LONDON MARKET OPEN: Hastings Down After Warning; Cranswick Climbs

Fri, 17th Jan 2020 08:39

(Alliance News) - Stocks were higher in London early on Friday, following on from record gains in the US overnight and a generally positive Asian session.

On the London market, NMC Health rose after a former US judge joined the independent review into claims by a short-seller, while insurer Hastings slumped after warning on profit. Pork producer Cranswick climbed as it guided to beat market views.

The FTSE 100 index was up 23.81 points, or 0.3%, at 7,633.62.

The mid-cap FTSE 250 index was up 23.78 points, or 0.1%, at 21,745.01. The AIM All-Share index was 0.2% higher at 971.83.

The Cboe UK 100 index was up 0.4% at 12,942.74. The Cboe 250 was 0.3% higher at 19,653.44, but the Cboe Small Companies was 0.6% lower at 12,242.52.

In mainland Europe, the CAC 40 in Paris was up 0.5%, while the DAX 30 in Frankfurt was 0.7% higher early Thursday.

China's economy weakened to its slowest pace of growth in three decades in 2019 as weaker domestic demand and trade tensions with the US took their toll, official data showed Friday.

The world's second-largest economy grew by 6.1% last year, its worst performance since 1990, according to the National Bureau of Statistics.

The figure matches an AFP analyst forecast and is within Beijing's official target of 6.0% to 6.5%. But last year's growth was down from 6.6% in 2018.

While China's economy had been gradually losing steam over the first three quarters, growth stabilised at 6.0% in the last three months of 2019 â€“ the same pace as in the third quarter, according to the National Bureau of Statistics.

"So far it looks like Beijing is perfectly engineering a soft landing to its economy with just the right levels of debt and stimulus even amidst a trade war with the US. Either that or the figures are fictitious," said Jasper Lawler at London Capital Group.

The Japanese Nikkei 225 index finished 0.5% higher on Friday. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong closed 0.6% higher.

In the US on Thursday Wall Street ended higher, with the Dow Jones Industrial Average closing up 0.9%, the S&P 500 u 0.8%, and the Nasdaq Composite up 1.1%. The S&P passed the 3,300 mark for the first time, ending at 3,316.81 points.

On the LSE, FTSE 250 insurer Hastings fell 7.7% as it warned of a steep drop in annual profit, with claims in the last-quarter of 2019 rising. The firm also warned of a lower dividend for 2019 than the prior year.

Hastings reported "elevated" claims in the fourth-quarter, meaning its annual loss ratio, before a change in the Ogden rate last July, will be between 81% and 82% and adjusted operating profit will be GBP110 million, suggesting a 42% fall from 2018.

This compares to a loss ratio in 2018 of 75%.

Hastings saw higher repair and third-party credit hire costs, as well as "slightly" higher winter frequencies. Further, there was a small number of larger bodily injury losses.

Fellow insurer Admiral was 3.3% lower, the worst FTSE 100 performer.

In the FTSE 100, NMC Health rose 6.3% as it confirmed a former US federal judge and prosecutor, Louis Freeh, will be joining an independent review into claims against the firm by short-seller Muddy Waters. Shares are still 40% lower in the past three months.

"The committee chose Freeh Group to provide a completely independent, unbiased, comprehensive and transparent report that will address all of these allegations," said Jonathan Bomford, chair of the independent review.

British Airways owner International Consolidated Airlines rose 5.0%, as it removed a limit on non-EU shareholdings.

IAG said as of February 11, 2019, the ownership of shares by non-EU persons was 48%, meaning IAG put a limit on the holdings of non-EU shareholders.

However, this has since falling to just under 40%, and IAG has now removed the limit.

Miner Rio Tinto was 1.7% higher as it reported a mixed production result for 2019, with Pilbara iron ore shipments slipping.

In 2019, Pilbara iron ore shipments of 327 million tonnes were down 3% on 2018, hit by weather and operational challenges in the first half of the year at the Western Australia mine. This was, though, in line with the Anglo-Australian miner's guidance for output between 320 million to 330 million tonnes.

Looking ahead, Rio Tinto expects Pilbara iron ore shipments around 300 million to 343 million tonnes in 2020.

Aluminium production of 3.2 million tonnes was 2% lower than 2018, and mined copper production of 577,000 tonnes was down 5%.

Rio Tinto Chief Executive Jean-Sebastien Jacques said: "We finished the year with good momentum, particularly in our Pilbara iron ore operations and in bauxite, despite having experienced some operational challenges in 2019."

Fellow miners were benefiting from the encouraging Chinese growth data. BHP Group was 1.2% higher, Glencore 1.2% higher, Anglo American up 1.4%, and steelmaker Evraz 2.3% higher.

Credit checking firm Experian fell 0.3% as it reported "another quarter of good growth" in the three months to December, its third quarter. Total revenue growth was 7%, and 9% excluding currency movements, while organic growth at constant currency was 7%.

Experian delivered 11% revenue growth in North America in the quarter at actual rates, with Latin America revenue 10% higher. However, the UK & Ireland fell 3% and Europe, Middle East, Asia & Asia-Pacific fell 4%.

"We delivered another quarter of good growth as we execute on our strategy of innovation-led growth," said Chief Executive Brian Cassin.

"Overall the performance was in line with our expectations and our guidance for the full year is unchanged."

British Land was 2.1% higher after Goldman Sachs raised the property firm to Buy from Neutral. Peer Land Securities climbed 2.4%, after the same move by Goldman.

Back in the FTSE 250, meat producer Cranswick jumped 7.5% as it said adjusted pretax profit for its year ending March is set to beat market expectations. In November, Cranswick reported "robust" performance, and it said this continued over the key festive period.

Revenue growth was "positive" across all of the company's four product categories, while export sales have been "exceptionally" strong.

Sports betting and gaming firm GVC fell 0.5% as it said 2019 earnings before interest, tax, depreciation and amortisation will be at the higher end of the guided range of GBP670 million to GBP680 million.

GVC achieved "strong" 2019 online net gaming revenue growth of 13%, while UK retail remained ahead of guidance as like-for-like net gaming revenue fell 12%. European retail net gaming revenue was up 4%.

GVC's overall net gaming revenue for the year was 2% higher than the year before.

Chief Executive Kenneth Alexander said it was an "excellent" performance in 2019, with momentum in the third quarter continuing into the fourth.

GVC's bookmaking peer William Hill fell 1.3%. UBS lowered its rating to Neutral from Buy. Wagamama-owner Restaurant Group slumped by 4.5% as UBS slashed its rating to Sell from Neutral.

Big Yellow rose 2.7% in the FTSE 250, as Goldman raised the storage company to Buy from Neutral.

Elsewhere on the London market, Devro, which makes collagen products such as sausage casings, said 2019 edible collagen volumes were flat. Second-half volume growth was 1%, lower than expected.

Shares were 2.9% lower in early trade.

The company now sees annual underlying operating profit between GBP39 million and GBP40 million, due to the lower volumes, a less favourable geographical mix, and a smaller than expected foreign exchange benefit due to a stronger pound.

In 2018, Devro delivered an underlying operating profit of GBP40.0 million, meaning no growth is likely.

The economic calendar Friday has UK retail sales at 0930 GMT and eurozone inflation at 1000 GMT.

By George Collard; georgecollard@alliancenews.com