LONDON MARKET OPEN: Halma Up On Dividend; Equiniti Down On Guidance

(Alliance News) - Stocks in London were higher early Tuesday despite some jitters on the US and China trade war front, with Halma heading the FTSE 100 after lifting its interim payout and investors flocking to Homeserve after it unveiled a new acquisition.

The FTSE 100 was up 23.41 points, or 0.3% higher, at 7,331.11.

The FTSE 250 was up 84.98 points, or 0.4%, to 20,525.48, and the AIM All-Share was up 0.2% at 895.89.

The Cboe UK 100 index was 0.6% higher at 12,452.69. The Cboe UK 250 was 0.6% higher at 18,488.17 and the Cboe UK Small Companies was up 0.1% at 11,293.84.

FTSE 100-listed Melrose Industries said it is trading in line with expectations in 2019, though two of its units have been hurt by the recent General Motors strike in the US.

Sales in the industrial turnaround firm's Automotive unit were down 5% year-on-year in the period to from July 1 to October 31, and its Powder Metallurgy saw a 13% sales decline, both feeling the bite from the GM strike action.

Nearly 50,000 GM workers downed tools in mid-September, launching the biggest labour dispute to hit the automaker in more than a decade. The strike ended in October after a 40-day walkout.

Melrose said sales in the Aerospace division, part of most recent big acquisition GKN, were up more than 5% in the recent four months on a year before, together with "good margin improvement".

Hazard detection and life protection technology manufacturer Halma led the way in the FTSE 100 early on Tuesday. It was 6.6% up after it edged its dividend higher, having delivered first half earnings growth.

The firm posted a 12% revenue rise to GBP653.7 million, with pretax profit rising 12% to GBP105.8 million.

Halma proposed a 6.54 pence per share interim payout, 7.0% up from 6.11p last year.

Just behind Halma were Intertek, 3.5% higher, after Jefferies upped its rating from Buy to Hold, and Meggitt, up 2.0%, after securing a USD130 million defence contract.

Meggitt will supply fuel bladders to the Defense Logistics Agency in Philadelphia, a combat support agency in the US Department of Defense.

Budget airline easyJet was 1.3% higher after said its full-year results were in line with expectations.

Revenue increased by 8.3% to GBP6.39 billion, pretax profit fell by 3.4% to GBP445 million from GBP430 million however. Passenger revenue was 6.9% higher with the firm saying it benefited from strike action at IAG-owned flag carrier British Airways and Ryanair.

easyJet said headline costs, excluding fuel were 10% higher at GBP4.54 billion.

Headline pretax profit was down 26% to GBP427 million, though it was towards the top end of its GBP420 million to GBP430 million guidance range.

Looking ahead, easyJet said forward bookings for the first half of the 2020 financial year are "reassuring", slightly ahead of last year's levels.

The company also announced a new Holidays business as well as a plan to make all flights net zero carbon, both from Tuesday.

The Holidays business push takes advantage of the recent demise of travel firm Thomas Cook, while easyJet said the environmental measure will cost it about GBP25 million in its new financial year.

In the FTSE 250, Homeserve was the best performer, 5.6% higher after it reported an interim earnings rise, and added that it has agreed to acquire a 79% stake in US-based directory website operator eLocal.

The home improvements firm will pay USD140 million on a "debt free, cash free" basis.

In the first half, Homeserve's revenue rose 13% to GBP457.7 million, with pretax profit up 2.1% from last year to GBP28.8 million from GBP24.6 million.

Intermediate Capital Group was just behind, up 4.4% in the FTSE 250, fresh from reporting an 11% rise in assets under management to EUR41.1 billion in the first half.

Pretax rose by 24% year-on-year to GBP153.4 million, the asset manager raised its interim dividend by 50% to 15.0 pence per share from 10.0p.

Equiniti was 19% lower early Tuesday, after guiding for 2019 underlying earnings before interest, taxation, depreciation and amortisation at the lower end of market expectations. The financial technology outsourcer said this was due to weaker higher margin UK corporate activity.

Company complied consensus tipped underlying Ebitda for 2019 between GBP136 million and GBP142 million.

Revenue is tipped to be at the upper end of GBP550 million to GBP567 million market guidance, however.

Turning to London small caps, Dialight shed 24% in early trade, after the LED lighting specialist said its recovery has been hampered by a "slowdown in global markets" and uncertainty over US and China trade.

The firm, which has exposure to US markets, expect its full-year earnings before interest and taxation to be in the range of GBP5 million to GBP8 million, after adjustments for non-underlying costs.

Later on Tuesday, Boris Johnson and Jeremy Corbyn do battle in the first televised debate of the UK general election campaign. The two leaders will face off in an hour-long encounter screened live on ITV on Tuesday evening.

"Latest polls show the Conservatives maintaining a 10-point or more lead over Labour, while bookmakers currently attach about two-thirds probability to a Conservative majority," Lloyds Bank research said.

The Nikkei 225 closed 0.5% lower on Tuesday in Tokyo, China's Shanghai Composite closed up 0.9% and the Hang Seng in Hong Kong 1.6% up.

"The Chinese government took the wind out of the bull’s sails yesterday as it was reported that Beijing are pessimistic about the prospect of a trade deal as President Trump doesn’t want to roll back on tariffs. The trade war has dragged on for over one year so to a certain extent traders are used to minor setbacks." CMC Markets analyst David Madden said.

He continued: "In the middle of next month, the Trump Administration will introduce fresh tariffs on roughly USD156 billion worth of Chinese imports, unless something changes. Some traders are hoping phase one of the overall trade deal will be agreed upon by then so there will be no need to press ahead with new tariffs."

US Federal Reserve Chair Jerome Powell reasserted the independence of the US central bank during White House talks with Trump on Monday.

Powell attended the meeting, which comes amid an unprecedented campaign of public attacks on the central bank, at the invitation of the president, and was joined by Treasury Secretary Steven Mnuchin.

Trump, who has previously lambasted Powell, tweeted that the meeting was "good & cordial", but in a second post, said that during the discussion, he protested "that our Fed Rate is set too high relative to the interest rates of other competitor countries".

The Republican president also reportedly backed off from a proposed ban on certain flavours of e-cigarettes, over fears that such a move could cost him votes in next year's US presidential election.

Aides allegedly advised him to hold fire on signing a memo to ban popular e-cigarette flavours such as fruit and menthol, warning that it could damage his re-election chances next year in some key battleground states, The New York Times and Washington Post both reported.

Cigarette makers BAT and Imperial Brands were up 0.8% and 1.7% respectively.

In European equities, the CAC 40 index in Paris was 0.3% up early Tuesday and the DAX 30 in Frankfurt was 0.4% higher.

The economic events calendar on Tuesday has eurozone current account figures at 0900 GMT.

Sales of new cars in the EU decreased by 0.7% year-on-year in the first 10 months of 2019, industry data showed. From January to October, 12.9 million new vehicles were registered, the European Automobile Manufacturers Association said in its monthly bulletin.

October saw over 1.17 million new vehicles registered in the bloc, the highest total for the month since 2009.

By Eric Cunha; ericcunha@alliancenews.com

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