FTSE Moves Lower Again on Lack of Market Drivers

Market News: 
 
FTSE 100          6835.95  -15.35 -0.22% 
FTSE 250         17661.39  -26.01 -0.15% 
FTSE AIM All-Share 776.54   -0.52 -0.07% 
 
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Augustin Eden at Accendo Markets wrote: “Equities are in the red this morning with UK and European markets suffering from a lack of drivers – they look just as addicted to dramatic announcements as they are to economic stimulus!

“A lack of juicy data is leaving FX as the major driver with a weaker USD and stronger GBP causing the big multinationals to take the most points off the FTSE100, while oil price weakness is hurting energy stocks ahead of this afternoon’s US DOE oil inventories. Financials and a different mix of defensives are outperforming – just.”

 
Top Stories: 
 

Bank of England to Make Up Bond-Purchasing Shortfall

The Bank of England said Wednesday it plans to make up a shortfall in its bond-purchase program later this year after it couldn’t find enough bonds to buy in a Tuesday auction, an unusual hiccup that analysts say probably won’t become the norm.

ITV Bid Rejected by Peppa Pig-Owner Entertainment One

Canadian film and television producer and distributor Entertainment One Ltd., the owner of children’s cartoon series Peppa Pig, Wednesday said it rejected a $1.3 billion offer from U.K. broadcaster ITV PLC.

Shell Declares Force Majeure on Nigeria LNG Deliveries Over Pipeline Leak

A leak on Royal Dutch Shell PLC’s main pipeline to Nigeria LNG has disrupted supply to the liquefied natural gas exporter, Shell said Wednesday.

Eurostar Faces Disruptions as Workers Announce Strike

Passenger train services using the English Channel Tunnel are set to be disrupted for seven days in August after a U.K. union said Wednesday that Eurostar rail workers will strike because of a dispute over their work-life balance.

 
Companies News: 
 

Midatech Pharma Sees 10-Fold Increase in 1H Revenue

Shares in Midatech Pharma PLC (MTPH.LN) rose on Wednesday after the pharmaceutical company said it expects to report a greater than 10-fold increase in revenue for the six months ended June 30.

G4S Shares Soar After Dividend Level Maintained

Shares of security company G4S PLC (GFS.LN) jumped 16% on Wednesday after it reported a 9.7% rise in half-year profit before interest, tax and amortization and kept its interim dividend at 3.59 pence a share.

Interserve Shares Jump After Company Reassures on Outlook Despite Brexit

Shares in support service and construction company Interserve PLC (IRV.LN) jumped Wednesday after it said it is retaining its full-year outlook despite Britain’s vote to leave the European Union.

Prudential 1H Operating Profit Rose 9.5%; On Track to Meet 2017 Objectives

Prudential PLC (PRU.LN) Wednesday reported a 9.5% rise in first-half operating profit, beating market expectations, and said it remains on track to achieve 2017 financial objectives.

Kibo, Lake Victoria Gold To Combine Tanzanian Projects, List JV

Tanzania-focused miner Kibo Mining PLC (KIBO.LN) and Australia-based Lake Victoria Gold Ltd. agreed to combine their respective Tanzanian Imweru and Imwelo gold projects into a joint venture that will be listed on the London and Johannesburg stock exchanges.

Gem Diamonds’ Letseng Mine Hit By Excessive Snowfall, Wind

Southern Africa-focused Gem Diamonds (GEMD.LN) said Wednesday that “excessive snow falls and severe winds” in the Lesotho mountains has limited access to its flagship Letseng mine and will affect diamond production, although not materially.

Conroy Gold: Study Confirms Continuity of Gold Lodes at Clontibret

Conroy Gold & Natural Resources (CGNR.LN) Wednesday said a study by a structural consultant has confirmed the continuity of the gold lodes at its Clontibret gold target in Ireland.

Lookers to Sell Automotive Parts Business for GBP120M

Car dealership chain Lookers (LOOK.LN) on Wednesday announced that it had conditionally agreed to sell its automotive parts business to Alliance Automotive U.K. Ltd. for 120 million pounds ($156 million) in cash.

Harvest Minerals’ Fertilizer Project Has Small Costs and Good Production

Harvest Minerals (HMI.LN) said on Wednesday that its maximus natural fertilizer project went through a scoping study, after which it was found out that the project uses small mining and processing costs and that its production is robust.

Andalas Energy Proof Of Work Program Approved

Oil and gas explorer Andalas Energy & Power PLC (ADL.LN) Wednesday said Indonesia’s national energy company has approved its proof of concept work program for a gas field.

