25th Jul 2024 07:49
(Alliance News) - London's FTSE 100 is called to open lower on Thursday, with a sell-off of US technology shares filtering through to trade in Europe and in Asia.
"Underwhelming results from Tesla and Alphabet painted the equity markets in the red yesterday. The S&P500 experienced its worst sell-off since December 2022," Swissquote analyst Ipek Ozkardeskaya commented.
Focus remains on corporate earnings on both sides of the Atlantic, with aerospace technology, and industrial automation services provider Honeywell among those reporting.
Economic data will also be eyed, meanwhile, with a US gross domestic product reading in the afternoon.
In early UK corporate news, AstraZeneca raised its outlook, while Unilever and Lloyds backed theirs. ITV lowered its guidance for its Studios unit, while Indivior, which has suffered a sharp share price drop this month, announced a share buyback.
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 0.5% at 8,111.79
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Hang Seng: down 1.7% at 17,012.83
Nikkei 225: closed down 3.3% at 37,869.51
S&P/ASX 200: closed down 1.3% at 7,861.20
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DJIA: closed down 504.22 points, 1.3%, at 39,853.87
S&P 500: closed down 2.3% at 5,427.13
Nasdaq Composite: closed down 3.6% at 17,342.41
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EUR: lower at USD1.0835 (USD1.0857)
GBP: lower at USD1.2882 (USD1.2926)
USD: lower at JPY152.63 (JPY153.44)
GOLD: lower at USD2,374.04 per ounce (USD2,426.06)
OIL (Brent): lower at USD80.99 a barrel (USD81.75)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
09:00 BST Germany Ifo business climate
13:30 BST US GDP
13:30 BST US initial jobless claims
13:30 BST US durable goods orders
13:30 BST US quarterly personal consumption expenditures
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Britain's newly created state-owned energy company, Great British Energy, is to partner with the monarchy's property firm to help speed up the building of offshore wind farms. The Crown Estate owns the vast majority of Britain's seabed, stretching up to 12 nautical miles from the mainland, and leases parts of it to wind farm operators. The government said that GB Energy will help develop future offshore wind projects, as part of its push to hasten the UK's transition to renewable energy. It is also designed to reduce the UK's reliance on energy imported from other countries by generating more of its own electricity. The Crown Estate estimates the partnership will lead to up to 20-30 gigawatts of new offshore wind developments being leased by 2030, enough to power almost 20 million homes. Ministers laid out fresh details on what GB Energy will do with its GBP8.3 billion of funding over the next five years, as the Great British Energy Bill is introduced to Parliament on Thursday. The company is set to lead energy projects through development stages to speed up the process, before returning them to private ownership but maintaining a stake. It could, however, become an operator of such projects over time.
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Germany and Britain pledged to cooperate more closely on defence and security issues as part of the new Labour government's post-Brexit "reset" in relations with European allies. On his inaugural visit to Berlin, UK Defence Secretary John Healey signed a joint declaration with German counterpart Boris Pistorius that was hailed as the first of its kind between the Nato allies. It includes pledges to strengthen the defence industries in both countries, cooperate more closely on the development and procurement of weapons, and coordinate "even better" on support for Ukraine, Pistorius said. The pact would "strengthen the European pillar within Nato and thus Nato as a whole", Pistorius said at a joint press conference. Healey, welcomed to the German capital with military honours, said the deeper cooperation in the defence sector would bolster both nations' security as well as "our national economies". The pact comes as Britain's Labour government, after a landslide election win this month, is "determined to reset relations with Europe", Healey said. "Britain's essential relationships with many European allies has been strained at best" in recent years, he said, in a nod to ties soured by Brexit.
