LONDON MARKET EARLY CALL: Lloyds PPI Provision; Next Raises Outlook

(Alliance News) - Stock prices in London are set to opening flat on Wednesday as markets await an anticipated interest rate cut from the US Federal Reserve."The Federal Reserve will likely cut the Fed funds rate by 25 basis points today, if not more, as FOMC members will accentuate the rising downside risks due to a weakening global economy, that could hit the US businesses sooner rather than later if they do not act now," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.Ozkardeskaya continued: "The Fed could still surprise the market with a 50-basis-point cut, but such action would make it harder to keep the market motivated in the coming quarters, as a larger cut today would require larger cuts in the future as well."IG says futures indicate the FTSE 100 index of large-caps to open 2.57 points lower at 7,644.20 on Wednesday. The FTSE 100 index closed down 39.84 points, or 0.5%, at 7,646.77 on Tuesday.In early UK company news, Lloyds Banking Group reported a dip in interim profit and income as it upped its payment protection insurance provisions.In the six months to June 30, Lloyd's pretax profit slipped 7.1% to GBP2.90 billion from GBP3.12 billion a year before. The bank's net interest income declined 3.0% to GBP6.15 billion from GBP6.34 billion. Total net income slipped 1.7% to GBP8.82 billion.Lloyd's operating costs in the first half improved to GBP3.91 billion from GBP4.02 billion. Lloyds restructuring costs were halved to GBP182 million.The bank upped its PPI provisions, however, to GBP650 million from GBP550 million last year. Lloyds said it took a PPI charge of GBP550 million in the second quarter - following a GBP100 million provision in the first - due to a "significant increase in information request volumes" ahead of the August 29 claims deadline.Clothing retailer Next raised its annual guidance following a better-than-expected second quarter. Full price sales in the second quarter were up 4.0% on a year ago, having been expected to fall 0.5%. This lead to full price sales growth in the first half coming in at 4.3%. Online lead the way in the half, with sales up 12%, while bricks-and-mortar stores saw sales fell 3.9%.July was particularly strong, Next said, with full price sales up 6.8% on last year. Sales in May and June combined were up 3.0%, which the retailer said it thinks is a better indicator of underlying growth, seeing as July benefited from the end-of-season sale.For the financial year ending in January 2020, Next now expects full price sales to grow 3.6% year-on-year, versus previous guidance of a 1.7% rise. Accordingly, Next has lifted its pretax profit guidance to GBP725 million from previous guidance of GBP715 million. Packaging firm Smurfit Kappa boosted its interim payout after a solid performance in the first half.Revenue for the first half was up 4% to EUR4.62 billion, with earnings before interest, tax, depreciation and amortisation 17% higher at EUR847 million. This was ahead of Irish broker Davy's forecast of EUR837 million, a prediction which was in line with consensus. Pretax profit was up 9% to EUR456 million.The price of recovered fibre in the European business was 9% lower year-on-year in the first half, with testliner and kraftliner down by EUR120 per tonne and EUR140 per tonne respectively from the high of October 2018."While macro-economic and political risks remain, Smurfit continues to be highly confident of another year of progress and delivery. Reflecting this and the future prospects of the business, the board is recommending a 10% increase in the interim dividend to 27.9 cent per share," said Chief Executive Tony Smurfit.Takeover target Just Eat saw profit all but evaporate in the first half on planned investments.Revenue for the first half of 2019 was up 30% to GBP464.5 million, but pretax profit was all but wiped out, coming in at just GBP800,000 from GBP48.1 million a year ago. The takeaway platform put the 98% drop in profit down to planned investments in delivery and iFood.UK order growth was 11% in the second quarter following a stronger May and June, leading to 9.3% growth in the first half as a whole. Australia returned to revenue and order growth in the second quarter, while Canada was profitable in the first half.Just Eat said it is confident in its current performance and reconfirmed its annual guidance.At the start of the week, Just Eat and Dutch rival Takeaway.com confirmed a preliminary agreement for a possible all-share merger between the two. Just Eat made no reference to this in its interim results.Motor insurer Direct Line said there remains "much to do" but was pleased with its progress in the first half. Gross written premiums were down 2.2% in the half to GBP1.58 billion, with pretax profit down 11% to GBP261.3 million. Despite the