LONDON (Alliance News) - London stocks were mixed Tuesday midday, with shares in Standard Chartered digging a hole after it announced a rights issue, slashed its dividend and reported a swing to loss in its third-quarter, while Wall Street was seen lower, giving back some of the gains made on Monday.
The FTSE 100 index was down 0.2% at 6,351.62 points, the FTSE 250 was flat at 17,163.83, and the AIM All-Share was up 0.5% at 743.23. In Europe, the CAC 40 index in Paris was flat, and the DAX 30 in Frankfurt was down 0.3%.
US stock futures pointed down, with the Dow 30, the S&P 500 and the Nasdaq 100 all seen down 0.2%. The open in the red comes after a positive close Monday, when the Dow rose 0.9%, the S&P gained 1.2% and the Nasdaq Composite added 1.5%.
In the US economic calendar, the Redbook is scheduled for 1355 GMT, ahead of the ISM New York index at 1445 GMT and US factory orders at 1500 GMT. The US economic optimism index, released by The Investor's Business Daily TechnoMetrica Institute of Policy and Politcs, also is released at 1500 GMT.
Investors also will be keeping a close eye on a speech in Frankfurt by European Central Bank President Mario Draghi after the London closing bell at 1900 GMT.
The UK construction sector continued its solid pace of expansion in October, helped by the fastest rise in new work in a year, survey data from Markit Economics and the Chartered Institute of Procurement & Supply showed Tuesday.
However, the Markit/CIPS UK Construction Purchasing Managers' Index fell to 58.8 in October from 59.9 in September, a figure that matched economists' expectations. A PMI reading above 50 indicates growth in activity.
The latest survey marked two-and-a-half years of sustained output growth across the UK construction sector, Markit said. The survey also showed that construction sector employment grew the most since November 2014.
“Another relatively buoyant construction PMI reading indicates that the sector remains in rude health," said Tim Moore, senior economist at Markit. "Rather than acting as a drag on the economy, as suggested by recent [UK] gross domestic product estimates, the sector is continuing to act as an important driving force behind the ongoing UK economic upturn."
Chinese stocks also ended mixed, with the Hang Seng in Hong Kong up 0.9% but the Shanghai Composite down 0.3%. Tokyo was closed due to the Culture Day celebration.
Chinese President Xi Jinping said at a meeting of the Communist Party on Tuesday that the Asian giant's annual economic growth rate should be at least 6.5% for the next five years. Xi's remarks followed state media reports last week that said China was planning an economic growth target of 6.5% in its next 5-year plan. China's economy grew 6.9% year-on-year in the third quarter of 2015, below the 7% target that the government has set for the whole of 2015.
On the London Stock Exchange, Standard Chartered shares crashed to the bottom of the blue-chip index, while housebuilders and oil companies were pushing in opposite directions. The first group was taking a hit after several downgrades in the sector by Liberum, while the latter were benefiting from a rise in commodities prices.
Standard Chartered, down 8.9%, said it will raise GBP3.3 billion in a rights issue and axe its final dividend for 2015 to strengthen its balance sheet, as the emerging markets-focused bank reported that it swung to a third-quarter loss on a jump in impairment charges.
The two-for-seven rights issue is designed to increase the group's common equity tier one capital ratio, a key measure of financial strength, to 13.1% on June 30 levels from 11.5%. The bank said it intends to issue additional tier one securities to build its capital levels over time.
The issue price of the rights issue has been set at 465 pence, a 35% discount to the Monday's closing price of 713.60p. The stock was quoted at midday at 650.60p. The rights issue is fully underwritten. The bank said that Singapore's Temasek Holdings, its largest shareholder, will take up its rights for 15.8% of existing share capital.
Societe Generale analyst James Invine called the update "weak". He said "it is difficult to assess consensus for an item like a capital increase, but we think the rights issue size is about in line with expectations". SocGen kept a Hold stance on Standard Chartered.
Meanwhile, Investec put its recommendation on Standard Chartered Under Review from Hold, calling the bank's update "awful". The broker said it also has put its earning-per-share forecasts under review, adding that it expects consensus to "rebase sharply lower once the detail of today's Strategic Review has been absorbed."
Housebuilders Taylor Wimpey, Barratt Developments and Persimmon were down 4.1%, 3.9% and 2.6%, respectively, after Liberum cut its recommendation on all of them to Sell from Hold.
The broker said the investment case for the largest UK housebuilders is "not as positive as is widely supposed" as "house prices, margins and returns will not keep moving up forever".
"We agree that the outlook is broadly supportive, but we do not believe that these optimistic valuations can withstand the gross margin pressure that we expect in the coming years," said Liberum. "We believe that house price inflation will be suppressed by a more vigilant regulator and build cost inflation returns."
Meanwhile, oil-related companies were higher, with BG Group up 1.3% and Royal Dutch Shell 'B' shares up 0.9%. The latter upgraded its cost synergy targets from its proposed acquisition of BG by USD1.0 billion to USD3.5 billion. It said the merger is on track to complete in early 2016.
Oil stocks also were benefiting from a rise in Brent oil prices, which was at USD49.24 a barrel, having touched an intraday low of USD48.44. Blue-chip BP was up 1.0%, while mid-caps Tullow Oil and Premier Oil were up 12% and 6.2%, respectively.
