LONDON MARKET PRE OPEN: Bovis Ups Dividend; B&M Sees Record Christmas

LONDON (Alliance News) - Shares in London are called to open higher on Friday, following on from Thursday's strong finish on Wall Street, with market focus amid a lack of UK data likely to lie on the consumer price index and retail sales due from the US later in the day.

IG says futures indicate the FTSE 100 index of large-caps to open 7.96 points higher at 7,770.90 on Friday. The FTSE 100 index closed up 0.2%, or 14.43 points at 7,762.94 on Thursday.

In early UK company news, blue-chip technology firm Smiths Group said the recently-enacted US tax reform will be beneficial to the group over the "medium term".

For its current financial year, Smiths said it anticipates a headline effective tax rate of 27.5% to 28.5%, which includes the one-off adverse revaluation of its deferred tax asset position. Looking ahead to the financial year ending July 2019 and beyond, the headline effective tax rate is estimated to be in the range of 23.0% to 25.0%.

In the FTSE 250, Bovis Homes said it delivered 3,645 completions in 2017, down from 3,977 in 2016. The overall average selling price on completions in the year increased by 7% to GBP272,000 from GBP254,900.

Full-year profit before tax, one-off and exceptional items is anticipated to be in-line with management expectations, the builder said.

Bovis said it intends to recommend a final dividend of 32.5p, up from 30.0p in 2016, bringing its total payout in 2017 to 47.5p, up from 45.0p a year earlier. Reflecting its "strong outlook", the firm said it anticipates increasing this by 20% in 2018, and making a first special dividend payment towards the end of the year.

Pub operator Mitchells & Butlers said trading through the core three week festive season with strong, with strong like-for-like growth of 3.9%.

Over the full 7 week period since its last update, in November, sales performance was "encouraging" although hit by "adverse" weather, particularly in the run up to the festive season. Adjusting to align calendar dates, like-for-sales growth was 1.6%.

Also adjusting to align calendar dates, like-for-like sales growth was 2.2% in the 14 weeks ended January 6. On an unadjusted basis, like-for-like sales growth was 1.1%.

B&M European Value Retail said it saw a strong third quarter with "record" Christmas trading. Revenue grew 23% in the 13 week period to December 23, with like-for-like sales up 3.9%. In the same period a year before, the firm posted 21% revenue growth at 7.2% like-for-like growth.

"B&M continues to go from strength to strength. Despite the demanding comparatives from the very strong Christmas in 2016, our buying, supply chain and retail teams achieved another outstanding performance this year by doing what we do best, which is delivering great value for customers," said Chief Executive Simon Arora.

The retailer said it is confident it will meet market earnings before interest, tax, depreciation and amortisation expectations for its current financial year.

In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.8%, the S&P 500 up 0.7% and Nasdaq Composite closing 0.8% higher.

"After a brief pullback for US markets on Wednesday, normal service was resumed with more record closes for US equity indices yesterday as investors shrugged off concerns about tighter central bank policy and warnings about trade tensions with respect to NAFTA," says CMC Markets chief market analyst Michael Hewson.

The rebound on Wall Street was partly due to easing concerns about US Treasuries after China dismissed a Bloomberg News report that officials have recommended slowing or halting purchases of US debt.

"The news could quote the wrong source of information, or may be fake news," China's State Administration of Foreign Exchange said, according to Reuters.

Meanwhile, in the London afternoon on Friday, US retail sales are at 1330 GMT with the consumer price index due at the same time.

"If today's US CPI numbers show a similarly weak tone questions may once again be asked as to the likely pace of US rate rises this year, as well as some puzzlement as to why recent sharp rises in oil and other commodity prices aren't showing up in the headline rates," notes CMC's Hewson.

US producer prices unexpectedly declined in December, data from the US Labor Department showed on Thursday. The producer price index for final demand edged down by 0.1% in December after climbing by 0.4% in November. Economists had expected prices to rise by 0.2%.

Compared to the same month a year ago, producer prices were up by 2.6% in December and core producer prices were up by 2.3%.

Analysts at Deutsche Bank say they expect US core CPI to have risen 0.2% month-on-month, leaving the annual rate unchanged at 1.7%. Headline CPI is expected to rise 0.1% month-on-month, and 2.0% year-on-year.

As well as CPI and retail sales data due, attention on Wall Street will be on the start of earnings season on Friday. Fourth-quarter results are due from banks JPMorgan and Wells Fargo, as well as asset management firm BlackRock, later in the day.

In Asia on Friday, the Japanese Nikkei 225 index closed down 0.2%. In China, the Shanghai Composite is up 0.2%, while the Hang Seng index in Hong Kong is up 0.7%.

Released earlier on Friday, China's December imports came in below market expectations, with 4.5% year-on-year growth below forecasts for 14.8%, while exports beat forecasts to rise 11% year-on-year.

The world's second-largest economy reported strong overall trade data for 2017. Imports for the year jumped 16% to USD1.8 trillion, while exports rose 7.9% to nearly USD2.3 trillion, the General Administration of Customs said.

China's economy last year performed better than expected, with most economic indicators showing a positive trend at the end of the year.

In Friday's slim economic calendar, French consumer prices are at 0745 GMT.

Elsewhere in Europe on Friday, analysts at Societe Generale say: "Today, we expect the focus to be on the results of the exploratory talks for a new Grand Coalition in Germany, which last night ran over time and into the night. This signals the difficulties ahead, with the next move, assuming a positive outcome, being to get the approval of SPD members for formal talks on [January 21]."

The key sticking points early Friday were taxes, financial policy, immigration and health care. Although there was some movement in their discussions, albeit point by point, an adjournment of the talks was also not ruled early Friday.

Merkel had earlier warned that the leaders faced a difficult round of talks to try to end negotiations on Thursday.

She was hoping to seal a deal for the parties to start formal negotiations on a coalition in the next 24 hours in order to break the current political deadlock and head off the threat of voters returning to the polls following September's inconclusive elections.

The euro was quoted at USD1.2061 early Friday, firm from USD1.2047 at the European equities close Thursday.

By Lucy Heming; [email protected]

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