The new trading week gets off to a shaky start with economic and geopolitical concerns making investors nervous. China has cut its economic growth target to 6.5% from last year’s 6.7% rate; North Korea launched four missiles towards the Sea of Japan; and the US Federal Reserve indicated it may put up interest rates this month.
The FTSE 100 followed in the footsteps of Japan’s Nikkei index with a decline in valuation on Monday. The UK blue chip index traded down 30 points to 7,348 in the first five minutes of trading, dragged down by commodity stocks.
Nearly all the big miners fell by about 1% following China’s economic downgrade. Banking shares including HSBC (HSBA) were also weak.
Among corporate news, financial services groups Standard Life (SL.) and Aberdeen Asset Management (ADN) have agreed an £11bn merger with shareholders in the former owning two thirds of the enlarged business. Aberdeen has long been seen as a takeover target following an extensive period of investors withdrawing money from its funds. Its share price had fallen by more than a third over the past two years, prior to today’s merger news.
BT (BT.A) has secured a three-year renewal for the rights to broadcast UEFA Champions League football. It is paying £394m each year for the rights. BT saying the acquisition of EE last year more than doubles its marketable customer base, thus putting it in a stronger position to monetise the UEFA rights investment through subscriptions and advertising revenues.
Acacia Mining (ACA) extends losses seen last Friday afternoon with another 8.4% decline to 422.33p. Tanzania has banned the export of unprocessed metals with a view to making mining companies use local smelters (or build their own ones in the country) to process ore. Acacia has a big gold mining operation in Tanzania.
Sausage skin maker Devro (DVO) reports a marginal drop in underlying pre-tax profit for 2016 and maintains its dividend at 8.8p per share. The company had already flagged to the market problems during 2016, reflected by 6.6% decline in annual sales volumes. The market still seems disappointed as Devro’s share price falls 5.3% to 175.75p. The company’s focus is to now regain market share, cut costs, increase revenue and launch new products.
Chemicals group Synthomer (SYNT) has released a good set of full year results with £122.2m pre-tax profit at constant currency rates, up 16.4% on the previous year. The company is hopeful of decent trading in Europe in 2017, albeit flagging expectations for volatility in raw material prices and macroeconomic conditions. The news coincides with Synthomer’s acquisition of Swedish supplier Perstorp Belgium for €78m. The acquirer’s share price rises 1.5% to 459.45p.
Ferries-to-shipping group Irish Continental (ICGC) reports an 11.6% rise in full year pre-tax profit to €60.4m. It credits this performance to increased car and freight volumes and higher charter revenues. Investment bank Investec says the business should be debt-free by the end of 2019, despite spending €144m on a new ship which arrives next year.
Advanced materials group Versarien (VRS:AIM) has raised £1.5m through placing new shares at 15p each. It will use the money to scale up manufacturing capabilities and marketing efforts.
