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LONDON (Alliance News) - Shares have opened mostly lower Wednesday with small-caps out-performing large caps, following Tuesday's relief rally from lowered Ukraine tensions.
Standard Chartered has reported lower 2013 profit and a 15% reduction in its bonus pool, while saying the first half of 2014 will prove challenging. The emerging markets bank's shares are up 2.9% at the open, however.
Deutsche Bank is positive on water companies, raising Pennon and Severn Trent to Buy from Hold, while Nomura likes mining companies, lifting Randgold Resources and Centamin to Buy from Neutral. Credit Suisse is less positive on house builders, cutting Bellway, Taylor Wimpey and Persimmon to Neutral from Outperform, according to traders.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: down 12.12 at 6,811.65
FTSE 250: down 55.69 at 16,643.21
AIM ALL-SHARE: up 1.21 at 889.77
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Hang Seng: down 53.40 at 22,604.23
Nikkei 225: closed up 176.15 or 1.2% at 14,897.63
DJIA: closed up 227.85 at 16,395.88
S&P 500: closed up 28.18 at 1,873.91
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GBP-USD: up at USD1.6680
EUR-USD: down at USD1.3736
GOLD: down at USD1,334.70 per ounce
OIL (Brent): down at USD109.06 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
08:43 Italy Markit Services PMI
08:48 France Markit Services PMI
08:53 Germany Markit Services PMI
08:58 EU Markit Services PMI
08:58 EU Markit PMI Composite
09:28 UK Markit Services PMI
10:00 EU Gross Domestic Product
10:00 UK Inflation Report Hearings
10:00 EU Retail Sales
12:00 US MBA Mortgage Applications
13:15 US ADP Employment Change
15:00 US ISM Non-Manufacturing PMI
15:30 US EIA Crude Oil Stocks change
19:00 US Fed's Beige Book
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Shop prices in the UK reported deflation for the tenth straight month in February, and at the fastest pace on record, as food inflation dropped sharply and retailers resorted to heavy discounting on apparels and electrical goods, a report from the British Retail Consortium (BRC) showed Wednesday. The February data suggests that consumer price inflation is set to remain low in the coming months, with many of the larger food retailers cutting prices and investing heavily in promotions, BRC said. The shop price index dropped 1.4% on an annual basis, after falling 1% in the beginning of the year. Economists had forecast a weaker decline of 1.1% for February. The contraction was the biggest since the series began in 2006, and indicated the longest sustained period of price decreases ever recorded.
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China aims to achieve about 7.5% economic growth this year, the same as last year's target, and plans to boost domestic spending. The government also maintained its 3.5% inflation target for 2014, Premier Li Keqiang told National People's Congress on Wednesday. Last year, consumer prices rose 2.6%. Further, the nation intends to achieve 7.5% trade growth this year. Li said the fiscal deficit will be 2.1% of gross domestic product and military spending will be raised by 12.2%.
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Irish service sector growth slowed significantly in February, despite strong increases in activity, new business and job creation, survey data from Markit Economics showed. The Investec Purchasing Managers' Index for the services sector dropped to 57.5 from January's 61.5. A score above 50 suggests expansion in the sector.
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The US on Tuesday accused Russia of acting on false pretences in Ukraine, while Moscow warned of consequences if Washington and the EU impose sanctions. US Secretary of State John Kerry said Russia was engaging in "falsehoods, intimidation and provocation" in seizing Crimea, in order to "create a pretext for further invasion" in Ukraine. Kerry spent a few hours Tuesday in Kiev, including a stop on Institutska Street where he laid flowers and left a candle at a shrine for victims of government violence during deadly protests, which toppled the country's pro-Moscow regime last month. He then flew to Paris where he is expected to meet Wednesday with Russian Foreign Minister Sergei Lavrov for the first time since the Ukrainian Parliament removed President Viktor Yanukovych and appointed a pro-Western interim government.
