LONDON (Alliance News) - Bank of England Governor Mark Carney's vow to fight Brexit blues with easier monetary policy has kept London shares firm at the open Friday, consolidating a week off gains, particularly for the FTSE 100 index.
Carney said Thursday afternoon: "In my view...the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer," fuelling expectations of a possible cut in UK interest rates from their current 0.5%.
Carney also tried to reassure investor confidence on the UK economy by saying that the near-term challenges it is facing "can't be wished away", but "they can be addressed".
"The [Monetary Policy] Committee will make an initial assessment on July 14, and a full assessment complete with a new forecast will follow in the August Inflation Report," Carney said. "In August, we will also discuss further the range of instruments at our disposal."
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 6,509.70
FTSE 250: down 0.1% at 16,255.68
AIM ALL-SHARE: up 0.1% at 708.68
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Hang Seng: up 1.8% at 20,794.37
Nikkei 225: closed up 0.7% at 15,682.48
DJIA: closed up 1.3% at 17,929.99
S&P 500: closed up 1.4% at 2,098.86
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GBP: flat at USD1.3290 (USD1.3294)
EUR: up at USD1.1087 (USD1.1032)
GOLD: up at USD1,331.68 per ounce (USD1,318.96)
OIL (Brent): down at USD49.87 a barrel (USD50.32)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times in BST)
holiday Canada Day
08:30 Switzerland SVME - purchasing managers' index
08:45 Italy Markit manufacturing PMI
08:50 France Markit manufacturing PMI
08:55 Germany Markit manufacturing PMI
09:00 Italy unemployment
09:00 EU Markit manufacturing PMI
09:30 UK Markit manufacturing PMI
10:00 EU unemployment rate
14:45 US Markit manufacturing PMI
15:00 US ISM Prices Paid
15:00 US ISM manufacturing PMI
15:00 US construction spending
18:00 US Baker Hughes US oil rig count
18:00 US vehicle sales
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Senior Tories lined up behind UK Home Secretary Theresa May's leadership bid as rival Michael Gove, the Justice Secretary and prominent Leave campaigner, prepared to set out his case for becoming prime minister. Cabinet colleagues Michael Fallon and Patrick McLoughlin declared their backing for the Home Secretary's campaign as the candidates to replace David Cameron as Tory leader and premier jostled for support. Gove will set out his case for the leadership in a speech on Friday after his last-minute decision to enter the race effectively torpedoed Brexit campaign ally Boris Johnson's hopes of entering Number 10.
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Jeremy Corbyn is clinging on defiantly as UK Labour leader as a poll indicated he could still see off a leadership challenge, but his previously rock-solid support in the party may be falling away. The Labour leader has vowed to stay on despite the threat of a challenge to his position and the mass resignation of scores of frontbenchers in protest at his leadership. Corbyn has repeatedly said he will not quit because he won an overwhelming mandate from 60% of Labour members in the 2015 leadership election. But a YouGov poll for The Times, carried out between Monday and Thursday as Corbyn struggled to maintain his position, found 50% of Labour members surveyed would vote for Corbyn but 47% would not - down from the 64%-33% lead in May.
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IRELAND JUNE MANUFACTURING PMI 53 VS. 51.5 IN MAY
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Business sentiment in China's manufacturing sector has dipped, according to a key survey released. The purchasing manager's index compiled by Caixin business magazine fell 0.6 point to 48.6 in June, the fastest drop for four months. The government's official PMI, which favours the larger, state-owned enterprises, also showed a drop in sentiment, of 0.1 point to 50.0, the lowest level since February. "Today's data suggest that China is unlikely to achieve a GDP growth of 6.7% in Q2," ANZ bank commented, referring to China's GDP target for 2016, and predicting growth of 6.2% for the quarter.
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Japan's consumer confidence improved by more than expected in June to the strongest level in five months, survey results from the Cabinet Office showed. The consumer confidence index rose to 41.8 in June from 40.9 in the previous month. Economists had expected the index to climb to 41.1. The latest reading was the highest since January this year, when it marked 42.3.
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The manufacturing sector in Japan continued to contract in June, albeit at a slower pace, the latest survey from Nikkei showed on Friday with a manufacturing PMI score of 48.1. That's up from 47.7 in May, although it remains well beneath the line of 50 that separates expansion from contraction. It's also the fourth straight month of contraction.
