LONDON BRIEFING: Search For New Bank Of England Governor Begins

LONDON (Alliance News) - The UK government on Wednesday formally launched its search to find the ...

Alliance News 24 April, 2019 | 8:09AM
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LONDON (Alliance News) - The UK government on Wednesday formally launched its search to find the next governor of the Bank of England.

Canadian Mark Carney has been in the role since the summer of 2013 and will step down at the end of January 2020. He previously agreed a seven-month extension to his current contract to help ensure a "smooth" Brexit process.

Chancellor of the Exchequer Philip Hammond said he believes the role of governor is "more important than ever" due to a "rapidly evolving economy".

Hammond said: "Finding a candidate with the right skills and experience to lead the Bank of England is vital for ensuring the continuing strength of our economy and for maintaining the UK's position as a leading global financial centre."

The chancellor said the Bank of England has been at the "forefront of reforms to make our financial system safer and more accountable".

"I look forward to working with Mark Carney over the remaining months of his term as governor. His steady hand has helped steer the UK economy through a challenging period and we are now seeing stable, low inflation and the fastest wage growth in over a decade," added Hammond.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,507.91
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Hang Seng: down 0.4% at 29,832.24
Nikkei 225: closed down 0.3% at 22,200.00
DJIA: closed up 0.6% at 26,656.39
S&P 500: closed up 0.9% at 2,933.68
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GBP: flat at USD1.2925 (USD1.2932)
EUR: unchanged at USD1.1208 (USD1.1205)

Gold: firm at USD1,270.37 per ounce (USD1,268.70)
Oil (Brent): down at USD74.12 a barrel (USD74.46)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come

0930 BST UK public sector finances

0900 CEST Spain industrial orders & turnover
0900 CEST Spain trade balance
1000 CEST Germany Ifo Business Climate Index
1000 CEST Italy foreign trade non-EU

