6th May 2025 07:54
(Alliance News) - London's FTSE 100 is called to open lower on Tuesday, kicking off the week following an extended bank holiday weekend, as Germany prepares to swear in its new chancellor and UK consumer confidence hits a new low.
Meanwhile, US stocks closed lower on Monday, as new figures from EY-Parthenon showed half of all company profit warnings in April flagged a hit from the mounting global trade war amid the fallout from US President Donald Trump's sweeping tariff hikes.
Firms issuing warnings last month also saw their share price drop by 19% on average as the fears over global trade disruption sparked stock market turmoil.
"Demand and supply shocks from the pandemic and geopolitical events were significant but primarily cyclical disruptions, whereas major changes to international trade policy may have more enduring effects," warned Claire Gambles, EY-Parthenon turnaround and restructuring strategy partner.
In early corporate news, Associated British Foods confirms it is in talks for a potential combination of bread producers Hovis and Kingsmill, while CRH swings to a net loss and announces a further buyback tranche for up to USD300 million.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 0.1% at 8,586.45
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Hang Seng: up 0.9% at 22,701.13
Nikkei 225: closed for Greenery Day
S&P/ASX 200: closed down 0.1% at 8,151.90
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DJIA: closed down 98.60 points, or 0.2%, at 41,218.83
S&P 500: closed down 36.29 points, or 0.6%, at 5,650.38
Nasdaq Composite: closed down 133.49 points, or 0.7%, at 17,844.24
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EUR: down at USD1.1330 (USD1.1341)
GBP: up at USD1.3303 (USD1.3296)
USD: down at JPY143.69 (JPY144.36)
Gold: up at USD3,366.90 per ounce (USD3,249.91)
(Brent): up at USD61.34 a barrel (USD61.07)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
09:00 BST eurozone composite PMI
10:00 BST eurozone PPI
08:55 BST Germany composite PMI
09:00 BST UK new car sales
09:30 BST UK composite PMI
13:30 BST US trade balance
13:55 BST US Redbook index
19:00 BST US FOMC meetings begins
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Consumer confidence in the future of the UK economy has plummeted to its lowest level since the height of the cost-of-living crisis, according to the Which? consumer insight tracker. 64% of consumers believe the economy will get worse before it gets better. Confidence fell by seven points to minus 53 in April – its lowest level since December 2022 when the cost-of-living crisis was at its height and the inflation rate was above 10%.
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US President Donald Trump on Tuesday was set to host Canada's new Prime Minister Mark Carney at the White House amid tense bilateral relations between the two neighbours. Ahead of the visit, Carney said that the meeting would focus on tariffs and bilateral relations between the two countries. Trump, however, on Monday said he was "not sure" what Carney "wants to see me about. I guess he wants to make a deal. Everybody does." Carney won Canada's election on April 28 buoyed by his sharp anti-Trump stance. Trump has repeatedly threatened to annex Canada as the 51st state of the US. He has also imposed high tariffs on the neighbouring country, whose economy is closely intertwined with that of the US. Trump's remarks about annexation caused widespread outrage. In a television interview over the weekend, the US president said that it was "highly unlikely" that the US would reach a point where it would intervene with its military. After his Liberal Party's victory in last week's parliamentary election, Carney promised to firmly oppose the aggressive policies of the US government.
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Germany's conservative leader Friedrich Merz is set to be sworn in as chancellor on Tuesday. In a session from 0900 CEST, or 0800 BST, Merz will seek a majority in the 630-seat Bundestag to become modern Germany's 10th chancellor. Once confirmed by President Frank-Walter Steinmeier, he is then set to deliver the oath of office at noon.
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The UK is planning on restricting visa applications from nationalities considered most likely to overstay and claim asylum, a report has suggested. Applications for work and study visas from nationalities such as Pakistanis, Nigerians and Sri Lankans are among those that could be curbed by the Home Office, according to the Times newspaper. The paper reported that the plans will be announced as part of the Immigration White Paper shortly, as the government looks to reduce net migration figures.
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The UK government said that it will take a "calm and steady approach" to trade talks with Washington, after President Donald Trump announced plans for tariffs on films made outside the US. "Talks on an economic deal between the US and the UK are ongoing, but we are not going to provide a running commentary," said a government spokesperson. "We will continue to take a calm and steady approach to talks and aim to find a resolution to help ease the pressure on UK businesses and consumers." The UK is currently engaged with Washington over a trade deal, with the US having imposed 10% tariffs on goods imported from Britain.
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The US service sector grew against last month, though a pair of surveys on Monday painted differing pictures on the pace of expansion. The Institute for Supply Management's services purchasing managers' index rose to 51.6 points in April, from 50.8 in March. Stretching further above the 50 neutral mark, the reading suggests the pace of growth quickened last month. The figure beat the FXStreet cited consensus of 50.6, which would have signalled growth eased slightly. The S&P Global services PMI, however, suggested growth eased in April. The PMI fell to 50.8 points, the tamest reading since November 2023, from 54.4 in March. The reading was shy of the 51.4 flash estimate.
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Russian President Vladimir Putin accused the West of trying to provoke him into using nuclear weapons in Ukraine, in comments on a Russian state television documentary film about his 25 years in power. "They wanted to provoke us, they wanted to make us make mistakes," he said in the film "Russia. Kremlin. Putin. 25 years." However, there was no need to use nuclear weapons, he said. "And I hope that this will not be necessary in the future either." Russia has sufficient forces and means to achieve everything that was necessary for Moscow in the war that began in 2022, he said, of the year the Kremlin launched its full-scale invasion of Ukraine.
