19th Mar 2025 08:26
(Clarifies that M&G's assets under management are in billions, not millions.)
(Alliance News) - London's FTSE 100 opened lower on Wednesday amid a Wall Street slump, as Germany sets out its multi-million defence boost plan and investors await a Federal Reserve rate decision.
"The Fed is expected to maintain its rates unchanged today. But the committee will update its dot plot, growth and inflation projections and will provide a hint regarding where the policymakers are planning to put pressure in the changing economic landscape. Is the Fed worried about a renewed uptick in inflation due to the government’s hectic tariff policies? Is it more worried about the negative impact of the wide-ranging White House policies on employment and growth? Is it worried about the stock market selloff?" Swissquote analyst Ipek Ozkardeskaya commented.
"What investors are explicitly wishing is to hear that Powell and the Fed are ready to step in in case the market selloff gets worse to ensure a minimum financial stability – a thing that it’s beautifully done in the past by lowering rates and buying bonds."
Gold, meanwhile, reached a record high at USD3,045 an ounce in the early morning, as the safe haven metal continues to rally against the decline in US stocks.
In company news, Nvidia wants to meet the rapidly growing demand for computing power for artificial intelligence with a new generation of its chips.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: 0.4% lower at 8,673.48 on Wednesday morning
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Hang Seng: up 0.1% at 24,774.89
Nikkei 225: closed down 0.3% at 37,751.88
S&P/ASX 200: closed down 0.4% at 7,828.30
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DJIA: closed down 260.32 points, or 0.6%, at 41,581.31
S&P 500: closed down 60.46 points, or 1.1%, at 5,614.66
Nasdaq Composite: closed down 304.55 points, or 1.7%, at 17,504.12
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EUR: down at USD1.0903 (USD1.0931)
GBP: down at USD1.2972 (USD1.2991)
USD: down at JPY149.32 (JPY149.55)
Gold: up at USD3,041.81 per ounce (USD3,035.29)
(Brent): down at USD70.29 a barrel (USD70.76)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CET eurozone CPI
11:00 CET eurozone labour cost index
11:00 GMT Ireland residential property prices
13:00 CET eurozone European Central Bank vice-president Luis de Guindos speaks
10:30 EDT US EIA crude oil stocks
14:00 EDT US interest rate decision
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UK Prime Minister Keir Starmer has spoken to Ukraine's Volodymyr Zelensky after the US and Russia agreed to work towards a limited ceasefire on energy infrastructure in the war-torn eastern European nation. Starmer spoke to the Ukrainian president on the phone on Tuesday, following the discussions between Donald Trump and Vladimir Putin aimed at brokering a peace in the grinding three-year war. The US and Russian leaders agreed to work towards a plan which will cease attacks on Ukraine's power grid, which it is hoped will pave the way for a maritime ceasefire in the Black Sea, and then a full and sustained end to the fighting. A Downing Street spokeswoman said: "The prime minister spoke to President Zelensky this evening. They discussed progress President Trump had made towards a ceasefire in talks with Russia. President Zelensky updated on the situation on the front line and the prime minister reiterated [the] UK's unwavering support." No 10 had earlier welcomed "the progress President Trump has made towards a ceasefire". The spokeswoman added: "This process must lead to a just and lasting peace for Ukraine.
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Washington has been pushing for a full, 30-day ceasefire as a first step towards a wider settlement of the Russo-Ukrainian War. But in the 90-minute call with Trump on Tuesday, Putin refused, insisting that any such deal would be contingent on the West halting all military aid to Ukraine. However, according to the Kremlin, Putin has already ordered his military to pause strikes against Ukrainian energy targets for 30 days. Explosions rang out and air raid sirens wailed in Ukraine just hours after Trump and Putin spoke. Ukrainian leader Volodymyr Zelensky said "there have been hits, specifically on civilian infrastructure... It is these types of nighttime attacks by Russia that destroy our energy sector, our infrastructure, and the normal life of Ukrainians." US envoy Steve Witkoff said talks on a possible ceasefire will continue on Sunday in the Saudi Arabian port city of Jeddah.