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A Canadian bitcoin exchanged has closed after hackers stole all its virtual coins, the exchange said Tuesday. Flexcoin was attacked and robbed Sunday, the company said. The attacker made off with 896 bitcoins.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES PENNON GROUP TO 'BUY' ('HOLD') - TARGET 800 (650) PENCE
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DEUTSCHE BANK RAISES SEVERN TRENT TO 'BUY' ('HOLD') - TARGET 2000 (1550) PENCE
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UBS REMOVES PEARSON FROM 'MOST PREFERRED LIST' - 'BUY'
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NOMURA RAISES RANDGOLD RESOURCES TO 'BUY' ('NEUTRAL') - TP 6000 (4600) PENCE
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NOMURA RAISES CENTAMIN TO 'BUY' ('NEUTRAL') - TARGET 85 (45) PENCE
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UBS REMOVES INTERCONTINENTAL HOTELS FROM 'MOST PREFERRED LIST' - 'BUY'
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TRADERS: JPMORGAN CUTS DEVRO TO 'NEUTRAL' ('OVERWEIGHT')
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GOLDMAN CUTS TATE & LYLE PRICE TARGET TO 680 (790) PENCE - 'NEUTRAL'
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TRADERS: CREDIT SUISSE CUTS BELLWAY TO 'NEUTRAL' ('OUTPERFORM')
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TRADERS: CREDIT SUISSE CUTS TAYLOR WIMPEY TO 'NEUTRAL' ('OUTPERFORM')
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TRADERS: CREDIT SUISSE CUTS PERSIMMON TO 'NEUTRAL' ('OUTPERFORM')
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*SOCGEN CUTS TULLETT PREBON TO 'HOLD' ('BUY') - TARGET 330 (310) PENCE
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UBS REMOVES PEARSON FROM 'EUROPEAN KEY CALL LIST'
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TRADERS: UBS REMOVES INTERCONTINENTAL HOTELS FROM 'MOST PREFERRED LIST'
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COMPANIES - FTSE 100
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Standard Chartered FY Pretax Profit USD6.96B Vs USD 7.52B; Statutory Pretax Profit Was USD6.06B, Down 11%; Dividend Increased 2% To 86.0 cents a Share; FY Core Tier 1 Capital Ratio 11.8% Vs 11.7%; Cuts Bonus Pool By 15% Due To Weaker 2013 Performance; Chairman: We Remain Well Capitalised
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Legal & General Group PLC reported a 10% rise in 2013 pretax profits, supported by strong growth across the business, particularly its retirement and investment management divisions. The FTSE 100 life pensions and investment company reported a GBP1.13 billion pretax profit, compared with GBP1.03 billion in 2012, while total revenue grew by 12% to GBP39.3 billion. Expenses grew to GBP37.9 billion from GBP33.8 million, up 12%.
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Oil giant BP PLC said it plans to establish a separate business to manage its onshore oil and gas assets in the US Lower 48. The new business will operate separately from the rest of BP and will be designed to adapt to the changing and competitive energy landscape in the region. This move is expected to help unlock the significant value associated with BP's resource position in the US Lower 48 onshore, which the company now oversees through its Houston-based North America Gas group.
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Engineering investment group Melrose Industries PLC reported an increase in profit and revenue for the full year, largely driven by the acquisition of Elster Group in August 2012. Melrose said its 2013 results are not directly comparable to 2012 as the prior year performance includes only four months of Elster trading after its acquisition in a deal worth USD2.3 billion. Melrose, which specialises in buying underperforming engineering companies and turning them round, posted pretax profit of GBP171.1 million for 2013, up from GBP6.3 million, as revenue rose to GBP1.73 billion, from GBP1.05 billion a year earlier.
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Admiral Group PLC reported a 7% increase in 2013 pretax profits despite a fall in net revenue as it faced significantly lower costs, mainly because of a reduction in the cost of net insurance claims. The FTSE 100 motor insurer, that is also famous for owning price comparison website Confused.com, said it made a GBP370.2 million pretax profit, compared with GBP344.6 million in 2012. According to consensus estimates provided by the company, analysts had been forecasting a GBP363.9 million pretax profit.