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An index monitoring business sentiment in Japan was steady in the second quarter of 2016, the Bank of Japan said on Friday in its quarterly Tankan business survey. The large manufacturers' index came in with a score of +6, beating forecasts for +4 and unchanged from the previous quarter. The outlook also came in at +6, beating forecasts for +3, which would have been unchanged from Q1. The survey is closely watched by the Bank of Japan for formulating policies.
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Nationwide consumer prices in Japan slid 0.4% on year in May, the Ministry of Internal Affairs and Communications said. That beat forecasts for -0.5% following the 0.3% decline in April. Core CPI, which excludes food prices, also was down 0.4% on year. That was in line with expectations and down from the 0.3% decline a month earlier.
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The unemployment rate in Japan came in at a seasonally adjusted 3.2% in May - in line with expectations and unchanged from the previous month.
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Three foreign nationals carried out this week's attack on Istanbul's Ataturk international airport, killing 44 people in what appeared to be a coordinated strike on a major global transit hub, a Turkish official confirmed. The three attackers came from Uzbekistan, Kyrgyzstan and Russia, he said. The Dogan news agency reported the Russian national was from the restive Caucasus region of Dagestan in the south of the country. No group has claimed the attack, which involved firearms and explosives, but Turkish officials are pointing the finger at Islamic State, which has been blamed for a number of attacks in the country during the past year.
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BROKER RATING CHANGES
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TRADERS: MERRILL LYNCH RAISES ABERDEEN ASSET MANAGEMENT TO 'BUY' ('UNDERPERFORM')
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BERENBERG CUTS STAFFLINE TO 'HOLD' ('BUY') - TARGET 900 (1700) PENCE
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BERENBERG CUTS INTERSERVE TO 'HOLD' ('BUY') - TARGET 330 (520) PENCE
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BERENBERG RAISES DIGNITY TO 'BUY' ('HOLD') - TARGET 2825 (2400) PENCE
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TRADERS: MACQUARIE INITIATES RIGHTMOVE WITH 'NEUTRAL'
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TRADERS: LIBERUM RAISES GENUS TO 'BUY' ('HOLD')
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TRADERS: JPMORGAN RAISES DAIRY CREST GROUP TO 'OVERWEIGHT' ('NEUTRAL')
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COMPANIES - FTSE 100
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BHP Billiton said Brazilian courts have been told to suspend their decision on whether to ratify the framework agreement that will start to rectify the aftermath of the Samarco dam failure that occurred last year. BHP, alongside its partner Vale, had the framework agreement approved by courts in early May, but said Friday that the Superior Court of Justice in Brazil has now issued an interim order suspending the decision of the Federal Court of Appeal to ratify the agreement.
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Drugmaker AstraZeneca said it has entered into licensing agreements with LEO Pharma AS covering skin-disease treatments. AstraZeneca said it has signed a deal with LEO, a Danish dermatology care specialist, to licence its tralokinumab treatment for patients with atopic dermatitis, an inflammatory skin disease. LEO will make an upfront USD115.0 million payment to AstraZeneca for the global rights to tralokinumab and will pay AstraZeneca up to USD1.0 billion in commercially-related milestones, plus royalties on product sales. In addition, AstraZeneca said it has terminated a licence held by an affiliate of US-based Valent Pharmaceuticals International Inc to develop and commercialise brodalumab, a treatment for skin disease psoriasis, in Europe. Simultaneously, AstraZeneca has signed a deal for the licence to brodalumab in Europe with LEO.
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HSBC, the largest bank in the UK, announced Thursday it will not consider relocating its headquarters out of London despite the decision by the UK to leave the EU. HSBC Chairman Douglas Flint, chairman, speaking at a conference in London, said that HSBC would stick to its plan to keep its headquarters in the UK. Earlier this year, HSBC had said it would keep its global headquarters in London. The bank had completed a review on whether to move its headquarters away from London, with New York or Hong Kong looked at as alternatives.
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COMPANIES - FTSE 250
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Specialty chemicals company Synthomer affirmed its expectations for 2016 as it completed the acquisition of Hexion Performance Adhesives & Coatings. The company, which supplies latices and emulsion polymers, said its outlook for 2016 is unchanged and trading has been in line with its expectations in the first half.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Trinity Mirror said it anticipates interim results will meet its expectations and said strong cash generation in the first half should bring net debt down further. The newspaper publisher, which owns the Daily Mirror and Sunday Mirror titles, said revenue in the 27 weeks to July 3 was down 8.0% on a like-for-like basis. Revenue declined 9.0% in the first quarter but this eased to 7.0% in the second quarter.
