LONDON (Alliance News) – Stocks in London opened higher on Tuesday morning, with defence outsourcer Babcock International leading the FTSE 100, but the gains in the blue-chip index were being limited by miners and wealth manager St James’s Place.
The FTSE 100 was up 0.1%, or 8.59 points, at 7,261.59 points. The FTSE 250 index was up 0.1% at 18,685.53, but the AIM All-Share was marginally lower at 907.96.
The BATS UK 100 index was flat at 12,294.12 points, and the BATS UK 250 was 0.1% higher at 16,964.44. The BATS UK Smaller Companies index was flat at 11,062.92.
St James’s Place was down 5.0%, the worst blue-chip performer, after the news that Chief Executive David Bellamy will resign at the end of 2017 offset the announcement of an 18% increase in the dividend for 2016 to 33.0 pence from 27.96p in 2015.
The company said it has chosen Andrew Croft to replace Bellamy, after 12 years as chief financial officer, while Croft will be replaced by Craig Gentle, who joined the group in 2016.
St James’s Place said funds under management rose to GBP75.3 billion in 2016 compared to GBP58.6 billion. Net inflow of funds under management rose to GBP6.8 billion from GBP5.8 billion a year ago. Net income increased to GBP11.35 billion from GBP3.11 billion in 2015. Pretax profit increase to GBP486.3 million from GBP174.1 million in 2015.
Fresnillo was down 1.1%. The miner reported revenue of USD1.90 billion in 2016 compared to USD1.44 billion in 2015, saying that its gross profit doubled. Earnings before interest, tax, depreciation and amortisation were USD1.03 billion, up from USD547.50 million in 2015.
The miner reported a pretax profit of USD718.20 million in 2016 compared to USD212.4 million a year ago, while it declared a final dividend of 21.5 cents, above the interim dividend of 8.6 cents.
Fresnillo said it aims to produce in 2017 between 870,000 and 900,000 ounces of gold, down from the 935,513 ounces the miner produced in 2016.
Other mining stocks were lower as well, the main drag for the FTSE 100, with fellow gold miner Randgold Resources down 3.0%, Anglo American down 2.3% and BHP Billiton down 1.6%.
BT Group was down 1.0%. UK regulator Ofcom said it plans to force the telecommunications giant to cut bills for customers that only have a landline by between GBP5 to GBP7 per month to return line rental prices to 2009 levels.
Around 2.3 million people who buy only a landline telephone service from BT would see their monthly bills cut. The regulator said these customers “are often elderly or vulnerable” and are “unlikely to switch”. Almost 80% of the UK’s 2.9m landline-only customers are with BT. Ofcom said it has found that BT’s market power has allowed it to increase prices without much risk of losing customers. Other providers have then followed BT’s pricing lead, it said.
“We expect that our proposed cut in BT’s prices would lead to other providers following suit and reducing theirs. This would mean savings for landline-only customers across the market,” said Ofcom.
In the green was Babcock, up 3.1%. The defence firm said its outlook for its full financial year remains unchanged, noting trading in the second half of its year to date has been in line with expectations.
Babcock said that, since the end of its first half, on September 30, it has continued to make progress with its existing contracts and its new order intake remains strong. Babcock said its order book and pipeline have been maintained at GBP30.80 billion.
New orders include the manufacture of 22 missile launch tube assemblies for the joint US-UK Trident nuclear submarine replacement programme, as well as a new EUR500.0 million contract for the provision and maintenance of training platforms and related services for the French Air Force.
In Europe, the CAC 40 in Paris was up 0.3% and the DAX 30 in Frankfurt was 0.1% higher.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite ended up 0.4%, while the Hang Seng index in Hong Kong finished down 0.8%.
Wall Street ended higher on Monday, with both the Dow 30 and the S&P 500 up 0.1%, both indices reaching record closing highs. The Nasdaq Composite rose 0.3%.
In the US economic calendar, preliminary fourth-quarter GDP figures are at 1330 GMT, as is the goods trade balance. The Redbook index is at 1355 GMT, while the Chicago PMI is at 1445 GMT. US consumer confidence is at 1500 GMT while the API weekly crude oil stock data are at 2130 GMT.
Investors are awaiting a key policy speech by US President Donald Trump to Congress scheduled for at 2100 EST Washington time Tuesday, or 0200 GMT Wednesday.
The market will look for Trump to provide details on his promises of tax reform, deregulation and infrastructure spending. The US president promised at a meeting with airline executives earlier this month “something…phenomenal in terms of tax” to be announced soon.
Ahead of Trump’s speech, the White House said on Monday the US plans to hike defence spending by about 10%. The spike in military spending is to be offset by equal cuts to other federal discretionary spending, according to an official from the Office of Management and Budget.
By Daniel Ruiz; firstname.lastname@example.org
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