BHP books $1.8bn charge, TUI makes flying start to year
London open
The FTSE 100 is expected to open flat on Tuesday, having closed up 1.19% at 7,177.06 on Monday.
Stocks to watch
BHP said it would book a $1.8bn charge due to cuts in the US corporate tax rate. The miner said it would record a non-cash re-measurement of deferred taxes of $898m and a non-cash impairment of foreign tax credits $834m. The tax reform will have a positive impact on the group's US attributable profits in the longer term mainly due to the lower corporate tax rate.
Tour operator 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.
Computacenter posted the results of its tender offer on Tuesday, which was initially set out in a shareholder circular on 23 January and closed on 9 February. The FTSE 250 company said a total of 44,089,779 ordinary shares were validly tendered, with the strike price determined to be 1170p. As a result, 8,546,861 ordinary shares would be purchased at that price, for a total cost of £99.998m, representing approximately 6.97% of the issued share capital of the company.
Newspaper round-up
MPs have accused the “big four” accountancy firms of “feasting on what was soon to become a carcass” as it emerged they banked £72m for work linked to collapsed government contractor Carillion in the years leading up to its financial failure. Less than a fortnight before Carillion’s auditor KPMG is due to face questions from MPs on two select committees, the accountant and rivals Deloitte, EY and PricewaterhouseCoopers (PwC) submitted evidence to the inquiry. – Guardian
Donald Trump unveiled a $200bn plan to fix America’s crumbling infrastructure – a plan that falls woefully short of the trillions civil engineers say is needed to rebuild the country’s tattered backbone and is likely to face intense opposition from Democrats and Republicans. Trump said in a statement: “We will build gleaming new roads, bridges, highways, railways, and waterways all across our land. And we will do it with American heart, and American hands, and American grit.” – Guardian
Major energy suppliers may be stripped of the right to challenge an unfair energy price cap after a group of MPs suggested an appeal process could be used as a delaying tactic. The parliamentary committee for business defied regulatory convention by saying energy companies should not be allowed to appeal the regulator’s set price for standard energy tariffs with the Competition and Market Authority. – Telegraph
A Network Rail body will add an extra layer of scrutiny to new rail franchise bids to make sure that plans by operators are workable, in the wake of the collapse of the East Coast mainline contract. The recently launched body, called the System Operator, will sit within Network Rail and is likely to have a busy few years with new contracts set to start on East Midlands and Southeastern in 2019 and on the West Coast mainline in 2020. – Telegraph
The City regulator’s shambolic handling of its investigation into Royal Bank of Scotland’s restructuring unit took an anarchic twist last night as the confidential report was leaked online. The highly sensitive 361-page document was sent initially to more than 500 members of a group who want to sue RBS over the activities of its Global Restructuring Group, which mistreated thousands of companies. – The Times
Banks and hedge funds have been ordered to tighten their controls over computer-driven trading, only days after algorithmic trades were blamed for exacerbating stock market falls in the Wall Street sell-off. The Bank of England and the Financial Conduct Authority each issued papers yesterday aimed at forcing firms into improved procedures to guard against computer-driven crashes and market abuse. – The Times
US close
Wall Street's main indexes finished the session higher on Monday, extending the bounce that began late on Friday, driven by technology and financial issues as stocks did their best to recover from their worst week since 2016.
The Dow Jones Industrial Average finished up 1.7% at 24,601.27, the S&P 500 added 1.39% to 2,656.00, and the Nasdaq 100 was ahead 1.73% at 6,523.85.
At the same time, the Chicago Board of Options Exchange's volatility index was down 11.87% at 25.61.
“There are no major data points due, but after worries about inflation and rising interest rates prompted a selloff in equity markets last week, investors will be eyeing the release of the consumer price index for January on Wednesday,” noted SpreadEx financial analyst Connor Campbell earlier.
“Economists expect headline inflation to rise 0.3%, while core inflation - which excludes food and energy costs - is seen edging up 0.2%.”
Investors were also busy sifting through the Trump administration’s freshly-released 10-year infrastructure plan, with early criticism centred on the slashing of funding for transportation projects in largely Democratic states.
According to Politico, a quarter of the $200bn funding would go to rural areas for projects including airports, broadband, highways and sewers.