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The Bank of Japan kept its interest rates unchanged at 0.5% as the country reported a trade surplus for February, while industrial production showed year-on-year growth but declined from the previous month. Provisional figures released by the Ministry of Finance of Japan showed that the country swung to a JPY584.51 billion, approximately USD3.93 billion, trade surplus in February from a JPY2.759 trillion deficit in January. The latest reading came in below FXStreet-cited consensus forecasts of a JPY722.8 billion surplus. Exports were JPY9.191 trillion in February, up 11% year-on-year from JPY8.249 trillion. Meanwhile, imports fell 0.7% to JPY8.607 trillion from JPY8.664 trillion. Additionally, the Ministry of Economy, Trade and Industry of Japan issued revised figures showing industrial production rose 2.2% year-on-year in January contrasting with a 1.6% decline in December. Compared to the previous month, industrial production was 1.1% lower in January, matching FXStreet-cited consensus, and widening from December's 0.2% decrease.
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Germany's Bundestag approved a historic easing of the country's debt limit on Tuesday, to boost defence spending and earmark EUR500 billion for infrastructure and climate protection measures. The vote in the Bundestag, considered a crucial test for Germany's likely next chancellor Friedrich Merz, was 512 to 206. Merz justified the planned billions in debt saying it is needed for the security of Germany, Europe and Nato. "It is a war against our country, too, which is taking place every day," he said referring to Russia's more than three-year war against Ukraine. He announced austerity measures and a reduction in bureaucracy. The parties backing the measure, which include Merz's Christian Democratic Union and its Bavarian sister party, the Christian Social Union, the Social Democrats and the Greens, were not certain to receive the necessary two-thirds majority. The relaxation of Germany's strict constitutional restriction on government borrowing, known as the debt brake, will allow the uptake of unlimited credit to fund defence expenditure, civil protection, the intelligence services and cybersecurity.
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BROKER RATING CHANGES
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Barclays raises St James's Place target to 1,140 (945) pence - 'overweight'
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Berenberg cuts Qinetiq price target to 500 (610) pence - 'buy'
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Jefferies raises Wizz Air price target to 1,350 (1,070) pence - 'underperform'
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COMPANIES - FTSE 100
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Investment manager M&G said it swung to a pretax loss of GBP332 million in 2024, from a profit of GBP421 million in 2023, despite revenue growing 1.5% to GBP1.01 billion from GBP995 million. This was largely driven by a GBP643 million loss under short-term fluctuations in investment returns, widened from a GBP171 million loss the year before. Assets under management & administration at December 31 were GBP345.9 billion, 0.7% higher than GBP343.5 billion at the same time a year prior. M&G set its total dividend for the year at 20.1p per share, up on-year from 19.7p. Chief Executive Officer Andrea Rossi said: "As I look ahead to 2025, the environment we operate in remains challenging. Increased geopolitical uncertainty and market volatility continue to weigh on customer and client sentiment and pose a significant challenge to financial institutions across the globe. At M&G, we are confident that we can navigate this uncertain environment by leveraging the strength of our business model which we believe will remain a source of competitive advantage."
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Pfizer sold 618 million shares in consumer health products firm Haleon at 385 pence, worth GBP2.4 billion, in a placing run by Citigroup. An additional 44 million shares were bought back by Haleon at the same price from Pfizer. Haleon said this forms part of its GBP500 million share buyback planned for 2025. The total sale of 662 million Haleon shares by Pfizer represents its entire remaining 7.3% stake in Haleon, which formerly was a joint venture between the US pharmaceutical firm and the UK's GSK. GSK sold its remaining 4.2% holding in Haleon in May last year.
