The Morning Call - TUI sees strong start to financial year

Highlights of the Day

Asian Markets

The global rebound for stocks continued as Asian markets rose broadly once again, though gains eased as afternoon trading progressed.

U.S. Markets

U.S. stocks rose as the major indexes rebounded from their worst weekly performances in two years.

Today's News

Tui jetted off to a strong start for its financial year with sales and underlying earnings both much improved on last year. Turnover of €3.55bn in the three months ending 31 December was up 8.1% or 9.1% at constant currency rates, while losses before interest, tax, depreciation and amortisation of €24.9m was halved from the €60.3m loss a year ago. Just focusing on ongoing operations, EBITDA was positive and grew 86% to €55.4m.

BHP said it expects to recognise an income tax expense of $1.8bn following the lowering of US Federal corporate income tax rate from 35% to 21% as well as other measures introduced by the recently enacted US Tax Cuts and Jobs Act. The company said that the tax expense will be treated as an exceptional item and would include two main components: a non-cash re-measurement of deferred taxes as a result of the reduction in the US Federal corporate income tax rate of US$898m and a non-cash impairment of foreign tax credits due to reduced forecast utilisation of $834m.

Amazon is cutting hundreds of positions at its headquarters and global operations, a move that comes after several years of significant growth. The cuts were first reported by the Seattle Times, which said the actions are focused on streamlining the firm’s consumer retail business. Amazon said it is working to offer affected staff new roles. It said it expects “small reductions in a couple of places and aggressive hiring in many others.”

Interserve is coming under particularly close attention by the government after the collapse of rival contractor Carillion, according to new reports. The Cabinet Office, less than a month after denying that it had put Interserve on a watch list, has brought in Deloitte to help it to monitor the company.

Computacenter posted the results of its tender offer, which was initially set out in a shareholder circular on 23 January, and closed on 9 February. The company said total of 44,089,779 ordinary shares were validly tendered and, with the strike price determined to be 1170p.

Aviva announced that, along with Hillhouse Capital Group and Tencent Holdings, it has completed the transaction to develop a digital insurance joint venture in Hong Kong. The company said the joint venture had been approved by the Hong Kong Insurance Authority, and was expected to start operating under its new corporate structure during the first half of 2018.

Gold held firm, buoyed by a weaker dollar, while investors waited for U.S. inflation data for clues on the pace of interest rate hikes.

Oil Prices rose, lifted by a rebound in global stock markets that followed sharp falls last week.

Companies Reporting this week

Day	Companies
Wednesday:	Shire
Thursday:	Relx * Nestle
Friday:	Segro

Early Market Movements

Market	Index	Change	% Change
UK 100	7,199.2	+22.2	+0.3%
UK 250	19,409.4	+30.1	+0.2
GER 30	12,284.0	+1.2	+0.0%
FRA 40	5,141.8	+1.7	+0.0%
U.S. 30	24,601.27	+410.37	+1.7%
U.S. 500	2,656.0	+36.5	+1.4%
OIL (BRENT)	63.02	+0.43	+0.7%
GOLD	1,327.81	+5.11	+0.4%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
TUI AG	1624.5	+30	+1.9%
Mediclinic	577.4	+10	+1.8%
Nostrum Oil&Gas	251	+6	+2.5%
Imperial Brands	2639.5	-22	-0.8%
Rentokil Initial	281.7	-2.3	-0.8%
Acacia Mining	158.35	-6.9	-4.2%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Halma	JPMorgan	Underweight	1192	1050
Rentokil Initial	Deutsche Bank	Buy	284	335
Smiths Group	Barclays	Overweight	1523.5	1800
BP	Morgan Stanley	Equal-Weight	478.8	550