10th Dec 2024 07:45
(Alliance News) - London's FTSE 100 is called to open lower on Tuesday, as investors await Wednesday's US inflation data, with China remaining in focus ahead of that reading.
Export data from China was softer than expected on Tuesday, though President Xi Jinping said he has "full confidence" that the nation can achieve its 2024 growth goal.
Xi also warned that a trade war with the US would result in "no winners", state media said, ahead of next month's inauguration of president-elect Donald Trump.
SPI Asset Management analyst Stephen Innes commented: "China optimists are buzzing, pointing to the flood of fiscal and liquidity measures rolled out this year as proof of Beijing's unwavering resolve to turbocharge its economy.
"On the flip side, the sceptics urge caution, arguing that Beijing's history of big promises and limited action calls for a restrained approach. They warn that any meaningful economic recovery hinges on the government's readiness to tackle the banking sector's mounting bad loans."
The analyst added: "The big snag, however, is the resurgence of Sino-US trade tensions. On Monday, China announced it had initiated an investigation into Nvidia Corp for potential violations of its anti-monopoly laws—widely perceived as retaliation against recent US restrictions on China's chip sector."
In early UK corporate news, Ashtead announced a new buyback and said it is considering moving its primary listing. Centrica also announced a new buyback. Soon-to-be-promoted Games Workshop said it has struck a Warhammer deal with Amazon.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called down 0.5% at 8,313.68
----------
Hang Seng: down 0.1% at 20,389.58
Nikkei 225: up 0.5% at 39,367.58
S&P/ASX 200: down 0.4% at 8,393.00
----------
DJIA: closed down 240.59 points, 0.5%, at 44,401.93
S&P 500: closed down 0.6% at 6,052.85
Nasdaq Composite: closed down 0.6% at 19,736.69
----------
EUR: lower at USD1.0558 (USD1.0576)
GBP: lower at USD1.2751 (USD1.2785)
USD: higher at JPY151.38 (JPY151.19)
GOLD: flat at USD2,669.51 per ounce (USD2,669.43)
(Brent): lower at USD71.78 a barrel (USD72.43)
(changes since previous London equities close)
----------
ECONOMICS
----------
Tuesday's key economic events still to come:
13:55 GMT US Redbook index
----------
UK Prime Minister Keir Starmer said economic growth was his "number one mission" as he held talks with Saudi Arabia's crown prince Mohammad bin Salman. Downing Street insisted Starmer would still be able to raise concerns about the Saudi government's human rights record, despite it being a lower priority than the economy. Campaign group Reprieve called on Starmer to raise the issue of children facing the death penalty in Saudi Arabia, while the widow of murdered journalist Jamal Khashoggi urged the prime minister to question the crown prince about the case. Starmer accused predecessor Boris Johnson of "going cap in hand from dictator to dictator" when the former prime minister met the Saudi crown prince in 2022. But the prime minister defended his decision to visit Saudi Arabia and the United Arab Emirates on Monday. Following his talks with the crown prince, he told broadcasters in Riyadh: "Last week I launched my plan for change and made it clear that economic growth in the UK is my number one mission, and I want that to be people feeling better off, living standards driven up across the UK, in all parts of the UK. "For that to happen we have to win contracts and investment around the world, and UAE and Saudi Arabia are key partners of ours. "So I've been making the case that now's the time for further investment into our country."
----------
UK ministers have been warned they must find more savings in their departments as the chancellor said "every pound" of government spending will be scrutinised in a major budget review. Secretaries of state are being told that any outgoings which are not contributing towards one of Labour's "priorities" must be cut as Rachel Reeves vows to wield "an iron fist against waste." In letters sent by Chief Secretary to the Treasury Darren Jones, departments will be told to brace for "difficult" spending decisions in order to restore trust in the government's handling of the public finances. Every pound of departmental spending will be face a "line-by-line review" involving external finance experts from banks and think tanks in order to ensure it represents good value for money, the Treasury said. The chancellor will on Tuesday launch the next round of government spending, and is expected to warn departments that they "cannot operate in a business-as-usual way when reviewing their budgets for the coming years". She will insist that areas focused on Prime Minister Keir Starmer's "plan for change", which includes targets to improve living standards across the country and build 1.5 million homes, must be prioritised. Reeves said: "By totally rewiring how the government spends money we will be able to deliver our plan for change and focus on what matters for working people."
