LONDON MARKET OPEN: Downbeat Start For FTSE After Subdued Asian Trade

LONDON (Alliance News) - Stocks got off to a soft start on Wednesday in the absence of fresh ...

Alliance News 24 April, 2019 | 8:38AM
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LONDON (Alliance News) - Stocks got off to a soft start on Wednesday in the absence of fresh multi-month highs for oil and in the wake of mixed trading in Asia overnight, with Anglo American leading the fallers in the FTSE 100 following a rating downgrade.

The FTSE 100 was down 18.12 points, or 0.2%, at 7,504.88 early Wednesday. The FTSE 250 index was up 31.89 points, or 0.2%, at 19,939.91, while the AIM All-Share was up 0.1% at 959.08.

The Cboe UK 100 index was down 0.3% at 12,728.88. The Cboe UK 250 was up 0.1% at 17,818.49, and the Cboe UK Small Companies was flat at 11,484.38.

In European equities, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.2% and up 0.1% respectively in early dealings.

The negative open in Europe comes with oil off Tuesday's highs but prices "still hovering around their best in almost six months", commented Michael van Dulken at Accendo Markets.

Brent oil was quoted at USD74.12 a barrel early Tuesday in London, marginally down from USD74.46 late Wednesday, though still well up from last week. On Tuesday, Brent hit its best price since early November.

"Wall Street rallied to new highs on earnings reports and optimism about trade talks resuming with China," van Dulken added, though noting that Asian markets "failed to follow suit after some negative corporate results in the region".

In the US on Tuesday, Wall Street ended firmly in the green, with the Dow Jones Industrial Average ending up 0.6%, the S&P 500 up 0.9% and the Nasdaq Composite climbing 1.3%.

In Asia on Wednesday, the Japanese Nikkei 225 index ended down 0.3%. In China, the Shanghai Composite closed 0.1% higher, while the Hang Seng index in Hong Kong is down 0.5% in late trade.

In the UK, senior members of the Conservative party 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.

Ahead of Tuesday's talks, the committee chair Graham Brady met privately with May, when he is reported to have told her MPs want her to announce when she is going. 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.

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.

Sterling was quoted at USD1.2927 early Wednesday, marginally soft compared to USD1.2932 at the London equities close on Tuesday.

In the economic calendar, the Ifo German business climate survey is at 0900 BST and UK public sector borrowing at 0930 BST. In the afternoon, there is the Bank of Canada's latest interest rate decision at 1500 BST and US MBA mortgage applications at 1200 BST.

Miner Anglo American was the worst performer in early trade, down 1.8% after JPMorgan cut the stock to Neutral from Overweight.

Direct Line Insurance was another faller, down 0.7% after JPMorgan also cut the insurer to Neutral from Overweight.

AB Foods was down 0.8% after delivering what it deemed a "robust" set of results but profit slipped on the performance of its sugar unit.

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.

Meanwhile, 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.

Sales at 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.

"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."

Land Securities rose 1.2% after Deutsche Bank raised the property developer and investor to Buy from Hold.

CRH was up 1.1% after the building materials firm said it is to expand its share buyback programme as it also laid out expectations for a rise in earnings in 2019.

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.

For the first half of 2019, CRH expects earnings before interest, tax, depreciation and amortisation to be above EUR1.5 billion, versus EUR1.13 billion year-on-year.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Associated British Foods PLC 2,571.00
CRH PLC 2,518.00
Land Securities Group PLC 884.20 -
Anglo American PLC 1,964.40
Direct Line Insurance Group PLC 323.50
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