaming service provider detailed a robust earnings outlook for the third quarter, but said international expansion and ramp up of content will necessitate significant spending. Netflix said it added 3.28 million streaming subscribers globally in the second quarter, above its expectations of 2.50 million, to end the period with 65.55 million subscribers.
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Intel said its second quarter profit fell 3% from last year, as revenue declined and gross margin shrank amid a global PC slump. However, the company's quarterly earnings per share came in above analysts' expectations as did its quarterly revenue. At the same time, the Santa Clara, California-based company gave an upbeat revenue forecast for the current quarter, but lowered its full year revenue outlook.
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Thursday's Scheduled AGMs/EGMs
Caledonia Investments
Telford Homes
Burberry Group
FirstGroup
Wincanton
LondonMetric Property
Hansa Trust
McKay Securities
Dekeloil
Wynnstay Properties
Aer Lingus
Plus500
Infinis Energy
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