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Inkjet printing technology company Xaar said it has agreed to buy US product printing equipment firm Engineered Printing Solutions for up to USD18.5 million. Xaar will pay an initial consideration of USD11.0 million, with a further USD7.5 million due based on Engineered Printing hitting financial targets in the three years following completion.
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Eco City Vehicles said it has agreed to buy Tax Computer Systems, a company which supplies corporation tax software to large businesses, and said it will pay for the deal using proceeds from a large placing and from new debt facilities. Eco City plans to use existing cash plus GBP30.0 million worth of new debt and GBP45.0 million in proceeds from a placing to fund the acquisition, and then plans to re-admit to AIM with a new name, Tax Systems. Eco City said it has agreed to acquire Tax Computer Systems for a total of GBP73.0 million, allowing it to buy a leading supplier within the sector that has a blue chip customer base comprised of 43 of the FTSE 100 firms and 19 of the top 20 UK accountancy firms, it said.
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COMPANIES - INTERNATIONAL
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Snacks giant Mondelez International made a takeover bid of USD23 billion to acquire chocolate behemoth Hershey Co that would create the world's largest chocolate company, but Hershey rejected the offer. "The board of directors of the company unanimously rejected the indication of interest and determined that it provided no basis for further discussion between Mondelez and the company," Hershey said in a statement. Mondelez had offered to buy Hershey for USD107 a share in a cash and stock deal. Hershey has a market capitalization of USD21 billion before the offer, while Mondelez had a USD69 billion market value.
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Walt Disney Co has agreed to acquire a one-third stake in the video-streaming unit of MLB Advanced Media, in a deal that values the business at about USD3.5 billion, Bloomberg reported citing to a person familiar with the matter. Disney, the owner of ESPN and ABC, will retain a four-year option to buy an additional 33% stake in the digital arm of Major League Baseball.
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Apple is in talks to acquire Tidal, a streaming-music service run by rap mogul Jay Z, the Wall Street Journal reported citing people familiar with the matter. Apple is exploring the idea of bringing on Tidal to bolster its Apple Music service because of Tidal's strong ties to popular artists such as Kanye West and Madonna.
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A federal appeals court panel threw out a USD7.25 billion antitrust settlement between Visa and MasterCard and millions of retailers after determining that some of the merchants covered by the pact weren't adequately represented. The ruling is a blow to the world's biggest payments networks, which sought an end to bitter court battles over fees that exceed USD40 billion annually. The lawsuit, brought on behalf of 12 million merchants nationwide, was filed a decade ago after earlier disputes over the fees. The rejection of the deal raises the prospect that it will have to be renegotiated or the case may go to trial.
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A jury in Silicon Valley ordered Oracle to pay Hewlett-Packard Enterprise USD3 billion in damages in a lawsuit over HP's Itanium servers. Oracle said that it intends to appeal both today's ruling and the prior ruling from Judge Kleinberg.
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US auto safety regulators have opened a preliminary investigation into about 25,000 Tesla Motors Model S cars after a driver of one of the vehicles was killed while operating the vehicle in "Autopilot" mode. The National Highway Traffic Safety Administration said a fatal highway crash involving a 2015 Tesla Model S operating with automated driving systems engaged "calls for an examination of the design and performance of any driving aids in use at the time of the crash." According to the company, the vehicle involved in the fatal crash was on a divided highway with Autopilot engaged when a tractor trailer drove across the highway perpendicular to the Model S.
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The US National Highway Traffic Safety Administration advised owners of 313,000 recalled Honda and Acura vehicles to replace their Takata-made air bags immediately after testing showed there's as high as a 50% chance of rupture in a crash. These vehicles, from the 2001 to 2003 model years, have a manufacturing defect that greatly increases the risk of rupture.
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Goldman Sachs Group dismissed about 60 traders and salesmen in New York and London this week, according to media reports citing people familiar with the matter. The cuts, which come on top of at least 353 others in New York this year, affect employees in fixed-income and equities. The departures are about evenly split between the two cities, the reports said.
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Frenchman Jean-Pierre Mustier, appointed as the new chief executive officer at Unicredit, said he would work to strengthen the troubled Italian bank's capital base and improve its bottom line. UniCredit - which owns Germany's HypoVereinsbank - is Italy's biggest bank by assets and one of the largest in Europe. But the Milan-based lender has had a very rough 2016, losing more than 60% of its stock market value in the last six months.
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Friday's Shareholder Meetings
Pennon Group
Bellzone Mining
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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