19th Feb 2025 07:50
(Alliance News) - Stocks in London are called to open flat, after also barely budging on Tuesday, while sterling was also largely unmoved despite UK inflation hotting up.
According to the Office for National Statistics, the pace of yearly consumer price inflation picked up to 3.0% in January, from 2.5% in December. The reading topped the FXStreet cited consensus of 2.8%.
It was the sharpest annual consumer price rise since March 2024's 3.2% increase. In January 2024, the inflation rate was 4.0%.
"Should the spike in inflation peak at a level above expectations, or if the increase is too prolonged, then the [Bank of England] could find itself with a nasty headache. 'Stagflation' is a word that will have haunted the BoE in recent years, and we could see a resurgence in the coming months should the UK economy not respond as hoped," Quilter Cheviot analyst Richard Carter commented.
Sterling bought USD1.2616 shortly before the UK data, and spiked to USD1.2634 moments later, before fading again.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called down just 1.2 points at 8,765.63
----------
Hang Seng: down 0.3% at 22,906.42
Nikkei 225: down 0.3% at 39,164.61
S&P/ASX 200: down 0.7% at 8,419.20
----------
DJIA: closed up just 10.26 points at 44,556.34
S&P 500: closed up 0.2% at 6,129.58
Nasdaq Composite: closed up 0.1% at 20,041.26
----------
EUR: lower at USD1.0450 (USD1.0462)
GBP: higher at USD1.2620 (USD1.2616)
USD: flat at JPY151.71 (JPY151.71)
GOLD: higher at USD2,933.12 per ounce (USD2,928.05)
(Brent): higher at USD76.28 a barrel (USD75.66)
(changes since previous London equities close)
----------
ECONOMICS
----------
Wednesday's key economic events still to come:
09:00 GMT eurozone current account
13:30 GMT US building permits
12:00 GMT US Federal Reserve Vice Chair Philip Jefferson speaks
----------
UK Defence Secretary John Healey will travel to meet his Norwegian counterpart as Europe is thrown into turmoil over the future of Ukraine and the continent's wider security. Healey and Tore Sandvik will meet as European leaders plot their next steps to ramp up defence spending in the face of pressure from the US. America and Russia have kicked off talks to broker a peace in Ukraine, led by US Secretary of State Marco Rubio and Russia's Foreign Minister Sergei Lavrov. Ukraine was not invited to the negotiations which took place in Riyadh, Saudi Arabia, and concluded with ground rules set for further diplomacy. European countries were also locked out of the gathering, and are facing calls from US President Donald Trump and his Defence Secretary Pete Hegseth to increase their defence spending and shoulder more of the financial burden of supporting Kyiv. Following an emergency meeting of European leaders, UK Prime Minister Keir Starmer urged Trump to provide a security guarantee to any Ukraine peace settlement, insisting it is the only way to deter Russia from attacking the country again. The prime minister said he is prepared to deploy British troops as part of a peacekeeping force. But other countries at Monday's gathering, including Germany, resisted calls for European forces to be deployed to monitor a ceasefire. On Tuesday, Defence Secretary Healey said details of a US security guarantee for Ukraine are "being developed" and decisions made in the next few weeks will define "the security of our world for a generation".
----------
BROKER RATING CHANGES
----------
Berenberg cuts Tate & Lyle to 'hold' (buy) - price target 600 (900) pence
----------
JPMorgan cuts Trainline to 'neutral' (overweight) - price target 400 (500) pence
----------
COMPANIES - FTSE 100
----------
Aerospace and defence firm BAE Systems reported a rise in annual earnings and hailed a "record order backlog". In 2024, pretax profit edged up 0.3% to just over GBP2.33 billion. Pretax profit in 2023 came in at just under GBP2.33 billion. Revenue rose 14% to GBP26.31 billion in 2024, from GBP23.08 billion in 2023. On an underlying basis, revenue was up 14% at GBP28.34 billion, while pretax profit was 6.0% higher at GBP2.62 billion. "The results we're reporting today reflect the outstanding efforts of our employees and continue our track record of strong top-line and earnings growth, free cash flow and orders," Chief Executive Charles Woodburn said. "We're supporting our customers around the world, while shaping our portfolio towards higher growth and strategically important markets. Across our business, we're also investing in our people, facilities and technologies to drive efficiencies, boost capacity and increase our agility to deliver in a rapidly evolving environment. Based on the exceptional visibility of our record order backlog and sustainability of our value-compounding business model, we remain confident in the positive momentum of our business into the future." BAE upped its annual dividend by 10% to 33.0 pence per share from 30.0p. It lifted its final dividend by 11% to 20.6p from 18.5p. Looking ahead, BAE said: "Our Intelligence & Security business maintains a strong pipeline of qualified business opportunities. While there have been some delays in procurement decisions from the US Department of Defense, we are seeing an increase in demand driven by persistent global security challenges. The US defence services market remains fiercely competitive and can change quickly based on US government priorities. Our Intelligence Solutions business has identified cyber security as a key focus area for business growth and we continue to pursue opportunities in the Intelligence Community, federal/civilian agencies and the US Department of Defense."
