13th Feb 2025 07:54
(Alliance News) - London's FTSE 100 is called to open slightly lower on Thursday, while the pound climbed after better-than-expected UK data.
The UK economy climbed 0.1% quarter-on-quarter in the three months to December, the Office for National Statistics said. Gross domestic product had been flat in the third-quarter from the second. The fourth-quarter reading defied expectations of a 0.1% fall, according to FXStreet-cited consensus.
In December alone, GDP improved 0.4% on-month, beating forecasts of a 0.1% rise. In November, GDP rose 0.1% from October.
Year-on-year, the UK economy rose 1.4% in the final-quarter, beating expectations of a 1.1% improvement.
"The UK economy is still expected to see an improvement in growth as we move through 2025, but high levels of uncertainty remain. The impact of US tariffs is one of the largest risks as even if British goods are not targeted, many British firms contribute to global supply chains that will be affected. In addition, higher energy costs, with European natural gas recently hitting two year highs, will not help matters," Quilter Investors analyst Lindsay James commented.
The mood in Asia was largely positive and US stocks trimmed intraday losses overnight on hope of a Russia-Ukraine peace deal. The CAC 40 in Paris and DAX 40 in Frankfurt are to open up 0.8% and 1.3%.
"Markets rebounded from their lows after US President Donald Trump revealed that he had spoken separately with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy regarding efforts to end the ongoing war. Traders are now awaiting further details, as a concrete peace plan could weigh on energy stocks and benchmarks," ActivTrades Anderson Alves commented.
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 8,802.94
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Hang Seng: down 0.2% at 21,825.59
Nikkei 225: up 1.3% at 39,461.47
S&P/ASX 200: up 0.1% at 8,540.00
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DJIA: closed down 225.09 points, 0.5%, at 44,368.56
S&P 500: closed down 0.3% at 6,051.97
Nasdaq Composite: closed up 6.10 points at 19,649.95
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EUR: higher at USD1.0433 (USD1.0364)
GBP: higher at USD1.2512 (USD1.2415)
USD: lower at JPY154.10 (JPY154.77)
GOLD: higher at USD2,916.71 per ounce (USD2,897.30)
(Brent): lower at USD74.52 a barrel (USD75.81)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
10:00 GMT eurozone industrial production
13:30 GMT US PPI
13:30 GMT US initial jobless claims
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The UK will continue to support Ukraine's defence against Russia, the deputy prime minister signalled after Donald Trump claimed he and Vladimir Putin had agreed to start negotiations on ending the war.
Britain's support for Ukraine remains "steadfast", Angela Rayner said amid the US president's moves to draw the conflict to an end. Trump said he had agreed with Russia's leader to "work together, very closely" on bringing the three-year conflict to an end in a phone conversation on Wednesday. Speaking to ITV's Peston, the deputy prime minister said the government and "the whole of Parliament" were united in support for Kyiv, when asked about the US president's claims. "We'll continue to support Ukraine, and… the prime minister was very clear when he answered that question earlier today in the House," she added. Defence Secretary John Healey had earlier said welcoming Ukraine into Nato will take "some time", and the focus "for now" should be on ensuring Kyiv is in a strong position going into any potential peace talks, after the US insisted the country's membership of the military alliance was not a realistic prospect. Giving a press conference in Brussels after a meeting of defence leaders from countries across the world, Healey said that Ukraine's "rightful place" was within Nato, which the country has been seeking to join for many years. But he sought to play down splits between the UK and Washington, despite US defence secretary Pete Hegseth appearing to rule out membership for the country as a way of guaranteeing its security. It will be a major blow to Ukrainian President Volodymyr Zelensky, as admission of new countries to the alliance requires unanimous agreement by existing members. Trump's call with the Russian president came just hours after Zelensky warned "Putin is not preparing for peace" and called for unity from Ukraine's allies.
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Prime Minister Keir Starmer pledged Thursday to deliver Britain's "largest housebuilding programme" since the post-World War II era as he announced plans for several new towns in England. The initiative takes inspiration from the Labour government of the late 1940s, which built new urban areas to alleviate housing shortages that followed the defeat of Nazi Germany. The government has vowed to build 1.5 million houses by 2029, including through the "next generation" of new towns, which could host 10,000 homes each. "We're urgently using all levers available to build the homes we need so more families can get on the housing ladder," Starmer said in a statement ahead of a visit to a housing development. "We're sweeping aside the blockers to get houses built, no longer accepting no as the default answer, and paving the way for the next generation of new towns," Starmer added. The government said in a press release that it was considering more than 100 sites across England for the new urban areas. The towns will be "well-designed, beautiful communities with affordable housing, GP (doctor's) surgeries, schools and public transport where people will want to live," the government added. Britain has been gripped by a national housing crisis for several years, with supply failing to keep up with demand as net migration soars and people live longer. Prices have skyrocketed, and coupled with a lack of affordable housing mean home ownership is out of reach for many young people. Experts generally agree that more than 300,000 homes need to be built in England every year to keep up with demand, a target that has not been met in recent years.