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COMPANIES - FTSE 250
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SOCO International PLC said its pretax profit fell significantly in its full year 2013 on lower revenues and exploration write-off costs, but the company is confident of strong future progress. The major oil-and-gas exploration-and-production company said its pretax profit fell 25% to USD333.3 million from USD445.6 million the previous year as revenues fell 2.2% to USD608.1 million from USD621.6 million in 2012.
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BBA Aviation PLC reported a 16% rise in 2013 pretax profit as acquisitions buoyed revenues and it lifted margins and cut its finance costs, and it predicted progress in 2014 despite an unexpected slowdown in some businesses. In a statement, the aviation services company warned that revenues had been lower-than-expected in its engine repair and overhaul business and are set to remain subdued in 2014. It also cautioned that its Legacy aftermarket services business is set to pause this year after some major contracts were completed last year. However, it is seeing signs of a recovery in the North American business and general aviation unit. The company reported a pretax profit of USD145.2 million for 2013, up from USD125.1 million in 2012, outperforming the 2% rise in revenues to USD2.22 billion, from USD2.18 billion.
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Rentokil Initial PLC said it has acquired Chilean pest control, hygiene and office services company Bestway, a deal that makes it the biggest hygiene services provider in the country and gives it a platform to expand in Colombia as it continues to expand in emerging markets. No financial details for the deal were provided.
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Michael Page 2013 Pretax Profit GBP64.1M, Up 12% From GBP57.0M In 2012; Revenue GBP1.005B, Up 1.6% From GBP989.9M In 2012; Total Dividend 10.5p, Up 5.0% From 10.0p In 2012
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Carillion FY Pretax Profit GBP110.6M Vs GBP164.8M; Revenue GBP4.1Bn Vs GBP4.4B; FY Dividend Of 17.50 Pence Vs 17.25 Pence; Wins Middle East Development Contract Worth GBP150M; Wins Support Services Contract Worth Over GBP370M
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COMPANIES - ALL-SHARE AND AIM
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Rare Earth Minerals Says Sonora Partner Has Seen Significant Lithium Results From New Holes
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Gem Diamonds Sells Two 160+ Carat Diamonds For Total USD13.5M
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Thor Mining Says Spring Hill Testwork Returned Outstanding Gold Recovery, Reinforcing Assay Upgrades
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Green Compliance Sells Fire Suppression Unit Pyramid Fire Protection To FCF PLC For GBP435,000
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Japan Residential Acquires Six Resdential Buildings For GBP43.6M
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Gable Holdings Says 2013 Results To be In Line With Market Expectations; Says 2014 Off To Strong Start, Set For Robust Performance
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Synairgen Raises GBP1.5M In Placing; Says Licensing Talks Progressing Well, But Still No Guarantee Of Deal
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Eco City Vehicles CEO Steps Down To Pursue Other Interests; Swungs To 2013 Pretax Pre-Items Profit Of GBP0.25M Vs GBP0.2M Loss; Revenues GBP32.0M Vs GBP30.5M; Says New Vito Sales Softening In Current Quarter
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Lookers FY Pretax Profit GBP43.9M Vs GBP34.3M; Revenue GBP2.46B Vs GBP2.06B; Final Dividend Of 1.7 Pence Per Share
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COMPANIES - OTHER
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Energy firm Cuadrilla Resources Ltd has announced that tests at its shale gas resource in the North West of England may have increased the resource by over 50%, according to the BBC on Wednesday. A geologist with Cuadrilla has increased the estimates of gas in place at the company's licence area to 330 trillion cubic feet compared from 200 trillion cubic feet after the company fracked two wells in 2011. The company said the estimate was based on new seismic and well data but it could take two years to test the commercial viability of the increased resource.
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Wednesday's Scheduled AGMs/EGMs
JPMorgan Russian Securities
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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