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UK car production fell by 7.6% in the first six months of the year, new figures suggest. Industry body the Society of Motor Manufacturers & Traders, which released the data, said the decline was "expected" due to carmakers overhauling lines to make electrified models. Factories turned out 416,074 new cars between January and June, 34,094 fewer than in the same period in 2023. The decline in electric car production matched the overall trend, at 7.6%. Just over 106,157 cars were built for the UK, an increase of 18% year-on-year, but there was a 14% decline in production for overseas buyers to 309,917 units. The EU continued to take the majority of car exports, around 55%. The US, China, Turkey and Australia made up the rest of the top five export locations, accounting for a combined 29% of all overseas orders. Japan, Canada, South Korea, the United Arab Emirates and Switzerland completed the top 10. The latest independent outlook shows total production this year is expected to reach around 910,000 units, which would be a decline of 9.3% compared with 2023.
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BROKER RATING CHANGES
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Berenberg raises Spectris to 'buy' (hold) - price target 3,920 (3,520) pence
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HSBC cuts RS Group to 'hold' - price target 810 pence
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COMPANIES - FTSE 100
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Unilever backed its yearly sales growth guidance, and it reported a rise in revenue and profit in the first-half. Revenue in the first six months of 2024 climbed 2.3% to EUR31.12 billion from EUR30.43 billion. Pretax profit increased 5.7% to EUR5.57 billion from EUR5.27 billion. Underlying sales growth for the half-year was 4.1%, helped by a 2.6% rise in margins and a 1.6% pricing increase. "We continue to expect underlying sales growth for 2024 to be within our multi-year range of 3% to 5%, with the majority of the growth being driven by volume. Underlying operating margin for the full year is expected to be at least 18%, with increasing investment behind our brands. We expect the year-on-year margin progression in the second half to be smaller than in the first half," Unilever said. It raised its quarterly dividend by 3.0% to EUR0.4396, its first increase since the final quarter of 2020, it noted. Elsewhere, it said the separation of its Ice Cream offering is "underway" and set to complete by the end of next year. "We are working at pace on the legal entity set up, the standalone operating model and carve-out financials. In July, we communicated internally on the planned changes to simplify our business and further evolve our category-focused operating model. We have started consultations with the respective works councils," it added.
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AstraZeneca upped its yearly outlook, as the pharmaceutical firm hailed "strong growth in the first half of the year". Total revenue in the first-half of 2024 surged 15% to USD25.62 billion from USD22.30 billion. Pretax profit jumped 19% to USD5.29 billion from USD4.35 billion. For the second-quarter alone, revenue climbed 13% USD12.94 billion, and pretax profit was 15% higher at USD2.40 billion. Looking to the full-year, it now expects total revenue to grow by a "mid teens percentage" at constant currency, its view upgraded from a previously expects "low double-digit to low teens rise". "At our Investor Day in May we set out a new revenue ambition to deliver USD80 billion of total revenue by 2030. This is a clear reflection of the substantial growth potential we see from both our approved medicines and those in our late-stage pipeline. Already this year we have announced five positive, potentially practice-changing phase III studies that are anticipated to meaningfully contribute to our growth," Chief Executive Officer Pascal Soriot said. "In the year to date we have continued to make encouraging progress with several disruptive technologies, including antibody drug conjugates, bispecifics, cell and gene therapies, radioconjugates, and weight management medicines, all of which have the potential to drive our growth beyond 2030."
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Lloyds Banking Group reported that its top line shrunk in the first-half, as net interest income weakened 10%. It said net income fell 9.6% to GBP8.39 billion from GBP9.19 billion a year prior in the first half. Pretax profit dropped 14% to GBP3.32 billion from GBP3.87 billion. For the second-quarter alone, net income declined 8.4% to GBP4.15 billion from GBP4.53 billion a year prior. Pretax profit, however, rose 5.3% to GBP1.70 billion from GBP1.61 billion. Lloyds missed revenue consensus but did beat on profit. It had been expected to report net income of GBP4.27 billion for the second-quarter, and GBP8.51 billion for the first-half. Quarterly pretax profit of GBP1.58 billion was expected, and GBP3.21 billion for the half-year as a whole, both predictions below what it actually achieved. Lloyds affirmed its guidance 2024, expecting a banking net interest margin of greater than 290 basis points. The firm lifted its interim dividend by 15% to 1.06 pence per share from 0.92p.
