Investec warns on UK banking profits, Rolls-Royce signals further Trent 1000 disruption
By Josh White
Date: Friday 20 Sep 2019
(Sharecast News) - London open
The FTSE 100 is expected to open 43 points lower on Friday, having closed up 0.58% at 7,356.42 on Thursday.
Stocks to watch
Asset manager Investec said interim profits at its UK banking business earnings would be "significantly lower" due to Brexit and global trade wars hitting fees and trading income. The company on Friday said headline earnings per share were expected to be 15% -18% lower year on year.
Rolls-Royce warned airline customers of further disruption on Friday morning, as it made changes to its Trent 1000 engine repair programme on the Boeing 787 Dreamliner. The FTSE 100 company said it has taken a "proactive decision" to accelerate intermediate pressure turbine (IPT) blade replacement for the "limited number" of Package B and C engines yet to be fitted with the final standard of IPT blade, which had led to additional engine removals. As a result, it now expected the return to single-digit level of aircraft on ground on the Trent 1000 to be delayed until the second quarter of 2020.
Smiths Group reported 7% annual revenue growth to £2.5bn on Friday, as all divisions delivered growth, except for Smiths Detection where some large orders were deferred to 2020. Revenue from higher margin regions climbed by 9%, driving a 13% jump in profit before tax to £376m as the engineering business also benefited from favourable foreign exchange translations and contributions from two new acquisitions.
Newspaper round-up
The future of Thomas Cook is hanging in the balance as the travel company scrambles to raise an additional £200m to secure an emergency rescue deal. Britain's oldest package-holiday firm must secure the funds before a crucial meeting next Friday after a last-minute demand from its lenders, which include about 10 banks led by RBS, Barclays and Lloyds. - Guardian
More than a third of British rail services failed to reach stations on time over the past year, according to new performance measurements. Under the toughened standards, trains are considered punctual if they arrive within a minute of the timetable, rather than the previous limit of up to 10 minutes. Under the changed regime, just 64.7% of services were on time in the 12 months to the end of June, a figure the rail passenger watchdog Transport Focus described as "unacceptable". - Guardian
The boss of the London Stock Exchange mounted a staunch defence of its £22bn takeover of data business Refinitiv in his first public comments since the Hong Kong exchange launched an audacious bid for his company. David Schwimmer said the Refinitiv deal, which was only announced last month, was a transaction LSE felt "very good about" because it was "a very strong fit strategically". - Telegraph
Businesses which have been told by the government to prepare for a no-deal Brexit are being undermined by "big gaps" in official guidance about the UK's scheduled departure from the European Union in six weeks, a leading employers' group has warned. The British Chambers of Commerce said there was "incomplete or insufficient information available to plan thoroughly for a no-deal" in 31 out of 36 "business-critical" areas, undermining government claims that companies have what they need to prepare. - The Times
Airbus is under investigation in Germany over possible spying by several employees, who have been accused of obtaining confidential army documents on procurement projects. The Munich state prosecutor's office said it was investigating 17 Airbus employees and an unquantified number of German government officials. - The Times
US close
US stocks finished in a mixed state on Thursday, as investors continued to react to the Federal Reserve's latest policy announcement and got hopeful about trade talks between US and Chinese officials in Washington.
The Dow Jones Industrial Average ended the session down 0.19% at 27,094.79, while the S&P 500 was flat, rising just 0.002% to 3,006.79, and the Nasdaq 100 added 0.17% to 7,901.79.
At the open, the Dow was 101.07 points higher after stocks closed on a mixed note on Wednesday following a cut to the US central bank's main policy rate by a further 25 basis points.
Several top officials there also indicated that it would need to be lowered again before the year was out.
In his post-meeting press conference, Fed chairman Jerome Powell said that the central bank was prepared to move "forcefully" if necessary.
Market participants were also keeping a keen eye on a new round of face-to-face talks between Chinese and US officials in Washington.
The two-day talks will focus on preparing for high-level talks early next month which will determine whether or not Washington and Beijing can move forward with a deal or be forced to resume the ongoing game of tit-for-tariff between the two.
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