 
Market Talk: 
 

Cheaper, More Profitable B&M Tempts Morgan Stanley

1047 GMT Shares in B&M European Value Retail rise 3.3% to 273p following Morgan Stanley’s upgrade to overweight from equal-weight. The bank also lifts its target price to 315p from 270p. When the company launched its initial public offering, Morgan Stanley noted that it liked the company, although felt B&M’s valuation was too steep. Now, though, after a 24% share price drop over the past year and a 50% increase in profits, the bank changes its mind. Morgan Stanley also likes B&M’s international growth, with its Germany operations showing similar strength to its U.K. ones.(

Barclays Downgrades Smith & Nephew After 1H Stumble

1014 GMT Barclays cuts its investmenty recommendation on orthopedics company Smith & Nephew to equal weight from overweight, lifting its target price to 1240p from 1230p. The company recently released disappointing 1H results, with its Emerging Markets and Wound Care operations performing particularly poorly. This, plus a return to positivity for sector peer Zimmer Biomet, means the company suffers from reduced visibility as to when it will make sustainable, reliable growth, Barclays says. What’s more, the transition to new management may further delay the implementing of key initiatives, the bank says. These problems mask what Barclays calls Smith & Nephew’s solid progress in the U.S. knee market. Shares drop 1.2% to 1263p.

Liberum Doubts ITV Reoffer for Entertainment One

1000 GMT It’s unlikely ITV will follow up its bid for Entertainment One, after the U.K. company’s offer for the Canadian firm was rejected, says Liberum. “We suspect it will not although there is some rationale for a combination of the assets.” ITV declined to comment on whether or not it will return to the table with another takeover offer. ITV shares +0.2% at 199 pence.

Peel Hunt Raises Parkmead Target Price

0956 GMT Peel Hunt raises its target price on Parkmead Group to 105p from 100p, after the company reports better than expected results from the Diever West gas field, onshore Netherlands, and doubles its interest in two U.K. oil fields. Parkmead now owns a 100% interest in the Polecat and Marten fields within License P.2218. It didn’t disclose the price paid for the extra interest, but Peel Hunt reckons it was negligible. Shares up 3.7% at 48.75p.

Standard Life Results Have Underperformed Enough

0949 GMT The underperformance in Standard Life’s 6.75% perpetual and 5.5% call-2022 bonds has run its course and now the issues fully factor in downside risks, according to Societe Generale. Analyst Rotger Franz lifts his recommendation on the two bonds to hold from sell, highlighting better-than-expected 1H results and a resilient Solvency II ratio. He also recommends selling Legal & General’s 10% call-2021 bond to buy Standard Life’s 5.5% call-2022 issue, given the latter’s solvency stability. However, Mr. Franz warns Standard Life’s 6.546% perpetual bond remains overvalued versus peers and keeps his sell recommendation on the issue.

Entertainment One Shares Rise Again, Post-Bid Rejection

0933 GMT Shares in Entertainment One rise for a second consecutive day, gaining 6% to 231p after announcing Wednesday that it has rejected a takeover bid priced at 236p per share from British broadcaster ITV. ITV shares tick up 0.7% to 200p. Liberum analyst Ian Whittaker notes Entertainment One’s rejection is not surprising given that the company’s largest shareholder, the Canada Pension Plan Investment Board, bought its stake at 269p per share. However, the prospect of a more expensive bid may not entice ITV, he adds, given that the 300p per share price sought by many Entertainment One shareholders would jeopardise ITV’s special dividend.

Shell Keeps Euro Bond Issuance Afloat

0920 GMT Shell is drawing attention away from the hot sterling corporate bond market Wednesday, with a dual-tranche bond in euros. A dealer calculates fair value at 22 bps above mid-swaps on the 8.5-year leg and at 32 bps on the 12-year part. Each tranche could reach the EUR1 billion mark, the dealer adds. The issue comes a day after rival BP tapped the sterling market for GBP650 million, adding to the sterling rush after the Bank of England announced it will purchase up to GBP10 billion of corporate bonds last Thursday.

Interserve Shares Jump After Brexit Reassurance

0900 GMT Shares in Interserve are up 12% at 358p after it said it is retaining its full year outlook despite the turmoil surrounding the U.K.’s vote to leave the EU. The company reported an interim pretax loss of GBP33.8 million for the six months ended June 30, but this was after it incurred a GBP70 million charge related to its decision to exit the waste to energy conversion business. Analysts at Liberum are reassured the previously announced charge was not increased, but keeps sell rating and 230p target price.

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