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BROKER RATING CHANGES
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UBS raises AstraZeneca to 'buy' (neutral) - price target 14,200 (11,500) pence
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Peel Hunt raises Bellway to 'add' (hold) - price target 3,000 (3,160) - pence
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COMPANIES - FTSE 100
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Barclays said it met its financial targets last year, and it announced a further share buyback of GBP1.0 billion. Pretax profit in 2024 totalled GBP8.11 billion, rising 24% from GBP6.56 billion in 2023. Total income rose 5.6% to GBP26.79 billion from GBP25.38 billion. Pretax profit beat company-compiled consensus of GBP8.07 billion, while total income was ahead of a GBP26.53 billion forecast. The Barclays Investment Bank was a standout division, achieving total income of GBP11.81 billion, a 7.0% rise on-year, beating consensus of GBP11.67 billion. Barclays UK division revenue rose 9.1% to GBP8.27 billion last year. The unit includes its ring-fenced UK retail banking division. "In 2024 we met our financial targets, delivering for our customers and clients, with operational and financial performance improvement driven by disciplined execution of the three-year plan. This delivered a group [return on tangible equity] of 10.5% for the year and GBP3.0 billion of capital distributions, including the GBP1.0 billion buyback announced today," Chief Executive CS Venkatakrishnan said. Barclays said its total dividend for the year was lifted 5.0% to 8.4 pence per share from 8.0p. For 2025, Barclays expects a RoTE of around 11%. Group net interest income, excluding the investment bank and head office, of GBP12.2 billion is expected, rising from GBP11.2 billion in 2024. Its aim for 2024 was "greater than GBP11.0 billion". For 2025, it targets Barclays UK net interest income of around GBP7.4 billion, rising from GBP6.5 billion in 2024.
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Unilever reported annual revenue that topped expectations, though profit declined and it cautioned on a "slow start" to 2025. Pretax profit in 2024 amounted to EUR8.87 billion, fading 5.0% from EUR9.34 billion in 2023. Revenue, however, rose 1.9% to EUR60.75 billion from EUR59.60 billion, beating the company-compiled consensus of EUR60.58 billion. Underlying sales growth was 4.2% in 2024, shy of consensus of a 4.3% improvement. "Underlying sales grew 4.2% with volumes up 2.9%, led by our Power Brands, with particularly strong performances from Dove, Comfort, Vaseline and Liquid I.V. Fewer, bigger innovations helped to deliver volume growth consistently above 2% in each quarter. All Business Groups delivered positive volume growth for the year," CEO Hein Schumacher said. "We continue to sharpen our portfolio, allocating capital to premium segments by acquiring scalable brands in attractive markets, such as K18 and Minimalist, and announcing the divestment of local food brands such as Unox and Conimex, as we focus our Foods portfolio on cooking aids and condiments categories. The comprehensive productivity programme we announced in March is being implemented at pace and we are ahead of plan in helping to create a leaner and more accountable organisation. We are taking decisive actions in Indonesia, where long-standing challenges required a reset of the business, and China, where we are transforming our go-to-market approach during a market slowdown. We expect to see the benefits of these actions from the second half of 2025." The CEO said the Ice Cream separation "remains on track and we are making good progress on the key workstreams". Jean-Francois van Boxmeer has been appointed as chair designate for the separated Ice Cream business. He is currently chair of telecommunications firm Vodafone. Unilever declared a EUR0.4528 per share fourth-quarter dividend, up 6.1% on-year. In addition, it announced a new EUR1.5 billion share buyback. Looking ahead, Unilever said: "We expect underlying sales growth for full year 2025 to be within our multi-year range of 3% to 5%. Market growth slowed throughout 2024. We anticipate a slower start to 2025 with subdued market growth in the near term. We expect the market and our growth to improve during the year as price increases, reflecting higher commodity costs in 2025. We expect a more balanced split between volume and price."
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COMPANIES - FTSE 250
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Ingredients provider Tate & Lyle said it delivered a solid third-quarter, and new acquisition CP Kelco has performed in line with expectations so far. Tate & Lyle sealed the buy of CP Kelco in November. For the year ending March 31, Tate & Lyle now expects revenue to be mid-single digit percent lower at constant currency. The figure excludes CP Kelco. Back in its November half-year results, the company had affirmed its previous guidance for "slightly lower" revenue on-year. In the three months to December 31, group revenue was 14% higher on-year at constant currency, rising to GBP423 million. Not including the new acquisition, however, revenue was 4% lower at GBP357 million. "Volume in Food & Beverage Solutions was 4% higher, with growth in each region. Revenue was 4% lower primarily reflecting the pass through of input cost deflation. Sucralose performed strongly, benefiting from the continued impact of the pull-forward of customer orders which we expect will partly unwind in the fourth quarter," Tate & Lyle said. "In line with the normal cycle of our industry, during the quarter we renewed contracts for the 2025 calendar year for those customers who contract annually. While market demand remains broadly stable, we have not yet seen the acceleration in demand we expected in the second half of the 2025 financial year. Against this background, continued geopolitical uncertainties and some pricing pressure, we renewed contracts for both Tate & Lyle and CP Kelco which are expected to deliver volume and revenue growth in the 2025 calendar year." Tate & Lyle expects earnings before interest, tax, depreciation and amortisation will be at the lower end of 4% to 7% guidance range.
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OTHER COMPANIES
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South32 attributed its return to interim profit to robust aluminium and copper operations, and improved commodity prices. The mining group said its pretax profit from continuing operations was USD583 million for the first six months that ended December 31, swung from a loss of USD58 million a year earlier. The diversified miner classified Illawarra metallurgical coal in New South Wales and Eagle Downs metallurgical coal in Queensland as discontinued operations. South32 completed the disposal of these coal assets in August last year. From continuing operations, revenue was USD2.92 billion, up 26% from USD2.31 billion, lifting underlying earnings before interest, taxes, depreciation and amortisation to USD1.02 billion, up 44% from USD708 million. Copper production rose 16% in the first half to 36,700 tonnes from 31,600 tonnes. Aluminium production for the first six months was up 5.0% to 604,000 tonnes from 575,000 tonnes. South32 hiked its interim dividend to 3.4 US cents, up sharply from 0.4 cents, after restoring profit. "We delivered a strong start to FY25, off the back of our improved operating performance and transformed portfolio," South32 Chief Executive Officer Graham Kerr said.
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By Eric Cunha, Alliance News news editor
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