6th Feb 2025 07:49
(Alliance News) - London's FTSE 100 is called to open higher on Thursday, with risk appetite returning after a week which has so far been marred by trade war worries.
The Bank of England takes centre-stage this afternoon. It is expected to cut rates. Eyes will also be on its latest economic projections.
"The actual decision is unlikely to cause much movement in the pound. It will be particularly interesting to see what the new inflation and growth forecasts look like. The latter are likely to be revised sharply downwards, although we remain cautiously optimistic that the coming figures will be somewhat better again," Commerzbank analyst Michael Pfister commented.
In early UK corporate news, AstraZeneca reported earnings growth, Compass backed its outlook and Babcock raised its expectations. Elsewhere, BBGI Global Infrastructure backed a takeover offer.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.8% at 8,692.19
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Hang Seng: up 1.0% at 20,809.15
Nikkei 225: up 0.6% at 39,066.53
S&P/ASX 200: up 1.2% at 8,520.70
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DJIA: closed up 317.24 points, 0.7%, at 44,873.28
S&P 500: closed up 23.60 points, 0.4%, to 6,061.48
Nasdaq Composite: closed up 38.31 points, 0.2% at 19,692.33
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EUR: lower at USD1.0388 (USD1.0414)
GBP: lower at USD1.2484 (USD1.2513)
USD: higher at JPY152.53 (JPY152.33)
GOLD: lower at USD2,860.72 per ounce (USD2,870.03)
(Brent): higher at USD74.71 a barrel (USD74.64)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
08:30 GMT eurozone construction PMI
10:00 GMT eurozone retail sales
08:30 GMT Germany construction PMI
11:00 GMT Ireland unemployment
09:30 GMT UK construction PMI
12:00 GMT UK interest rate decision
13:30 GMT US initial jobless claims
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The UK government is pledging to create thousands of highly skilled jobs by reforming planning rules to make it easier to build new nuclear reactors. The prime minister announced that more nuclear power plants will be approved across England and Wales as red tape will be "slashed". The reforms will clear a path for so-called small modular reactors to be built for the first time in the UK which ministers said would help to deliver clean, secure and more affordable energy. The government announced that "archaic" rules will be ripped up while growth will be prioritised ahead of local opponents, or Nimby's. The UK has been left lagging behind in the global race for cleaner, more affordable energy after years of delay and obstruction, with the last nuclear power station built in 1995, said ministers. Under moves announced today, mini-nuclear power stations will be included in planning rules for the first time and a set list of eight sites where they can only be built will be scrapped. The expiry date on nuclear planning rules will be scrapped, and a Nuclear Regulatory Taskforce will be established. Ministers said Britain is considered one of the world's most expensive countries in which to build nuclear power, so the taskforce will speed up the approval of new reactor designs and streamline how developers engage with regulators. Prime Minister Keir Starmer said: "This country hasn't built a nuclear power station in decades. We've been let down and left behind.
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Nearly one in four UK businesses are hiking prices in response to the threat of tariff hikes as fears grow over a global trade war kicked off by US President Donald Trump, according to a survey. A poll of 1,500 businesses by banking firm HSBC found 39% are increasing prices in anticipation of higher tariffs.
It also revealed that half of firms are shifting their export markets to countries with lower trade barriers in an effort to side-step the worst of the hit from any trade war. Firms are also planning to adapt their supply chains to weather the storm, with 41% saying they will diversify and almost a third (31%) looking to bring the chain back in-house, while 41% said they would expand the products and services they sell to help offset any hit. The results of the survey, which was conducted in November for the bank's going global for growth report, comes as Trump fired his opening shots over the weekend by slapping 25% trade tariffs against Canada and Mexico, and 10% on Chinese imports. Canada was quick to announce plans for retaliation, though Trump announced a month-long pause before the tariffs on imports from Canada and Mexico come into effect. But with no sign of a truce with China, the trade war between the pair has since begun in earnest, with Beijing responding with a broad package of economic measures targeting the US. Trump also warned the EU would be next, sending stock markets sharply lower on Monday. He said a deal "can be worked out" with Britain, despite claiming the UK was "out of line".
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Business growth in Ireland continued in January, numbers from S&P Global showed. The AIB Ireland composite purchasing managers' index posted 52.3 in January, edging up from 52.1 in December. Meanwhile, the AIB Ireland services PMI reduced to 53.4 in January from 57.1 in the previous month.
S&P Global explained: "The services sector registered slower growth in activity and new business in January, but these trends were offset by renewed increases in manufacturing output and new orders. "Employment increased at the second-strongest rate in five months, though this masked broadly unchanged workforces at service providers with recruitment entirely driven by manufacturers." It was reported on Tuesday that the AIB Ireland manufacturing PMI rose to a reading of 51.3 in January, up from up from 49.1 in December. A reading above 50 indicates expansion, while a reading below marks a contraction. The PMI's are compiled by S&P Global using responses to monthly questionnaires sent to a panel of companies in the relevant sector. The services and manufacturing panels include 400 and 250 companies respectively.
