Disappointing news for Barclays and Centrica this morning, more below. The Nikkei and Hang Seng were both down overnight slipping -1.07% and -1.12% while the Shanghai Composite soared more than +2%. The disjoin is part-explained by Chinese shares emerging from a five-day break marking the new lunar year. The Hang Seng saw investors take profits following Wednesday’s market rally.
Despite some on-the-surface positive sentiment from the release of the Fed’s January minutes yesterday US shares finished down last night; the US rate-setting committee showed a surer tone in their commitment to future interest rate rises though they need to manage the balance between upping rates without cutting confidence. Either way, a rate rise looks likely for March.
“A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate,” the Fed minutes reported yesterday.
Overnight the spot dollar was up +0.1% to 90.20 while the pound slipped -0.30% to 1.3879 against the dollar; the euro was -0.2% lower against the greenback at 1.2266. A German IFO business climate index reading arrives at 9am; a UK GDP update follows at 9.30am.
- UK FTSE 100 7,281.57 +0.48%
- DAX 12,470.49 -0.14%
- CAC 40 5,302.17 +0.23%
- Euro Stoxx 600 381.10 +0.16%
- Dow 24,797.78 -0.67%
- S&P 500 2,701.33 -0.55%
- Nasdaq 7,218.23 -0.22%
- Nikkei 225 21,736.44 -1.07%
- Gold 1,325.10 -0.53%
- Oil WTI 61.13 -0.89%
Centrica profits fall and 4,000 jobs to go
British Gas owner Centrica admitted a 17% profits slump to £1.25bn this morning not helped by an exodus of customers following price hikes: customer numbers were slashed by 10%; its retail base falls from 14.25m to 12.87m.
"Concerns over the loss of energy customers in the UK, and the performance issue in North America have created material uncertainty around Centrica,” said CEO Iain Conn.
More than 4,000 jobs are to go by 2020. Adjusted earnings per share fell 25% to 12.6p though group net debt is down £877m to £2.6bn, at the lower end of the £2.5bn-£3bn 2017 range says Centrica.
Centrica adds it has upped its cost efficiency programme target by £500m to £1.25bn a year by 2020 though boss Conn has already shed 5,000 jobs and £650m from yearly operational costs in the last year. Some dividend worry must lurk for next year, especially if the government’s proposed energy price cap comes through on time.
Barclays hit by £1.9bn loss
Barclays admitted to a near £2bn full year net loss this morning as it attempts to settle goodwill charges plus a one-off tax charge from new US tax code changes. Revenues fell -2% overall though pre-tax profits were up +10%. This morning boss Jes Staley indicated more willingness for more share buybacks.
“I am confident in the capacity of this business to generate excess capital going forward, and it remains our intention over time to return a greater proportion of that excess capital to shareholders through dividends, and other means of capital distribution, including share buybacks."
Breaking news: BAE 2018 profits look likely to be flat despite higher defence spending in some of its key markets. BAE revenues increased £500m to £18.3bn. Shopping centre player Intu sees profits surge +20% to £227m.