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LONDON MARKET PRE-OPEN: WPP To Return GBP1 Billion From Kantar Sale

Fri, 12th Jul 2019 07:42

(Alliance News) - Stock prices in London are seen opening higher on Friday, following record highs being set in the US on Thursday, amid optimism that the US Federal Reserve will cut interest rates at its upcoming monetary policy meeting at the end of July.In company news, FTSE 100-listed WPP clinched its long-awaited sale of a 60% stake in market research arm Kantar, troubled travel agent Thomas Cook was in rescue talks with China's Fosun, and auto dealer Lookers issued a profit warning. IG futures indicate the FTSE 100 index is to open 28.18 points higher at 7,538.00. The blue-chip index closed down 20.87 points, or 0.3%, at 7,509.82 on Thursday.Ad agency WPP confirmed Friday it has agreed to sell 60% of brand and marketing research firm Kantar to private equity firm Bain Capital. The deal values all of Kantar at USD4 billion and proceeds to WPP on completion after tax and continuing investment in Kantar is expected to be USD3.1 billion. WPP said it will return GBP1.0 billion of this to shareholder, with the remainder going toward reducing debt.WPP Chief Executive Mark Read said: "Kantar is a great business, and we look forward to working with Bain Capital to unlock its full potential. As a strategic partner and shareholder in Kantar, WPP will continue to benefit from its future growth while our clients continue to benefit from its services and capabilities."This transaction creates value for WPP shareholders and further simplifies our company. With a much stronger balance sheet and a return of approximately 8% of our current market value to shareholders planned, we are making good progress with our transformation."Irish support services group DCC said it traded in line with expectations in the first-quarter of 2019 and delivered good growth operating profit, driven by acquisitions completed in the prior year.For the financial year ending March 31, 2020, DCC said profits are significantly weighted towards the second half of its financial year. The company expects financial 2020 to be another year of profit growth and development. Insurer Hiscox said it expects to deliver pretax profit for the six months ended 30 June in the range of USD150 million to USD170 million. The company estimates an investment return of USD150 million to June-end.Hiscox highlighted that the insurance market has seen continued deterioration from natural disasters in 2018, including Typhoon Jebi in Japan and Hurricane Michael in Florida. "The scale of deterioration has been significant, with industry loss estimates having increased materially since these events. As a result, and as previously announced in its first quarter trading statement, the group has strengthened reserves for prior year claims from Typhoon Jebi, Hurricane Michael and for the risk excess book. The combined impact of reserve strengthening for these events is approximately USD40 million net," Hiscox said. Hiscox added that the absence of prior year reserve releases from Hurricanes Harvey, Irma and Maria, which totalled USD25 million in the first six months of 2018, means that it expects reserve releases in the first half to be materially lower than last year.Hiscox said it remains strongly capitalised and committed to its progressive dividend policy and does not expect any impact on the interim or final dividend.Car dealer Lookers said underlying pretax profit for the full year is expected to be below previous expectations. Lookers expects underlying profit to be around GBP32 million, down from GBP43 million a year ago.Lookers said that throughout the first half and in line with general trends in the domestic retail sector, it has continued to experience cost inflation pressures. Lookers expects the recent challenging conditions to continue into the second half, made worse by continued weakness in consumer confidence in light of wider political and economic uncertainty in the UK, and further pressure on used car margins.Chinese investor Fosun Tourism Group is in talks to inject GBP750 million into Thomas Cook Group, both companies said Friday.The tour operator added that its 2019 summer programme is 75% sold - slightly ahead of the year before - but its underlying earnings in the second half will be behind the year before due to the "uncertain consumer environment" in the UK.Fosun said that it, along with Thomas Cook's "core lending banks", are considering the proposal to invest capital into the troubled firm. Fosun already is Thomas Cook's largest shareholder with an 18% stake.For its 2019 summer programme, Thomas Cook said its Tour Operator bookings are down 9%. Thomas Cook's Airline bookings are down 3% overall, with pricing up 2%.In the US on Thursday, Wall Street ended broadly higher, with the Dow Jones Industrial Average up 227.88 points, or 0.9%, and the S&P 500 up 0.2%. The Dow ended above 27,000 for the first time on Thursday and the S&P closed within touching distance of the 3,000 mark.However, the Nasdaq Composite index closed down 0.1%.The latest equity milestone for the Dow, which was accompanied by a fresh record for the S&P 500, came as US Federal Reserve Chair Jerome Powell completed a second day of congressional testimony, during which he emphasized economic risks in remarks that were widely interpreted as signaling a likely interest rate cut.CMC Markets analyst David Madden said: "Jerome Powell left the door open to interest rate cuts, and that helped the Dow Jones trade above 27,000 - for the first time ever. Given how much expectations have been built up, markets are likely to react badly should interest rates be kept on hold later this month."The Fed boss might trim rates later this month, and drop another hint about potentially lower rates later this year as a way of keeping equity markets on side. There has been a lot of talk of rates being cut by 50 basis points, but some people think that would be excessive when you remember that the unemployment is close to a 50 year low."The Japanese Nikkei 225 index closed up 0.2% on Friday. In China, the Shanghai Composite is up 0.6%, while the Hang Seng index in Hong Kong is up 0.4%.The pound was quoted at USD1.2545 early Friday, marginally lower than USD1.2555 at the London equities close Thursday.The economic events calendar on Friday has eurozone industrial production figures at 1000 BST and US producer prices at 1330 BST.

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