fall in profit, Direct Line lifted its interim payout to 7.2p from 7.0p a year ago."I am pleased with the progress that we have made so far this year. We have delivered a good financial performance overall, benefiting from the breadth and diversity of our business. We have maintained our underwriting discipline in a highly competitive motor market and we delivered a strong result in Home, Commercial and Rescue," said Chief Executive Penny James."There remains much to do, but we are successfully removing costs from the business as well as making good progress on transforming the Group's IT systems, for example with the initial launch of our new Motor platform."Defence firm BAE Systems reported interim profit growth as it backed its annual guidance.Revenue for the first half came in at GBP8.67 billion, up from GBP8.16 billion a year ago, with an order backlog of GBP47.4 billion versus GBP39.7 billion last year. Pretax profit grew to GBP776 million from GBP571 million.BAE is paying an interim dividend of 9.4p, up from 9.0p a year ago. Charles Woodburn, chief executive, said: "The first half performance underpins our guidance for the full year with improvements being made on a number of operational fronts. Our priority is to deliver consistent and strong operational performance for our customers and shareholders to enable us to meet our growth expectations over the medium term."Aston Martin reported a swing to loss in the first half just a week after it downgraded its annual wholesale guidance. For the first half of 2019, total wholesale vehicle volumes were 2,442, up 6% year-on-year, though revenue fell 4% to GBP407.1 million. The company sank to a pretax loss of GBP78.8 million from a profit of GBP20.8 million a year ago. "As described in our trading statement on 24 July, both our retail and wholesale volumes have increased year-on-year. However, we are disappointed that our projections for wholesales have fallen short or our original targets impacted by weakness in two of our key markets as well as continued macro-economic uncertainty," said President & Chief Executive Andy Palmer.UK car-manufacturing plunged by 20% to 666,521 vehicles in the first six months of the year compared to the same period last year, according to figures released early Wednesday. June also marked the 13th consecutive month of decline with car manufacturing dropping by 15% last month, according to the Society of Motor Manufacturers & Traders.Around 80% of vehicles made in Britain are exported to the EU, but the figures come as new Prime Minister Boris Johnson insists the country will leave the bloc by October 31 even without a deal "no ifs or buts".In the US on Tuesday, Wall Street ended in the red as traders await the Fed's decision, with the Dow Jones Industrial Average ending down 0.1%, the S&P 500 down 0.3% and Nasdaq Composite closing 0.2% lower.Apple after the New York market close on Tuesday posted a slight increase in revenue in its third quarter with an "all time record" outturn from its Services division.Revenue for the iPhone maker's third quarter ended June 29 was USD53.81 billion, up 0.9% year-on-year from USD53.26 billion, boosted by Services revenue which climbed 13% to USD11.45 billion from USD10.17 billion, as well as 48% growth in Wearables, Home & Accessories to USD5.53 billion from USD3.73 billion.Chief Executive Tim Cook said: "This was our biggest June quarter ever - driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac, and significant improvement in iPhone trends."In Asia on Wednesday, the Japanese Nikkei 225 index ended down 0.9%. In China, the Shanghai Composite is down 0.5%, while the Hang Seng index in Hong Kong is 1.3% lower.North Korea has fired two short-range ballistic missiles off its east coast, South Korea's military said, less than a week after Pyongyang's first weapons tests in more than two months.Observers say the launches were aimed at ramping up pressure on the US to make concessions as the two countries are struggling to resume diplomacy on North Korea's nuclear weapons programme.Aside from the Fed on Wednesday, there are UK Nationwide housing prices at 0700 BST. In Europe later in the morning, German unemployment is at 0855 BST and eurozone GDP is at 1000 BST. In the US, there is ADP employment at 1315 BST."The ADP employment report due before the Fed decision, should confirm that the US economy added 150,000 new nonfarm jobs in July, higher than 102,000 printed a month earlier," said London Capital Group's Ozkardeskaya.UK shop price deflation was steady in July, driven yet again by non-food items, the British Retail Consortium-Nielsen Shop Price Index showed on Wednesday. Year-on-year shop price deflation was 0.1% in July, in line with the month before. On a monthly basis, shop prices in the UK were down 0.2% following a 0.4% dip the month prior.