The Morning Call - Aberdeen Asset Management and Standard Life benefit from strong Aberdeen first quarter figures

Highlights of the Day

Asian Markets

Asian shares rose to near two-year highs as growing optimism over tech industry earnings and easing concerns over North Korea offset softer-than-expected factory readings in China and the United States.

U.S. Markets

The tech-heavy Nasdaq closed at a record, with shares of Apple hitting a new high, while the Dow industrials slipped lower as investors digested a raft of economic reports and looked ahead to the start of the Federal Reserve’s policy meeting tomorrow.

Today's News

Today’s News

Donald Trump said he is considering breaking up big Wall Street banks, by splitting their consumer business from their investment operations. He is reported to have told Bloomberg News “I’m looking at that right now,”. White House spokesman Sean Spicer said there were no further details and no announcement was planned. Shares in banks initially fell after President Trump’s comments before recovering ground. US banks were permitted to own both High Street banks and investment banking operations in 1999, when the Glass-Steagall Act was repealed.

BP benefitted from higher oil prices and production helped improve its bottom line. BP reported first-quarter underlying replacement cost profit, the company’s definition of net income, of $1.51bn, exceeding analysts’ average forecast of $1.26bn. Oil prices, a major driver for BP’s earnings, averaged around 35% above prior-year levels, helping to boost revenue from its core oil and gas production division.

Aberdeen Asset Management and Standard Life have agreed to pay roughly £35.0mn to a cluster of executives to prevent them quitting during the proposed £11bnon merger between the pair. The retention bonuses are understood to be payable to fund managers who remain with the combined group for at least three years. These form part of a one-off £320m integration cost alluded to in the companies’ merger announcement in March. The merger of Aberdeen and Standard Life will create Europe’s second-largest fund manager, with an estimated £660bn under management.

Aberdeen Asset Management’s revenue increased by 10.6% to £534.9m in the six months to the end of March and underlying profit before tax rose by 19.8% to £195.2m. The group’s assets under management totalled £308,1bn – up from £292.8bn a year ago. Improving trend in net new business flows. The group also said that actions to deliver £70m of annualised cost synergies had now been completed. Chief executive Martin Gilbert said: “These figures reflect improving sentiment towards emerging markets combined with our transition to becoming a full-service asset manager offering a broad range of capabilities via multiple distribution channels globally.

Elliott Management will meet with BHP Billiton’s Australian shareholders this week as the activist investor pushes for strategic changes at the world’s biggest miner. According to two sources familiar with the situation, Elliott was seeking feedback from other investors about its proposed overhaul of BHP. Over the past year, Elliott has built up a 4.1% in the miner and last month told BHP it had failed to deliver “optimal” value.

AstraZeneca and its global biologics research and development arm, MedImmune, said the US Food and Drug Administration has granted accelerated approval to the bladder cancer treatment Imfinzi (durvalumab). Imfinzi is indicated for the treatment of patients with locally advanced or metastatic urothelial carcinoma who have disease progression during or following platinum-containing chemotherapy, or whose disease has progressed within 12 months of receiving platinum-containing chemotherapy before or after surgery.

NMC Health expects healthcare regulatory changes implemented by His Highness Sheik Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Commander of the UAE Armed Forces to positively impact its entire healthcare portfolio. NMC now expects full year EBITDA to be towards the top end of the current guidance range of $335m-$350mn. The Crown Prince’s statements — regarding regulatory changes to Thiqa cardholders in Abu Dhabi — were confirmed by the Health Authority of Abu Dhabi (HAAD) to NMC on 27th April.

Bovis, which was subject to two failed buyout bids earlier this year, said it would take a £2.8m hit from the talks and a review conducted in February after the firm warned on profits. Bovis, which said sales so far this year are in line with reduced building expectations, warned on profits at the end of 2016 after it failed to build enough homes, prompting its chief executive to quit. In April, British housebuilder Galliford Try pulled out of a £1.2bn attempt to buy Bovis after the two failed to agree on price, a week after another potential suitor Redrow also pulled out.

Just Eat reported a rise in first quarter revenue, benefiting from the continuing transition to ordering takeaways online rather than by phone. Revenue for the quarter ended 31st March rose 46% to £118.9m from £81.5m a year ago, with order growth climbing by 25% on a comparable basis to 39m, the company said. Just Eat reiterated its full year guidance for revenue between £480m and £495m and underlying earnings before interest, taxation, depreciation and amortization between £157m and £163m.

Oil prices edged down, as rising output stoked worries that OPEC-led production cuts may not significantly tighten a bloated market. Oil has been weighed down by the market’s impatience with the slow pace of inventory drawdown, even after major oil producers agreed to cut production by 1.8m barrels per day for the first half of 2017.

Gold held near three-week lows hit in the previous session on diminishing demand for safe-haven bullion as Asian equities rallied and the U.S. dollar gained versus the yen.

Companies Reporting this week

Day	Companies
Today:	BP * Aberdeen Asset Management * Shire
Tomorrow:	Direct Line Insurance Group * Imperial Brands * J Sainsbury * Centamin * Sage Group * Indivior
Thursday:	HSBC Holdings * Randgold Resources * Lancashire Holdings * Next * Royal Dutch Shell * Inmarsat
Friday:	International Consolidated Airlines Group * Smurfit Kappa Group * Millennium & Copthorne Hotels

Early Market Movements

Market	Index	Change	% Change
UK 100	7,249.1	+45.1	+0.6%
UK 250	19,667.3	+51.9	+0.3%
GER 30	12,449.9	+11.9	+0.1%
FRA 40	5,277.4	+10.1	+0.2%
U.S. 30	20,913.46	-27.05	-0.0%
U.S. 500	2,388.3	+4.1	+0.2%
OIL (BRENT)	51.58	+0.06	+0.1%
GOLD	1,256.33	-0.25	-0.0%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
Ocado	269.65	+18.65	+7.4%
BP	453.5	+11	+2.5%
Rentokill International	254.9	+5.9	+2.4%
Just Eat	563.5	-13.5	-2.3%
Fresnillo	1422	-30	-2.1%
Rangold Resources	6665	-140	-2.1%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Nostrum Oil & Gas	Peel Hunt	Buy	448.40	700.00
Standard Chartered	HSBC	Reduce	710.00	640.00
Anglo American	JP Morgan Cazenove	Overweight	1,191.75	1,600.00
WPP Group	Barclays Capital	Overweight	1,675.50	2,050.00

Forthcoming Economic Data

Time/Date	Previous	Forecast	Outcome
9:00am: European Final Manufacturing PMI	56.8	56.8	–
9:30am: U.K. Manufacturing PMI	54.2	54.0	–
10:00am: European Unemployment Rate	9.5%	9.4%	–