0700 EDT US MBA weekly mortgage applications survey
1000 EDT Bank of Canada interest rate announcement
1030 EDT US EIA weekly petroleum status report
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Senior Conservatives are expected to hold further discussions on whether to change the party rules to enable an early leadership challenge to UK Prime Minister Theresa May. Officers of the Tory backbench 1922 Committee met in Westminster on Tuesday amid growing pressure for the prime minister to name the date of her departure. Afterwards there was no formal statement from the meeting which was said have been inconclusive. Under current party rules, MPs cannot mount a fresh leadership challenge until 12 months after last December's failed attempt. However, amid growing frustration over the latest delays to Brexit, some MPs now want to the rules to be rewritten to allow another challenge as early as June.
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Egyptians have overwhelmingly backed changes to the country's constitution that could allow President Abdel-Fattah al-Sissi to rule until 2030. Speaking at a press conference on Tuesday, National Election Authority chief Lashin Ibrahim said that 88.8% of voters supported the changes in the three-day referendum. The turnout was 44.3% of Egypt's 61.3 million eligible voters. Al-Sissi took office in 2014, a year after the then-army general led the overthrow of Mohammed Morsi, the country's first democratically elected president whose rule however proved highly divisive for the country.
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The death toll from the Easter Sunday suicide bombings in Sri Lanka has risen to 359 after more of the victims succumbed to their injuries, police said. More than 400 people remain in hospital, with some in critical condition. Another 18 people were meanwhile arrested overnight in connection with the attacks on churches and luxury hotels, bringing the total number of those detained to 60, police added. On Tuesday, Prime Minister Ranil Wickremesinghe had warned that several suspects were still at large, while police said they were searching in Colombo for a lorry and a van fitted with explosives that had been identified in an intelligence report.
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North Korean leader Kim Jong Un crossed into Russia early Wednesday en route to a meeting with President Vladimir Putin, the local government in the state of Primorsky confirmed. "I'm pleased to be on Russian soil," Kim told Russian officials after his armoured train arrived at Hasan station in the south of the Primorsky region, according to a government statement. He was greeted by Deputy Foreign Minister Igor Morgulov and Alexander Kozlov, the minister for Russia's Far East.
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BROKER RATING CHANGES
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JPMORGAN CUTS ANGLO AMERICAN TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 2300 PENCE
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JPMORGAN CUTS DIRECT LINE TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 360 PENCE
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DEUTSCHE BANK RAISES LAND SECURITIES TO 'BUY' ('HOLD') - TARGET 1020 (940) P
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DEUTSCHE BANK CUTS BRITISH LAND CO TO 'HOLD' ('BUY') - TARGET 620 (660) PENCE
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COMPANIES - FTSE 100
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AB Foods said it delivered a "robust" set of interim results, though profit did dip. Revenue for the 24 weeks to March 2 rose 1% to GBP7.53 billion, though pretax profit slipped to GBP515 million from GBP603 million a year ago. Pretax profit was hindered by a GBP79 million in exceptional items, with AB Foods having booked no such charges a year ago. On an adjusted basis, profit was largely in line with a year prior at GBP627 million. Sales at discount clothing chain Primark were 4.4% ahead of a year ago, said AB Foods, driven by increased retail selling space partially offset by a 1.5% decline in like-for-like sales. With a "much higher margin", profit was 25% ahead of last year, and the company described the early customer reaction to the spring/summer range as "encouraging". The firm declared an interim dividend of 12.05p, up 3% on last year. AB Sugar adjusted operating profit amounted to just GBP1 million in the half, versus GBP106 million a year before, amid a 13% decline in revenue. Grocery profit rose 5% to GBP167 million. "This is a robust set of results," said Chief Executive George Weston "Profit at AB Sugar was substantially reduced but, from this period, we expect our sugar profitability to improve."
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Building materials firm CRH is to expand its share buyback programme, it said, with earnings also set to increase during 2019. CRH also has agreed to sell a European business for over EUR300 million, it announced. CRH has returned EUR1 billion under its buyback scheme over the past 12 months, including EUR200 million so far in 2019. Due to its "strong balance sheet and cash generation", CRH has decided to continue this with a further EUR350 million to be returned by the time it releases its financial results for the first half of 2019, due on August 22. On the trading front, first quarter like-for-like sales grew 7% year-on-year, helped by "milder" weather conditions and good momentum in most markets, as well as pricing progress.
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Chilean miner Antofagasta reaffirmed 2019 guidance after reporting a first-quarter performance in line with expectations. In the three months to March, Antofagasta's copper production rose 23% on the year before to 188,600 tonnes, but was down 14% on the final quarter of 2018. This met expectations, with the year-on-year rise due to higher ore throughput and expected higher grades. However, the fall from the previous three months was caused by maintenance at the Los Pelambres and Centinela mines and lower grades. Copper sales rose 31% year-on-year to 178,900 tonnes, but declined 18% quarter-on-quarter. Chief Executive Ivan Arriagada said Antofagasta's "high level" of performance achieved in the second half of 2018 has continued, and it is on track for guidance of between 750,000 tonnes and 790,000 tonnes of copper in 2019.
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Insurer Aviva said Andy Briggs is to step down as the boss of UK insurance following the recent appointment of Maurice Tulloch as the new group chief executive. Aviva said Tulloch will be conducting a review of the UK businesses to ensure "the appropriate management structure to build on that success for the future" in the wake of Briggs's departure. Briggs will remain with Aviva until October 23 to ensure a smooth handover. Angela Darlington, currently Aviva's chief risk officer, will become interim CEO of UK Insurance.
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Legal & General said it has agreed its first pension risk transfer transaction in Canada for more than CAD200 million, or GBP114 million. Including this transaction, Legal & General has now written GBP2.5 billion in international pension risk transfers since its first transaction in 2015. "I am delighted to announce our first PRT transaction in Canada, where the market is growing strongly. The transaction provides further evidence of our appetite and capability to grow our PRT business internationally," said Chief Executive Nigel Wilson.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Online clothing retailer boohoo said it performed "exceptionally well" in its recently ended financial year, though expects the pace of revenue growth to ease in the coming year. Revenue for the year to February 28 rose 48% to GBP856.9 million, and pretax profit jumped 38% to GBP59.9 million. The retailer achieved an adjusted earnings before interest, tax, depreciation and amortisation margin of 9.9%, strengthened slightly from 9.8% the year before. Adding to the double-digit growth just achieved, boohoo said trading in the first few weeks of its new financial year has been "encouraging". boohoo expects revenue to grow between 25% to 30% in the year ahead, slower than the rate of growth achieved in its recently ended financial year, with an adjusted Ebitda margin of around 10% and capital expenditure in the region of GBP50 million to GBP60 million.
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COMPANIES - INTERNATIONAL
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Swiss investment bank UBS and Deutsche Bank are in serious talks over the possibility of merging their asset management arms, the Financial Times reported. The newspaper, quoting "people close to the discussions", said the talks have been taking placing for a couple of months and would create an asset manager with EUR1.4 trillion in assets under management. One structure being considered would see UBS fold its asset management unit into DWS Group, an asset manager 79% owned by Deutsche Bank. The deal would see UBS receive shares in the resulting asset manager, with Deutsche Bank remaining the largest shareholder. UBS currently has EUR700 billion in assets under management whilst DWS manages EUR662 billion of assets.
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Enterprise software company SAP raised its operating profit guidance for 2019 despite swinging to loss in the first quarter. The German firm said revenue in the three months to the end of March rose by 16% to EUR6.09 billion, with revenue from its Cloud segment hitting a record EUR1.56 billion, up 45% year-on-year. In the first quarter, new cloud bookings were up 32%. Operating profit, however, was hurt by the expected cost of SAP's 2019 restructuring, totalling EUR886 million, and higher acquisition-related charges and share-based compensation, primarily due to the purchase of US-based survey tools provider Qualtrics. This resulted in an operating loss of EUR136 million in the recent quarter, compared to operating profit of EUR1.03 billion reported for the first quarter of 2018.
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Novartis said net sales were up in its first quarter due to volume growth and raised its annual guidance. The Swiss pharmaceuticals firm posted net sales growth from continuing operations of 1.7% to USD11.11 billion from USD10.92 billion. This increase, Novartis said, was the product of an 11 percentage point growth in volume, largely from the drugs Cosentyx, Entresto, Lutathera, Promacta and Kisqali. Net income from continuing operations dropped to USD1.86 billion from USD1.97 billion and earnings per share fell to USD0.81 from USD0.85. Continuing operations includes Novartis units Innovative Medicines and Sandoz, as well as corporate activities. Eye care unit Alcon, which has been spun out, was classed as a discontinued operation.
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UK Prime Minister May has given the go-ahead to the Chinese telecoms giant Huawei to help build Britain's new 5G network despite warnings of the potential threat to national security, according to the Daily Telegraph. The National Security Council, which is chaired by the prime minister, agreed on Tuesday to allow the firm limited access to build "noncore" infrastructure such as antennas, the newspaper reported. Downing Street refused to comment on the report. A spokeswoman said: "We don't comment on NSC discussions."
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Wednesday's Shareholder Meetings

Croda International
AIB Group
Glanbia
Sthree
Tribal Group
Hutchison China Meditech
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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
British Land Co PLC 534.20 GBX -0.45 -
Land Securities Group PLC 836.40 GBX -0.24 -
Direct Line Insurance Group PLC 338.80 GBX 0.71
Anglo American PLC 2,202.50 GBX -0.05
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