LONDON MARKET OPEN: Hikma Up, Hargreaves Lansdown Down In Soft Open

Wed, 03rd Feb 2016 08:34

LONDON (Alliance News) - London shares opened slightly lower Wednesday, with Hargreaves Lansdown leading blue-chip fallers after it said its operating margins had come under pressure, even though it reported higher first-half pretax profit and strong net business inflows.

The FTSE 100 index was down 0.4% at 5,900.53 points, the FTSE 250 down 0.4% at 16,236.39, and the AIM All-Share down 0.2% at 692.08. In Europe, the CAC 40 in Paris was down 0.6% and the DAX 30 in Frankfurt down 1.1%.

Hargreaves Lansdown was down 4.2%. The fund supermarket said its pretax profit rose to GBP108.1 million in the six months ended December 31, from GBP101.9 in the corresponding half the prior year. Hargreaves Lansdown lifted its interim dividend to 7.80 pence from 7.30p.

Net revenue increased by 10% to GBP158.8 million and operating margins weakened to 67.9% from 70.7%. Total assets under administration swelled 20% to GBP58.8 billion over the course of the 12 months to December 30, as net business inflows added up to GBP2.77 billion.

"Against a backdrop of fluctuating stock markets, Hargreaves Lansdown has continued to be the most popular destination for UK retail investors, with excellent new business for the period. In particular the pension freedoms continue to attract huge interest as we prepare for the important tax year-end period," Chief Executive Ian Gorham said in a statement.

Shore Capital analyst Paul McGinnis said the results were "slightly light compared to a company-compiled consensus". As a result, the analyst said "small full year downgrades [are] likely".

At the other end of the index, Hikma Pharmaceuticals was adding to its Tuesday gains, up 2.2%, after Bank of America Merrill Lynch upgraded the company to Buy from Neutral.

In the FTSE 250, St Modwen Properties was up 0.2% after it posted a big rise in pretax profit, driving a 25% rise in its final dividend, and said its chief executive will retire at the end of the current financial year. The group, which focuses on regenerating brownfield sites and building residential developments, said its pretax profit for the year to November 30 nearly doubled, up to GBP258.4 million from GBP135.4 million.

Oil stocks were in the red as crude prices remained under pressure, with BP down 1.5%, Royal Dutch Shell 'B' down 0.6%, and BG Group down 0.2%. Mid-cap Tullow Oil was down 2.9%, while Ophir Energy was down 3.0%.

North Sea Brent crude was quoted at USD32.78 a barrel Wednesday, just above the low of USD32.22 it touched on Tuesday. Meanwhile, US benchmark West Texas Intermediate slid below the USD30 line overnight, but was standing just above it at USD30.04 a barrel after the London equities open.

In Asia on Wednesday, the Japanese Nikkei 225 index closed down 3.2%.

Japan's consumer confidence weakened as expected at the start of the year, though slightly, survey data from the Cabinet Office showed. The seasonally adjusted consumer confidence index dropped to 42.5 in January, in line with expectations, from 42.7 in December.

Bank of Japan Governor Haruhiko Kuroda said there is no limit to measures for monetary policy easing, and it is open to expand asset purchases further, if necessary. "If we judge that existing measures in the toolkit are not enough to achieve the goal, what we have to do is to devise new tools, rather than give up the goal," Kuroda said in a speech in Tokyo.

In January, the bank surprised the markets by introducing a negative interest rate. Kuroda said the "zero lower bound" of interest rate was believed to be impossible to conquer, but it has been almost overcome by the wisdom and practices of central banks.

In China, the Shanghai Composite ended down 0.4%, while the Hang Seng index in Hong Kong finished down 2.4%.

China's service providers experienced the fastest growth in six months in January but overall private sector activity was stable due to the ongoing contraction in manufacturing. The Caixin General Services Purchasing Managers' Index rose to 52.4, the highest level since July, from December's 17-month low of 50.2, survey results from Markit showed. The Composite Output Index came in at 50.1 in January, slightly above the neutral 50-point level and up from 49.4 in December.

The positive data pushed stocks with exposure to the Asian giant out of the red, with Burberry Group up 1.1% and Prudential up 1.4%.

Still ahead in the economic calendar Wednesday, there are Markit services and composite PMI readings from a number of European countries. France is at 0850 GMT, Germany at 0855 GMT, and the eurozone as a whole at 0900 GMT. UK services PMI is at 0930 GMT.

"The services sector has been the more resilient of the two main sectors of the global economy over the past few months but there has been a concern that the weakness in manufacturing could cause some ripple out effects into the broader economy, as job losses in manufacturing dent consumer spending and cause a slowdown in the wider economy," said CMC Markets chief market analyst Michael Hewson.

Eurozone retail sales follow at 1000 GMT, at the same time as the European Commission's economic growth forecasts for the region. Later in the day in the US, there are MBA mortgage applications at 1200 GMT, ADP employment for January at 1315 GMT, and trade balance at 1330 GMT. Markit services and composite PMI for the US is at 1445 GMT, before ISM non-manufacturing PMI at 1500 GMT, just before Energy Information Administration crude oil stocks.

By Daniel Ruiz; danielruiz@alliancenews.com