----------
BROKER RATING CHANGES
----------
Goldman Sachs raises British Land to 'buy' (neutral) - target 500 (410) - pence
----------
JPMorgan cuts Ninety One to 'underweight' (neutral) - price target 150 (165) - pence
----------
COMPANIES - FTSE 100
----------
Ashtead Group lowered its annual outlook and pitched a US primary listing in a move which could see the equipment rental firm relinquish its FTSE 100 status. Ashtead believes "the US market is the natural long term listing venue". Shifting its primary listing to the US from London "is in the best interests of the business and its stakeholders". It still plans to keep a UK listing. "Today Ashtead is substantially a US business, reporting in US dollars, with almost all the group's operating profit (98% in FY24) derived from North America, which is also the core growth market for the business. The group's executive management team and operational headquarters are based in the US and the vast majority of the group's employees reside in North America," Ashtead said. Ashtead said it will discuss the proposal with shareholders over the coming weeks before putting forward a proposal at a general meeting "in due course". "The board expects that the necessary steps would be implemented over the next 12-18 months," it added. In recent years, plumbing and heating products firm Ferguson, bookmaker Flutter and miner BHP have been among those to move their primary listings from London. Ashtead said revenue in the half-year to October 31 improved 2.2% to USD5.70 billion from USD5.57 billion a year prior. Pretax profit, however, declined 4.2% to USD1.20 billion from USD1.25 billion. Ashtead reported "lower used equipment sales and a higher increase in depreciation and interest costs", keeping a lid on its bottom line. Looking ahead, it now guides for group rental revenue growth of 3% to 5% for the full-year, its outlook cut from 5% to 8%. Full-year profit will also be "lower than our previous expectations". Ashtead said it is kicking off a USD1.5 billion share buyback programme to span the next 18 months. It increased its interim dividend to 36 cents per share from 15.75 cents a year prior. Ashtead noted it rebalanced the split of its annual dividends to "broadly one third interim, two thirds final".
----------
British Gas owner Centrica said it expects annual earnings to be in line with consensus and it announced an extension to an existing share buyback programme. Centrica said adjusted earnings per share for 2024 are to be "broadly in line with analyst consensus", which it puts at 18.5 pence. That would represent a decline from its adjusted basic EPS of 33.4p in 2023. The adjusted diluted EPS was 32.8p in 2023. "The usual uncertainties remain for the balance of the year, including weather, commodity prices and asset performance," it added. "In aggregate, adjusted operating profit in Retail and Optimisation is expected to be in line with analyst consensus, including an improved financial result in Services & Solutions compared to 2023. Infrastructure adjusted operating profit is also expected to be in line with analyst consensus based on year-to-date performance and the outlook for December, including hedging. This includes a second half loss for Centrica Energy Storage+." Looking to 2025, it expects British Gas Services & Solutions "to deliver a further improved financial result compared with 2024". Centrica said it "remains committed to its disciplined capital allocation framework" and announced a GBP300 million extension to its existing share buyback programme. "The extension, once completed, will mean the company has repurchased GBP1.5 billion of its ordinary shares since November 2022, representing approximately 20% of the company's issued share capital. The extension will begin as soon as practically possible and is expected to complete no later than the end of September 2025," Centrica said.
----------
COMPANIES - FTSE 250
----------
Games Workshop said it has struck an agreement with Amazon for adaptations of its Warhammer offering in film and television. The deal also includes "associated merchandising rights". The miniature wargames maker, set for FTSE 100 promotion later this month, has "granted exclusive rights to Amazon in relation to films and television series set within the Warhammer 40,000 universe". Amazon also has an option to license "equivalent rights in the Warhammer Fantasy universe following the release of any initial Warhammer 40,000 production". Games Workshop added: "Production processes in respect of films and television series may take a number of years."
----------
Moonpig Group reported a swing to a half-year loss amid tough trading conditions in its Experiences arm. The greeting cards seller and gifting firm backed annual guidance, however. Moonpig's pretax loss in the six months to October 31 amounted to GBP33.3 million, swinging from profit of GBP18.9 million a year prior. Revenue rose 3.8% on-year to GBP158.0 million from GBP152.1 million. Hurting its bottom line, however, Moonpig booked an impairment of goodwill worth GBP56.7 million, as it now predicts "a longer timeline for fully realising the revenue growth potential of Experiences". "Moonpig Group current trading remains in line with our expectations. Growth has been underpinned by consistent strong sales and orders at Moonpig and is supported by steady progression at Greetz. Given ongoing macro headwinds in gifting, trading remains challenging at Experiences and we remain focused on delivering our transformation plan. Accordingly, our expectations for full year revenue remain unchanged," Moonpig said. "Our business is well positioned to deliver sustained growth in revenue, profit and free cash flow, driven by our continued focus on data and technology. With respect to the medium-term, we continue to target double digit percentage annual revenue growth." Moonpig announced a maiden interim dividend of 1.0 pence per share.
----------
OTHER COMPANIES
----------
South32 has withdrawn its production guidance for Mozal Aluminium due to civil unrest in Mozambique. The Perth-based mining group indicated it has implemented contingency plans to mitigate operational impacts, adding it is working with relevant stakeholders. Mozambique has been rocked by unrest since an October 9 presidential election, won by the Frelimo party. The opposition claims the election was rigged. South3 said that due to escalating civil unrest in Mozambique, the transport of raw materials to Mozal Aluminium is being impacted by road blockages. "The safety and wellbeing of our people at Mozal Aluminium is our priority. Our workforce is safe and there have been no security incidents at Mozal Aluminium," the diversified miner said.
----------
Shareholders agreed Monday to split up the French media conglomerate Vivendi into four companies in an effort to boost the value of the various firms. Resolutions to confirm the creation of independent Canal+ television, Louis Hachette publishing and Havas advertising firms, plus a Vivendi holding group were approved by more than 97% of shareholders. Vivendi announced 12 months ago that it would study breaking up the group to unlock value in its different operations. Chair Yannick Bollore said the company estimated Vivendi's share price was 44% lower than it should be due to the fact it is a conglomerate. Canal+ will be listed in on the London Stock Exchange from December 16. Havas will be listed in Amsterdam and Louis Hachette in Paris. Vivendi will also keep its Paris listing.
----------
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.