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Rio Tinto re-affirmed to its shareholders that they should vote against a review of its dual-listing structure, ahead of meetings on April 3 and May 1 requisitioned by activist investor Palliser Capital. Palliser in December had called on the metals and mining firm to abandon its "outdated" dual listing structure and instead follow rival BHP Group, which moved its primary listing to Sydney in 2022. Rio Tinto on Wednesday called the potential move "destructive", adding that assertions about a USD50 billion value erosion due to the group's dual listing were "unfounded" and "misleading". Rio Tinto reached its conclusions following a "recent comprehensive review of the DLC with significant input from leading external advisers", and unanimously recommends to shareholders that they vote against the resolution.
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COMPANIES - FTSE 250
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Softcat saw its interim pretax profit rise 11% on-year to GBP76.7 million from GBP68.2 million in the six months that ended January 31, on revenue growth of 15% to GBP545.6 million to GBP467.2 million. The IT infrastructure and services provider lifts its interim dividend to 8.9 pence per share from 8.5p the year before, and also upgrades its full-year outlook. Softcat projects a low double-digit rise in operating profit, against its prior high single-digit growth guidance. "We have continued to successfully implement our strategy, resulting in a first half performance slightly above our initial expectations and an upgrade to full year guidance, despite the persistent backdrop of generally more challenging trading conditions," said Chief Executive Officer Graham Charlton. "We are excited by the rapid pace of innovation across our industry, with more organisations embedding [artificial intelligence] and automation into their systems and processes."
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OTHER COMPANIES
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Nvidia on Tuesday said that it wants to meet the rapidly growing demand for computing power for artificial intelligence with a new generation of its chips. Chief Executive Officer Jensen Huang said at Nvidia's developer conference GTC in San Jose, California that the company's next-generation Vera Rubin chip was scheduled to be launched in autumn 2026. Vera Rubin and the further development of the Blackwell system, announced for this year, are expected to drastically reduce the costs of operating AI software compared to previous technology. Nvidia chips have become a key technology for artificial intelligence. Industry giants such as Alphabet's Google and Meta Platforms, along with AI start-ups like Microsoft-backed ChatGPT creator OpenAI, rely on Nvidia's chips to train artificial intelligence systems. This position allowed Nvidia's business to grow explosively in recent years. Huang also tried to allay investors' concerns that the world could get by with less AI computing power in future - and that expectations of Nvidia's future business could therefore be too high.
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Scientific instrument investor Judges Scientific reported a decline in earnings for 2024, as its pretax profit slumped 3.0% to GBP13.0 million from GBP13.4 million, and revenue fell 1.9% to GBP133.6 million from GBP136.1 million. "As previously announced, the group had a difficult trading year in 2024, driven by the delay of a Geotek coring expedition and general weakness in order intake, particularly in China. M&A activity however was buoyant, with three acquisitions completed, and it was pleasing to see our cash conversion restored to normal levels," said Chair Alex Hambro. "2025 starts under better auspices with Geotek's coring expedition having commenced." Hambro is due to retire as chair at the firm's upcoming annual general meeting. Judges declared a final dividend of 74.8p per share, up from 68.0p in 2023. This brought the total dividend for 2024 to 104.5p, up 9.5% on-year from 95p. Performance for 2025 is currently expected in line with market expectations, but the firm notes it will pay around GBP3 million more per year in UK national insurance, starting from April.
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Around 750 jobs are at risk of redundancy at Santander UK as the high street lender announced another 95 branch closures and sweeping changes across its network. The bank said it was shutting the branches in June, while also cutting hours across 36 sites and switching 18 to be counter-free. Santander said it will be left with 349 branches, down from 444 currently, after the overhaul, which will include five so-called work cafes. The move will put about 750 jobs at risk if the plans get the go ahead after consultations with unions, the bank said. A Santander UK spokesman said: "As customer behaviour changes, we are ensuring that our branches remain fit for the future. Our new combination of full-service branches, alongside work cafes, counter-free branches and reduced hours branches, aims to provide the right balance between digital banking and face-to-face money management and guidance."
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By Emily Parsons, Alliance News reporter
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