In AIM, Lansdowne Oil & Gas was up 24%. Lansdowne and partner Providence Resources said a two-year extension has been granted on the licence covering the Barryroe oil field in Ireland. Providence's Exola subsidiary has an 80% stake in the licence and is the operator, while Lansdowne owns a 20% stake. Providence Resources shares were down 1.7%.
LGO Energy was down 16%. The oil and gas company said it has hired advisers to sound out potential strategic investors as it looks to bridge the funding gap it faces following the loss of the GY-678 well at the Goudron field in Trinidad.
LGO said delays have now occurred in the settlement of the remaining capital costs for its recent drilling programme, amounting to around USD4.0 million. LGO said it will need BNP Paribas, its lender, to approve the release of specific funds previously drawn down by the company.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2015 Alliance News Limited. All Rights Reserved.
UK dividends calendar - next 7 days
Monday 6 May | |
no events scheduled | |
Tuesday 7 May | |
Begbies Traynor Group PLC | dividend payment date |
Ferguson PLC | dividend payment date |
Manchester & London Investment Trust PLC | dividend payment date |
Mobius Investment Trust PLC | dividend payment date |
Nexus Infrastructure PLC | dividend payment date |
Pebble Group PLC | dividend payment date |
Pinewood Technologies Group PLC | special dividend payment date |
Thungela Resources Ltd | dividend payment date |
Volution Group PLC | dividend payment date |
Wednesday 8 May | |
Melrose Industries PLC | dividend payment date |
Personal Group Holdings PLC | dividend payment date |
Thursday 9 May | |
Admiral Group PLC | ex-dividend payment date |
AG Barr PLC | ex-dividend payment date |
Aurora Investment Trust PLC | ex-dividend payment date |
Balanced Commercial Property Trust Ltd | ex-dividend payment date |
Bank of Ireland Group PLC | ex-dividend payment date |
Bellevue Healthcare Trust PLC | ex-dividend payment date |
Braime Group PLC | ex-dividend payment date |
Centaur Media PLC | ex-dividend payment date |
Chenavari Toro Income Fund Ltd | ex-dividend payment date |
Clarkson PLC | ex-dividend payment date |
Coca-Cola Europacific Partners PLC | ex-dividend payment date |
Custodian Property Income REIT PLC | ex-dividend payment date |
CVC Income & Growth Ltd EURO | ex-dividend payment date |
CVC Income & Growth Ltd GBP | ex-dividend payment date |
Domino's Pizza Group PLC | dividend payment date |
Epwin Group PLC | ex-dividend payment date |
F&C Investment Trust PLC | dividend payment date |
Fidelity Special Values PLC | ex-dividend payment date |
Focusrite PLC | ex-dividend payment date |
Grafton Group PLC | dividend payment date |
Gresham Technologies PLC | ex-dividend payment date |
Headlam Group PLC | ex-dividend payment date |
Henderson International Income Trust PLC | ex-dividend payment date |
HSBC Holdings PLC | ex-dividend payment date |
Ibstock PLC | ex-dividend payment date |
Invesco Perpetual UK Smaller Cos Investment Trust PLC | ex-dividend payment date |
JPMorgan Global Core Real Assets Ltd | ex-dividend payment date |
Lancashire Holdings Ltd | ex-dividend payment date |
LSL Property Services PLC | ex-dividend payment date |
M&C Saatchi PLC | ex-dividend payment date |
M&G PLC | dividend payment date |
Macfarlane Group PLC | ex-dividend payment date |
Marwyn Value Investors Ltd | ex-dividend payment date |
Midwich Group PLC | ex-dividend payment date |
Montanaro UK Smaller Cos Investments Trust PLC | dividend payment date |
Octopus Titan VCT PLC | ex-dividend payment date |
One Media iP Group PLC | ex-dividend payment date |
Petershill Partners PLC | ex-dividend payment date |
Picton Property Income Ltd | ex-dividend payment date |
PRS REIT PLC | ex-dividend payment date |
Reach PLC | ex-dividend payment date |
Sherborne Investors Guernsey C Ltd | ex-dividend payment date |
Sthree PLC | ex-dividend payment date |
Sylvania Platinum Ltd | ex-dividend payment date |
Taylor Maritime Investments Ltd | ex-dividend payment date |
Tracsis PLC | ex-dividend payment date |
Travis Perkins PLC | dividend payment date |
UIL Ltd | ex-dividend payment date |
Friday 10 May | |
AIB Group PLC | dividend payment date |
Alpha Group International PLC | dividend payment date |
Antofagasta PLC | dividend payment date |
Hammerson PLC | dividend payment date |
Hunting PLC | dividend payment date |
International Personal Finance PLC | dividend payment date |
Invesco Select Trust Global Equity Income PLC | dividend payment date |
Invesco Select Trust UK Equity PLC | dividend payment date |
Johnson Service Group PLC | dividend payment date |
Kerry Group PLC | dividend payment date |
Moneysupermarket.com Group PLC | dividend payment date |
Schroder Asian Total Return Inv Co PLC | dividend payment date |
Schroder European Real Estate Investments Trust PLC | dividend payment date |
Schroder Oriental Income Fund Ltd | dividend payment date |
Serco Group PLC | dividend payment date |
Smurfit Kappa Group PLC | dividend payment date |
Somero Enterprises Inc | special dividend payment date |
Taylor Wimpey PLC | dividend payment date |
Tufton Oceanic Assets Ltd | dividend payment date |
VPC Specialty Lending Investments PLC | dividend payment date |
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