MARKET UPDATE 12 August 2015

from  The Financial Adviser in Spain

The FTSE 100 is called to open 44 points lower at 6620.

UK Gilt 10 Year Yield 1.914%, Spot Gold $1112.20 -3.34, Brent Crude $49.43 -0.23.

U.S. stocks slid, following equities’ biggest gain since May, as China’s currency devaluation sparked concern across global markets that the world’s second-largest economy is headed for a deeper slowdown. Companies that rely heavily on exports to China, including auto and luxury goods makers, retreated. General Motors Co. and Tiffany & Co. lost more than 2.1 percent. Apple Inc. sank 5.2 percent. Commodity producers from Freeport-McMoRan Inc. to Dow Chemical Co. fell at least 2.9 percent amid concerns about China’s growth. Google Inc. advanced 4.1 percent after saying it will reorganize into a holding company called Alphabet Inc. The Standard & Poor’s 500 Index declined 1 percent to 2,084.07 at 4 p.m. in New York, holding above its average price during the past 200 days. The Dow Jones Industrial Average slumped 212.33 points, or 1.2 percent, to 17,402.84, its worst drop in a month. The Nasdaq Composite Index decreased 1.3 percent. About 7.1 billion shares traded hands on U.S. exchanges, 9 percent above the three-month average.

PRESS COMMENTARY

Financial Times: Google investors welcomed the promise of more openness about the profitability of its core business, after the technology group said it would in future report separately results from its experimental ventures, such as self-driving cars.

COMPANY NEWS  

U.K. outsourcing and security group G4S said first-half pretax profit fell by 12.5%, reflecting restructuring charges and one-off costs, but increased the dividend and reported "strong momentum" in the period. Profit before tax in the six months to June 30 fell to GBP70 million ($109 million) from GBP80 million as revenue ticked up 1% to GBP3.41 billion. Stripping out one-off items, underlying earnings rose 10.5% to GBP95 million. G4S increased the first-half dividend by 5% to 3.59 pence.

EON SE, Germany’s largest utility, said first-half profit fell 21 percent on lower wholesale power prices. Underlying net income decreased to 1.17 billion euros ($1.3 billion) from 1.48 billion euros a year earlier, the Dusseldorf- based company said in a statement on Wednesday. That beat the 1.15 billion-euro average of seven estimates compiled by Bloomberg.

Balfour Beatty says 1H underlying revenue GBP4.09b vs GBP4.07b y/y, order book stable at GBP11.3b vs GBP11.4b at end-2014. 1H total underlying loss GBP135m vs GBP37m profit y/y, includes GBP152m shortfall from historic Construction issues, in line with indicated range of July update.

Henkel AG, the maker of Schwarzkopf shampoo and Loctite glue, reported a 14 percent jump in second-quarter profit as a series of deals last year and the dollar’s strength against the euro boosted earnings.

Tullow Co. says Jubilee field gas exports restarted Aug. 3 as FPSO Kwame Nkrumah gas compressor work completed; exports resumed before mid-Aug. forecast. Oil production increased; now returned to previous levels. Says Spari-1 well on offshore block 31, Suriname, had no significant hydrocarbon shows; being plugged, abandoned. Salander well on Norway’s PL650 encountered no hydrocarbons; to be plugged, abandoned.

Geberit says 1H net sales increase 20.1% to CHF1.31b, organic sales in local FX ex-Sanitec up 2.5%, positive sales development in all regions. 2Q sales CHF670.9m vs CHF677.8m est. 2Q Ebit CHF116m vs CHF113.8m est.

Bilfinger says 2Q output volume rises 7% to EU1.64b, orders received up 48% to EU1.87b. 2Q adj. Ebita -5% to EU53m. 2Q adj. net profit from cont ops -23% to EU31m.

Interserve reported a 29% rise in first-half pretax profit, but warned that the rise in the national minimum wage announced in the recent budget will hit the U.K. support services segment 10 million pounds ($15.58 million) to GBP15 million in 2016.

ScS Group reported the resignation of its finance head Ron Turnbull and said that results for fiscal 2015 are expected to be in line with market expectations due to recovery in sales in the final quarter of the period. 

Source: Quilter Cheviot

Pat Macdonald - International Financial Adviser at Blacktower Financial Management.
Contact: patrick.macdonald@blacktowerfm.com