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COMPANIES - FTSE 250
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ITV reported an increase in half-year profit, though it cut revenue guidance in its Studios arm. Group revenue in the first-half of 2024 declined 2.4% to GBP1.60 billion from GBP1.64 billion a year prior. Pretax profit jumped to GBP330 million from GBP45 million. It booked a GBP194 million profit on the disposal of joint ventures and subsidiary undertakings. CEO Carolyn McCall said: "Our digital advertising business continues to go from strength-to-strength and we saw a 17% increase in digital advertising revenue in the period, which contributed to the 10% increase in total advertising revenue. This was driven by strong viewing across our broadcast channels and ITVX, with a very successful Euros, a year-on year-increase in viewing of Love Island and a slate of great dramas." Looking ahead, the firm now expects revenue for the ITV Studios production arm to "be down low single digits" for the full-year. It had previously expected it to be "broadly flat". The downgrade is due to a "small number of key productions being contracted as executive productions rather than co-productions". "The change in contractual arrangement has no impact on profit but does mean we recognise less revenue this year. There remain a small number of contracts under negotiation, which may have a similar out-turn of lower recognised revenue, but the same profit if they are contracted as executive productions. In the revenue guidance for 2024, we have assumed that we will be the main or co-producer," the firm said.
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Trading platform provider CMC Markets maintained guidance after a first-quarter that went to plan. For the year ending in March 31, it still expects net operating income of between GBP320 million and GBP360 million. "The initial onboarding of Revolut clients has commenced and some clients are now live and trading. Further details will be provided at our half year results in November as the partnership picks up momentum and develops over the coming months. This exciting and important partnership reinforces CMC's position as a market leader and innovator in the B2B fintech space through technology and our [application programming interface] ecosystem," CMC added. In June, it announced a fintech partnership with Revolut. The deal allows for "back-to-back trading with Revolut, along with a complete back-end integration, providing their customers with access to the CMC Markets Connect trading universe", the firm explained at the time.
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OTHER COMPANIES
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Indivior announced a USD100 million share buyback but its half-year earnings were mixed, amid what has been a "challenging" 2024 so far. The specialty pharmaceuticals business said revenue in the first-half of the year improved 10% to USD583 million from USD529 million. It swung to a pretax loss, however, of USD72 million from profit of USD120 million. Its second-quarter revenue rose 8.3% to USD299 million from USD276 million, but it posted a loss of USD135 million, swinging from profit of USD62 million. Selling, general, and administrative expenses in the quarter jumped to USD311 million from USD133 million. The figure includes costs related to a legal settlement, its US primary listing and the hit from the discontinuation of schizophrenia drug Perseris, announced earlier in July. "While 2024 has proved to be a more challenging year than we had anticipated, we remain highly confident in the underlying fundamentals of our business and strategy, and that we are on a clear path to create substantial shareholder value. Reflecting our confidence, we are today announcing a new USD100 million share repurchase programme which we intend to execute over an accelerated time frame," CEO Mark Crossley said.
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Everyman Media Group said its first-half went to plan, and it expects a full-year out-turn in line with expectations ahead of a stacked second-half film release calendar. It expects to report revenue in the half-year to June 27 rose 22% to GBP46.9 million from GBP38.3 million a year prior. Earnings before interest, tax, depreciation and amortisation is tipped to have risen 6.9% to GBP6.2 million from GBP5.8 million. "Financial performance for the half year was in line with expectations and reflected the impact of last year's SAG-AFTRA and WGA strikes. The group expects a significant H2 weighting to admissions, revenue and Ebitda based on the strong pipeline of releases for the remainder of the year, including Joker: Folie a Deux, Paddington in Peru, Gladiator II, Wicked, Moana 2 and Mufasa: The Lion King," Everyman said. It expects full-year revenue in line with market expectations of GBP108.0 million.
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By Eric Cunha, Alliance News news editor
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