Improving sales trend continues at Croda, GKN points to positive quarterly sales
London open
The FTSE 100 is expected to open down 10 points, after closing up 0.15% at 7,275.64 on Tuesday.
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High-performance ingredient and technology speciality chemical company Croda International updated the market on its trading during the first quarter to 31 March on Wednesday. The FTSE 100 firm said the improving sales trend seen in the fourth quarter of 2016 continued in Q1, with constant currency sales increasing by 4.9%, driven by strong organic growth Reported currency sales increased by 19.1% to £365.5m, which the board said reflected sterling's continued weakness.
GKN had a good first quarter with organic sales growth, but the engineer warned that its growth rate may not be sustained for the full year due to tough comparators. During the quarter, the FTSE 100 company achieved “good” organic sales growth as it benefited from currency translation, while the automotive market performed better than expected although growth in aerospace was “slightly” slower than it planned.
London Stock Exchange Group has got over its merger-that-never-was and made a strong start to the year, with sales growth across the group apart from capital markets was hit by lower trading levels than last year. Total income from continuing operations in the three months ended 31 March was up 19% to £458.7m.
Newspaper round-up
The 26-year-old Duke of Westminster, who is believed to be the world’s richest person under 30 with a £9bn fortune, has been hit by a steep drop in returns on his family’s British property empire, which includes many of the most famous addresses in London’s Mayfair and Belgravia. The Grosvenor Group, which Hugh Grosvenor inherited last year following the death of his father Gerald Grosvenor, reported on Tuesday that returns on its British & Irish property portfolio had collapsed to just 0.3% last year compared with 10.7% in 2015. It is the company’s worst UK performance since the 2008 financial crisis and follows six successive years of returns above 10%. – Guardian
McDonald’s is to offer 115,000 UK workers on controversial zero-hours contracts the option of moving to fixed contracts with a minimum number of guaranteed hours every week. The move is a significant development in the debate about employee rights because McDonald’s is one of the biggest users of zero-hours contracts in the country. Sports Direct has also used workers on zero-hour contracts in its shops. – Guardian
Four UK construction hubs are being sought by Heathrow to allow components of its £16bn expansion project to be built away from the airport. The logistics hubs will pre-assemble components linked to projects related to the proposed third runway before transporting them to the airport. Heathrow’s chief executive John Holland-Kaye said this method would make the project more affordable and mean jobs linked to the investment would be spread more broadly across the country. – Telegraph
Compliance is under-valued by chief executives of some of the world’s biggest companies, leaving the businesses open to hacking attacks, legal risks and huge financial penalties. Research by risk consultancy Control Risks has found that a quarter of large companies spend less than $25 a year per staff member on compliance, and a similar proportion have five or fewer people in their compliance teams. – Telegraph
Donald Trump looked set to have sparked a potentially damaging trade war with Canada after the US president slapped $1 billion of tariffs on imports of the country’s timber. Hours after the White House published its decision late on Monday, Justin Trudeau, Canada’s prime minister, promised to protect his country as the government said it would fight the “unfair and punitive” tariffs in court. – The Times
Royal Bank of Scotland has hit a brick wall in its attempt to resolve the US investigation into its mis-sale of toxic mortgage securities because of changes at the Department of Justice since the election of President Trump. Hopes were raised that RBS was getting close to settling the multibillion-pound case in January when it set aside £3.1 billion to cover a likely fine by the DoJ, taking its total provision to £6.8 billion. However, the bank has made little progress because of the widespread clearout of key staff at the DoJ and among the state attorneys. – The Times
US close
US stocks ended in the black on Tuesday thanks to some well-received corporate news and as investors awaited a big tax reform announcement from President Donald Trump, with the tech-heavy Nasdaq breaching the 6,000 level for the first time.
The Dow Jones Industrial Average closed up 1.1% to 20,996.12, the S&P 500 rose 0.6% to 2,388.62, and the Nasdaq gained 0.7% to close at a record 6,025.49.
Investors were looking ahead to a possible announcement by Trump on Wednesday, after he tweeted over the weekend that his tax reform plans - which could include a reduction in corporate tax to 15% - would be revealed mid-week.
Neil Wilson, senior market analyst at ETX Capital, pointed out that tech stocks such as Amazon, Apple, Facebook, Google, and Microsoft, would be big beneficiaries of the proposed tax reforms.
“With the Nasdaq hitting all-time highs thoughts instantly return to the dotcom bubble. But we are a long way off the kind of multiples seen back then. That should offer some comfort,” he said.