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The EU is to unveil Tuesday a keenly anticipated plan to phase out its remaining gas ties to Moscow, a challenge given Europe's heavy dependence on Russian fossil fuels. EU energy chief Dan Jorgensen will set out the measures, which were delayed as Brussels waited to see whether talks between Russia and the US yielded a deal to end the war in Ukraine. Responding to Moscow's attack on its neighbour, the EU enacted a ban on Russian oil in late 2022 and has since sought to wean itself off Russian gas supplies. Despite imports via pipeline having fallen sharply, several European countries have increased their purchases of Russian liquefied natural gas, LNG, which is now transported by sea, and the bloc now wants to turn the tap off completely. That would pave the way for Europe to buy more LNG from the US – something both Brussels and Donald Trump have floated as a way to resolve the standoff sparked after the US president targeted European exports with tariffs. EU trade chief Maros Sefcovic told The Financial Times that the dispute could be resolved "very quickly" through LNG and soyabean purchases – as a way to reduce the bloc's trade surplus with its US partner.
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BROKER RATING CHANGES
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Citigroup cuts National Grid to 'neutral' - price target 1,050 pence
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Morgan Stanley starts Vistry with 'equal-weight'
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Barclays cuts Digital 9 Infrastructure target to 10 (25) pence - 'equal weight'
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COMPANIES - FTSE 100
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Associated British Foods confirms in response to recent media speculation that it is in talks with investment firm Endless regarding a "potential transaction", though notes there is no certainty a transaction will be concluded. Endless owns bread producer Hovis, which has been the subject of discussion for a possible combination with bread producer Kingsmill, which is owned by AB Food's Allied Bakeries. AB Foods reiterates that Allied Bakeries continues to face a "very challenging market", for which it is evaluating strategic options including options which do not include a deal with Hovis. A further announcement will be made "as and when appropriate".
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AstraZeneca announces it has received approval in the EU for Calquence, or acalabrutinib, in combination with bendamustine and rituximab, for the treatment of adult patients with previously untreated mantle cell lymphoma who are not eligible for autologous stem cell transplant. The European Commission approval follows a positive opinion from the Committee for Medicinal Products for Human Use, which was based on positive results from the Echo phase 3 trial that demonstrated the drug combination reduced the risk of disease progression or death by 27% against standard-of-care chemoimmunotherapy. Calquence plus bendamustine and rituximab is approved in the US and several other countries based on the Echo results, with regulatory applications are currently under review in further countries including Japan.
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Pershing Square notes investment manager Pershing Square Capital Management and parent company Pershing Square Holdco have agreed a USD900 million investment in US real estate development and management firm Howard Hughes Holdings, via the purchase of 9.0 million newly issued shares. The acquisition at USD100 per share represents a 48% premium to Howard Hughes' closing price on Friday. Pershing Square will now own 46.9% of Howard Hughes shares outstanding, and has agreed to limit its voting power to 40% and beneficial ownership to 47%.
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COMPANIES - FTSE 250
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Deliveroo says it has agreed the final terms of a potential takeover by DoorDash, under which each Deliveroo shareholder will receive 180 pence in cash per share. The offer values Deliveroo's share capital at around GBP2.9 billion on a fully diluted basis, which is a 44% premium to Deliveroo's closing share price of 125p on April 4, the last business day prior to DoorDash's offer letter. The deal currently has the backing of just over 15% of Deliveroo shareholders, with the Deliveroo board recommending shareholders vote in favour of the scheme. "The enlarged group will bring together DoorDash's strong operating playbook with Deliveroo's local expertise to invest in innovation and execution at an even higher level," says DoorDash Chief Executive Officer & Co-Founder Tony Xu. "Together, we will work to deliver the best experience for all of our stakeholders, to grow the GDP of cities around the world, and to build the leading global platform for local commerce."
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OTHER COMPANIES
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CRH swings to a net loss of USD98 million for the first quarter of 2025 that ended March 31, from net income of USD114 million a year prior. This is despite revenue for the three-month period rising 3.5% to USD6.76 billion from USD6.53 billion the year before, as total cost of revenues increases 4.0% to USD4.92 billion from USD4.73 billion. Selling, general and administrative expenses are also up 2.2% to USD1.83 billion from USD1.79 billion. CRH buys back a total of USD300 million in shares under its ongoing buyback programme during the first quarter, the latest tranche of which was completed on Friday. This brings the year-to-date repurchases to USD500 million. CRH also announces the launch of an additional USD300 million tranche to be completed no later than August 5. "The strength of our first quarter performance reflects the benefits of our differentiated strategy, good commercial management and contributions from acquisitions," says Chief Executive Officer Jim Mintern. "Although the first quarter is typically the seasonally least significant period for our business, we are encouraged by the continued strength of underlying demand across our key markets." The firm reaffirms reaffirms its full-year guidance for net income between USD3.7 billion and USD4.1 billion, as well as adjusted earnings before interest, tax, depreciation and amortisation between USD7.3 billion and USD7.7 billion. CRH reported USD3.52 billion in net income for 2024, and USD6.9 billion in adjusted Ebitda.
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By Emily Parsons, Alliance News reporter
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