----------
Miner Glencore hailed a "strong" 2024, and it announced a "top-up" share buyback of USD1.0 billion. It reported a swing to an annual loss, however, despite revenue improving. Glencore reported a pretax loss of USD998 million, swinging from profit of USD5.42 billion. Revenue rose 6.0% to USD230.94 billion from USD217.83 billion. It reported an "other expense" of USD2.12 billion, rising from USD1.27 billion and hurting its bottom line. The figure includes USD445 million in foreign exchange losses, USD295 million in "legal and government proceedings" and USD870 million worth of closed sites rehabilitation provisions. In addition, the cost of goods sold rose 8.3% to USD224.29 billion. CEO Gary Nagle said: "Operationally, 2024 was a strong year for Glencore. Our Industrial assets delivered full year production numbers within their original guidance ranges, which together with the addition of Elk Valley Resources's steelmaking coal volumes from July 2024, resulted in a 4% growth in copper equivalent volumes year over year. Basis current production plans for our existing operations, we also model a 4% compound annual growth rate to 2028 (in copper equivalents) from 2024." It recommended a USD0.10 per share "base cash distribution", down from USD0.13 a year prior. Glencore also announced a "top-up" share buyback worth USD1.0 billion.
----------
HSBC lifted its dividend and reported an increase in full year profit. Pretax profit increased 6.5% to USD32.31 billion in 2024 from USD30.35 billion a year prior. Revenue fell 0.3% to USD65.85 billion from USD66.06 billion as operating expenses increased 3.0% to USD33.04 billion from USD32.07 billion.
The bank lifted its final dividend by 16% to USD0.36 per share from USD0.31 previously. The total dividend therefore amounted to USD0.87 per share, up 43% from USD0.61. Additionally, HSBC said it intends to carry out a USD2 billion share buyback programme, which is expected to complete before the bank issues its first quarter 2025 results. In 2025 the bank aims to reduce costs by approximately USD300 million and commits to an annualised reduction of USD1.5 billion in its cost base by the end of 2026.
----------
OTHER COMPANIES
----------
Jet2 said it is "pleased" with how its financial year is ending and is "satisfied" with early bookings for the key summer season. The airline and package holiday operator expects pretax profit before foreign exchange revaluation for the year to March 31 between GBP560 million and GBP570 million, an improvement of 8% and 10%. "This range excludes gains from asset disposals, including the ongoing sale of our recently retired Boeing 757-200 fleet, details of which will be provided in our April post-close trading update," it added. In its November half-year results, Jet2 predicted profit ahead of market expectations at the time of GBP541 million. "Winter 2024/25 on sale capacity at 5.1 million seats is 14% higher than winter 2023/24 with the closer to departure, later booking profile experienced during summer 2024 having continued. Season to date booked average load factor is down by 2.2ppts, with the month of March and the later timing of Easter year-on-year contributing 1.3ppts of this decrease. Overall pricing for the season has remained competitive," Jet2 said. Looking to the next financial year, it added: "On sale capacity for summer 2025 is currently 8.5% higher than Summer 2024 at 18.6 million seats, with our new bases at Bournemouth and London Luton airports contributing approximately 4% of this growth at over [700,000] seats." Jet2 said bookings at its two new bases are encouraging, but it added that the average load factor in Luton "is materially lower than that of existing bases due to it only going on sale when operations were announced in November 2024". It expects to take delivery of 14 more new owned and leased Airbus aircraft, upping its A321neo fleet to 23 by the end of summer 2025. "Unfortunately, a number of these aircraft will be delayed from their agreed delivery dates and consequently we expect to incur additional operational costs to cover aircraft gaps in the peak summer flying programme. Nevertheless, we remain very pleased that the A321neo aircraft are already demonstrating their strategic value in terms of operating economics, reduced emissions and customer experience," it added. It also reported that the mandated increase in sustainable aviation fuel in its aircraft fuel mix with result in more than GBP20 million of incremental costs.
----------
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.