After surging yesterday, equities have given up some gains ahead of minutes from the Federal Reserve which could be another signpost on the path to interest rate rises. Click here to see what The Trader Nicole Elliott thinks of the markets.
IC TIP UPDATES:
Avon Rubber (AVON) continued to impress in the year to September. The defence and dairy specialist posted 8 per cent revenue growth off strong performances from both divisions as group adjusted operating profit rose 19 per cent to £20m. Shares fell slightly in early morning trading, but are still 50 per cent up on our buy advice. Buy.
The share price of Kaz Minerals (KAZ) was on the rise after the copper producer said that it has reached an agreement with its principal construction contractor, Non Ferrous China, to defer payment of $300m (£198m) in relation to Kaz’s Aktogay project. Under the revised terms, the construction costs which were due to be paid in 2016 and 2017 will be settled in the first half of 2018. Buy.
Another month, another fine for Barclays (BARC), which is working its way through regulatory censures for past conduct. The Financial Times is reporting this morning that the bank is to pay a further $100m to the New York Department of Financial Services to settle allegations of foreign exchange market abuse. The shares are flat today. We retain our buy stance.
Breedon Aggregates (BREE) delivered an upbeat trading statement for the first 10-months of the year, with sales volumes of aggregates up by 19 per cent and asphalt by 23 per cent. The quarry group also announced a conditional agreement to acquire Hope Construction Materials for £336m. Hope is a construction materials supplier with over 160 operational sites including 5 quarries and 152 concrete plants. The acquisition will be funded through the issuing of 259m new shares raising £41m and a £300m revolving credit facility. The shares rose over 7 per cent on the news. Buy.
KEY STORIES:
Generics giant Hikma (HIK) is no longer in the dog house with the US Food and Drug Administration (FDA). The US watchdog warned Hikma over environmental issues at its injectables plant in Portugal last year. However, the group confirmed this morning it has taken corrective action, and the FDA has officially closed the case.
Recently floated insurance group Hastings (HSTG) has revealed that trading in the first 9 months of the year remained strong, with live customer numbers up by 19 per cent on the previous year. Gross written premiums rose by a quarter to £454m, while operating profits moved up 19 per cent to £94m. The group’s loss ratio (of claims to premium income) rose from 71.7 per cent to 74.5 per cent, although this remains below the long-term target of between 75 per cent and 79 per cent.
Shares in Eckoh (ECK) climbed 4 per cent after the secure payments specialist posted a 44 per cent rise in adjusted operating profits to £1.5m in the six months to 30 September. The group also signed eight new contracts and acquired Product Support Solutions, a US-based specialist in contact centre and customer experience technology.
Asset managers have their hard hats on. The Financial Conduct Authority has set out the terms of reference of its review of the industry, ahead of an interim report next summer, and a final report in early 2017. The regulator will be looking at competition, value and differences between retail and institutional distribution, and warned that it was prepared to “intervene to promote effective competition”. This could mean fresh rules, upping self-regulation, company-specific moves or referrals to the competition regulator.
Tullow Oil (TLW) said it would abandon an exploration well in the North Lokichar basin, Northern Kenya, after it failed to find oil or gas. The Emesek-1 exploration well reached a total depth of 3,000 metres without finding commercial hydrocarbons. The rig will move to the South Lokichar basin to drill the Etom-2 well.
BHP Billiton (BLT) and Vale have been fined a further 1bn reais (£170m) for the Samarco mining disaster that killed 11 people in Brazil earlier this month. That comes on top of a 250m reais charge that will provide aid to the victims and fund environmental repairs.
US federal regulators have given the green light for Schlumberger’s (NYSE: SLB) $12.7bn bid to buy Houston oil tool maker Cameron International, putting the companies on track to close the deal early next year.
OTHER COMPANY NEWS:
UK Oil & Gas Investments (UKOG) has been given permission to take its 20 per cent interest in the Weald Basin licence PEDL143, onshore UK, which hosts the Holmwood project. Holmwood, which adjacent UKOG’s Horse Hill project, was granted planning permission for a vertical well in September. The company had previously agreed with Egdon Resources (EDR) that it would invest in the project is it got the green light from the planners.
Exillon Energy (EXI) said average production from its two Russian complexes was slightly lower in October than the previous month. Average daily production in the month was 15,437 barrels of oil per day (bopd), down from 15,660 barrels in September.