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BROKER RATING CHANGES
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HSBC cuts Halma to 'reduce' - price target 2,760 pence
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COMPANIES - FTSE 100
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AstraZeneca reported growth in annual earnings, with the drugmaker's Oncology offering helping lead the charge, and the new year could be a key one with a number of trials hitting the latter stages. Revenue in 2024 rose 18% to USD54.07 billion from USD45.81 billion in 2023. It helped pretax profit surge 26% to USD8.69 billion from USD6.90 billion. "Our company delivered a very strong performance in 2024 with total revenue and core EPS up 21% and 19% respectively. We also delivered nine positive high value phase III studies in the year, which coupled with increasing demand for our medicines in all key regions, will help sustain our growth momentum into 2025," Chief Executive Officer Pascal Soriot commented. At constant exchange rates, total revenue rose 21%. For 2025, AstraZeneca expects revenue growth to ease to a high single-digit percentage at constant currency. It added: "If foreign exchange rates for February 2025 to December 2025 were to remain at the average rates seen in January 2025, it is anticipated that total revenue in FY 2025 would incur a low single-digit percentage adverse impact compared to the performance at CER." The FTSE 100 listing declared a second interim dividend of USD2.10 per share, a rise of around 6.6% from USD1.97 a year prior. It makes for an annual dividend of USD3.10 per share, up 6.9% from USD2.90. The payout is to be further increased this year, with a dividend of USD3.20 expected. Astra also expects to up capital expenditure by some 50%, "driven by manufacturing expansion projects and investment in IT systems". The CEO added: "This year marks the beginning of an unprecedented, catalyst-rich period for our company, an important step on our Ambition 2030 journey to deliver USD80 billion total revenue by the end of the decade. In 2025 alone, we anticipate the first phase III data for seven new medicines, along with several important new indication opportunities for our existing medicines."
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Contact caterer Compass Group said it kicked off the year with "strong" revenue growth. Ahead of an annual general meeting, it reported that organic revenue rose 9.2% on-year in the first quarter. In North America alone, growth was 9.7%, in Europe it was 8.4% and in the rest of the world segment, it was 7.9%. "We are pleased with the strong start to the year. The group delivered good growth across all regions and sectors, supported by continued strong client retention. We are an even more focused business and are leveraging investments in capex and M&A to support future growth, as we maintain our strong track record of delivering long-term, compounding shareholder returns," Compass said. It left annual guidance unchanged, expecting high single digit underlying operating profit growth and an organic revenue hike "above 7.5%". It warned of a possible foreign exchange hit should spot prices stay as they are. "If current spot rates were to continue for the remainder of the year, foreign exchange translation would negatively impact 2024 revenue by USD558 million and operating profit by USD36 million," it added.
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Engineering firm IMI said it suffered a cyber security incident. The incident involved "unauthorised access to the company's systems". "As soon as IMI became aware of the unauthorised access, the company engaged external cyber security experts to investigate and contain the incident. In parallel, the company is taking the necessary steps to comply with our regulatory obligations," it added.
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COMPANIES - FTSE 250
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BBGI Global Infrastructure agreed to a GBP1.06 billion takeover from a vehicle indirectly controlled by British Columbia Investment Management. The infrastructure investor will be acquired at 147.5 pence per share in cash, a 21% premium to its 121.8p closing price on Wednesday. It values BBGI Global's the entire issued and to be issued share capital at GBP1.06 billion. It currently has a market capitalisation of GBP870.7 million. British Columbia Investment Management is an institutional investor in Canada. As of March last year, it had some GBP139.61 billion in gross assets under management. It manages a portfolio of investments on behalf of its British Columbia public pension fund and institutional clients. BBGI Global CEO Duncan Ball said: "Although both the BBGI supervisory board and the BBGI management board are confident that BBGI can continue to deliver sustainable cash flows to BBGI shareholders, the offer from BCI represents a premium to undisturbed share price and to net asset value, and provides BBGI Shareholders with the opportunity to realise the value of their holdings in cash, at an attractive value in excess of the reasonable medium term prospects for BBGI on a standalone basis." The acquisition is expected to be sealed in the third-quarter of this year.
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Watches of Switzerland said it enjoyed "good" trading in both the US and UK during the key festive period. The trading stretch formed part of its third-quarter, which ran to January 26. It said demand for its luxury brands "remains strong, outstripping supply in both the UK and US markets". The luxury watch seller added: "We continue to be encouraged by the performance of our pre-owned businesses and the strong performance of the Roberto Coin brand in North America. Over the period, we have seen further stabilisation of the UK market in both luxury watches and jewellery, while the US market has seen continued momentum. In addition, our differentiated business model, alongside the continued investment in our showroom portfolio, has driven market share gains in both the UK and US." It said it is confident of delivering on full-year guidance.
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Babcock International upped its annual outlook, as a strong half-year performance continued in the third-quarter. The provider of technical and engineering support services to defence and civil sectors said its outturn in January was "also encouraging", according to a preliminary analysis. For the year ending March 31, it now expects GBP4.9 billion of revenue, "with the expected overperformance due to double-digit organic growth in Nuclear and strong growth in Marine". The revenue forecast sits ahead of the Vuma compiled average analyst forecast of GBP4.67 billion. It would be a 12% rise from GBP4.39 billion in financial 2024. Babcock Chief Executive David Lockwood said: "Today's announcement demonstrates that successful execution of our strategy is continuing to deliver value for all our stakeholders. Our engineering skills and know-how are in ever greater demand and with significant opportunities before us, I look forward to further profitable growth."
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OTHER COMPANIES
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Video game publisher and developer tinyBuild expects to report 2024 earnings in line with expectations, but warned the "industry backdrop remains difficult with few signs of near-term improvement". Revenue and adjusted earnings before interest, tax, depreciation and amortisation in 2024 are to be "broadly in line with expectations". "The industry backdrop remains difficult with few signs of near-term improvement. tinyBuild is carefully managing its catalogue while investing in high-potential new IP," it added. It has "cash levels of low single digit millions". tinyBuild said: "Cash and cash equivalents are anticipated to reach a trough point in the summer of 2025 and improve post the launch of certain high-potential new games. The cash position will be carefully managed as the company invests in upcoming game releases in a disciplined manner. The company has no borrowings and it continues to assess its IP portfolio for strategic opportunities."
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By Eric Cunha, Alliance News news editor
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