LONDON MARKET OPEN: Wolseley And Miners Drag On FTSE 100

LONDON (Alliance News) - London equities started the new month lower Wednesday, with the familiar story of weak data from China weighing on UK-listed miners.

However, it was building products group Wolseley that was the biggest faller in the FTSE 100, down 4.6%. The company said it saw "decent revenue growth" in the third quarter of its financial year, despite deflationary headwinds and mixed market conditions, although it noted that recent revenue growth trends have been weaker.

"Demand in several of the group's markets remains subdued, and we continue to experience the adverse impact of commodity deflation, particularly in the US," the company said in a statement.

The FTSE 100 was down 0.6%, or 38.46 points, to 6,192.33. The blue-chip index's heavily weighted mining sector was providing a drag after uninspiring Chinese manufacturing data overnight.

China's official manufacturing purchasing managers' index came in at 50.1 for May, unchanged from the reading in April.

However, the Caixin manufacturing PMI stayed below the 50.0 mark, which separates expansion from contraction, for the 15th straight month. Markit said the index slipped to 49.2 in May from 49.4 in April and a touch lower than economists' expectation of 49.3.

Miners Anglo American, down 2.6%, Antofagasta, down 2.2% and Glencore, down 1.8%, were all among the biggest early blue-chip fallers.

The FTSE 250 was down 0.5% at 17,097.89 and the AIM All-Share was down 0.2% at 737.81.

European stock markets got off to a lower start. The CAC 40 in Paris was down 0.2% and the DAX 30 in Frankfurt was down 0.3%.

In Asia, the Nikkei 225 in Tokyo ended down 1.6% and the Shanghai Composite closed down 0.1%. The Hang Seng in Hong Kong continues down 0.2%.

Halfords Group reported a fall in profit in its recently-ended financial year due to exceptional costs, and as the prior year benefited from an extra week, but revenue excluding that extra week increased due to growth in the autocentres division.

The car parts and bicycle retailer said its pretax profit in the year ended April 1 fell to GBP79.8 million from GBP83.8 million the year before, as revenue slipped slightly to GBP1.02 billion from GBP1.03 billion.

The prior year contained an extra week, and excluding this, revenue was GBP1.00 billion, meaning revenue did actually rise by 1.7% on a proforma basis. However profit on a proforma basis the prior year was still slightly higher at GBP80.8 million.

The stock was one of the worst performers in the FTSE 250 index, down 2.6%.

Cobham set out the terms of its discounted, fully-underwritten rights issue, first announced in April with the aim of shoring up its finances.

The FTSE 250-listed company, which makes satellite communications equipment, microelectronics products and air-to-air refuelling technology for the aviation, maritime, defence and space sectors, tabled plans for the rights issue in late April after issuing a profit warning for 2016 following weak trading in the first quarter.

On Wednesday, Cobham said it will launch a fully-underwritten, one-for-two rights issue to raise GBP506.7 million. The company will issue 569.3 million shares at 89.00 pence per share, a 45% discount to its closing price on Tuesday of 163.49p. Early Wednesday, Cobham traded up 1.5% to 165.40p.

Lamprell was the best performer in the FTSE All-Share index, up 8.4%. The energy services company said it has signed a joint development agreement with three major companies that may lead to a new maritime yard being developed by the group in Saudi Arabia.

Lamprell signed the joint development agreement with Saudi Aramco, the National Shipping Co of Saudi Arabia, and Hyundai Heavy Industries following the memorandum of understanding signed between the group back in January.

Saudi Aramco is the national oil company of Saudi Arabia, and the National Shipping Co is also known as Bahri.

Lamprell said the partners have made "good progress" on undertaking preliminary due diligence on the potential project, which covers the possible collaboration for building a maritime yard at Ras Al Khair in eastern Saudi Arabia.

Still ahead in the economic calendar, UK consumer credit figures, mortgage approvals and manufacturing data, are all due at 0930 BST. There also are Markit manufacturing PMI from France at 0850 BST, Germany at 0855 BST, the eurozone at 0900 BST and the US at 1445 BST. The US ISM manufacturing PMI is at 1500 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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