24th Oct 2024 07:53
(Alliance News) - London's FTSE 100 is called to open higher on Thursday, recovering some of Wednesday's lost ground, but a slump on Wall Street overnight suggests the mood in markets is tetchy.
"[US] stocks had their worst day since early-September yesterday as longs unwound, while the buck bound higher once more as Treasuries continued to slump. A busier data docket, highlighted by 'flash' PMIs, awaits today," Pepperstone analyst Michael Brown commented.
A eurozone purchasing managers' index reading on Thursday comes amid worries over the strength of the single currency area's economy. Another tepid reading will strengthen the case for more European Central Bank rate cuts.
US equities were hurt by pre-election uncertainty, as well as fears that the Federal Reserve's rate cut cycle will be slower than previously thought.
SPI Asset Management analyst Stephen Innes commented: "The bond market is on fire. Ten-year Treasury yields have surged past 4.25%, slicing through the 200-day moving average. Wednesday's disappointing 20-year auction only fuelled the flames, exacerbating the bond selloff and rattling nerves across the market. We're now looking at a 70-basis-point surge in 10-year yields since their September lows, a move that's way "too much, too soon" for an equity market already straining under sky-high valuations."
In early UK corporate news, lender Barclays raised its net interest income target. Consumer goods firm Unilever left its outlook unchanged. Retailer Frasers called for a general meeting at investee boohoo, with the aim of making Mike Ashley the chief executive of the AIM listed online fashion retailer.
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 0.4% at 8,293.74
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Hang Seng: down 1.1% at 20,528.18
Nikkei 225: up 0.1% at 38,143.29
S&P/ASX 200: down 0.1% at 8,206.30
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DJIA: closed down 409.94 points, 1.0%, at 42,514.95
S&P 500: closed down 0.9% at 5,797.4
Nasdaq Composite: closed down 1.6% at 18,276.65
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EUR: higher at USD1.0797 (USD1.0780)
GBP: higher at USD1.2941 (USD1.2938)
USD: lower at JPY152.16 (JPY152.83)
GOLD: higher at USD2,734.55 per ounce (USD2,718.02)
OIL (Brent): higher at USD75.63 a barrel (USD75.06)
(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 eurozone flash composite PMI
18:00 BST eurozone European Central Bank Governor Philip Lane speaks
08:30 BST Germany flash composite PMI
09:30 BST UK flash composite PMI
14:00 BST UK Bank of England MPC member Catherine Mann speaks
16:20 BST UK Bank of England Governor Andrew Bailey speaks
13:30 BST US initial jobless claims
14:45 BST US flash composite PMI
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UK Chancellor Rachel Reeves has promised her first budget will be an economic "reset" for the UK. The chancellor said her statement on October 30 will invest in the "foundations of future growth". Reeves was speaking before talks with finance ministers from around the world in Washington DC at the International Monetary Fund annual meeting. She said: "A Britain built on the rock of economic stability is a Britain that is a strong and credible international partner. "I'll be in Washington to tell the world that our upcoming budget will be a reset for our economy as we invest in the foundations of future growth. "It's from this solid base that we will be able to best represent British interests and show leadership on the major issues like the conflicts in the Middle East and Ukraine." Reeves was handed a pre-budget boost by the IMF, which on Tuesday upgraded its 2024 growth forecast for the UK economy. It said UK gross domestic product is due to grow by 1.1%, a significant upgrade after predicting 0.7% growth in July. But the IMF's chief economist Pierre-Olivier Gourinchas said countries should tread a "narrow path in terms of fiscal consolidation", after being asked about reports the chancellor is considering changes to fiscal rules which could allow the state to borrow more.
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Entrepreneurs will find "no reason" to want to leave the UK following next week's budget, Keir Starmer has said. The prime minister hailed the fiscal event as a historic moment, describing it as Labour's first chance to "define the way in which we will approach the economy" after 14 years in opposition. But amid media reports that the government could raise capital gains tax, putting off business start-ups and foreign investors alike, Starmer is confident the UK's inward flow of cash will continue to grow. Asked if he thinks entrepreneurs may want to leave the UK following reported tax increases in the budget, Starmer told reporters: "There is no reason for them to." Speaking while travelling to Samoa for a meeting of Commonwealth leaders, the PM pointed to the recent UK investment summit he hosted as an indicator of mood music among investors. "All the feedback back to us has been that it was very well received by a significant number of global investors," he said. Some GBP63 billion inward investment resulted from the summit, according to the government.
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BROKER RATING CHANGES
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Deutsche Bank raises Playtech price target to 908 (873) pence - 'buy'
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Jefferies raises Spire Healthcare price target to 278 (250) pence - 'buy'
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COMPANIES - FTSE 100
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Barclays raised its annual outlook and reported a rise in third-quarter earnings. Total income rose 4.6% to GBP6.54 billion from GBP6.26 billion a year prior. Pretax profit surged 18% to GBP2.32 billion from GBP1.89 billion. It reported a total income in Barclays UK, the Barclays UK Corporate Bank and in the firm's investment bank. On the investment bank, it said: "Global Markets income increased 3%, with [fixed income, currencies, and commodities] and equities both up 3% respectively. Investment banking income increased 13%, as higher fee income in advisory and debt and equity capital markets was partially offset by lower income in the international corporate bank," it said. Total income fell in Barclays Private Bank & Wealth Management and the US Consumer Bank, however. Looking ahead, it now expects 2024 net interest income, excluding the investment bank and head office, above GBP11.0 billion. It had previously expected the figure to land at GBP11.0 billion. Barclays UK net interest income was raised to GBP6.5 billion from GBP6.3 billion.
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Consumer goods firm Unilever backed its yearly outlook and hailed a "fourth consecutive quarter of positive, improved volume growth". Revenue edged up ever-so-slightly to EUR15.25 billion in the third-quarter, from EUR15.24 billion a year prior. Underlying sales perked up 4.5%, the Dove soap and Magnum ice cream owner said. Volumes rose 3.6% and price growth was 0.9%. "We have delivered a fourth consecutive quarter of positive, improved volume growth, with each of our business groups driving higher volumes year-on-year," Chief Executive Officer Hein Schumacher said. "We are taking decisive actions, where we see operational or market challenges to ensure we are well positioned for consistent and improved performance. As part of the group's overall transformation, we are implementing a comprehensive productivity programme and the separation of Ice Cream, both of which are progressing as planned." Unilever still expects full-year underlying sales growth within its 3% to 5% "multi-year range".
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COMPANIES - FTSE 250
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Dunelm reported "robust sales growth" in its first-quarter, and the homewares retailer said it made market share advances. Total sales in the 13-weeks to September 28 rose 3.5% on-year to GBP403 million, "driven by increased volumes". "Our digital sales growth was strong, up 2ppts as a proportion of total sales to 37%, as we continue to improve our online offer. Despite some positive lead consumer indicators, we are still seeing volatile trading conditions. Nevertheless, we believe that we continued to gain market share in the quarter," Dunelm said. "Despite some positive lead consumer indicators, we are still seeing volatile trading conditions. Nevertheless, we believe that we continued to gain market share in the quarter." Dunelm added that it has "confidence" in its aim to achieve a "market share milestone of 10% in the medium term".
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OTHER COMPANIES
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boohoo said it is in the process of reviewing the "content and validity" of a request by shareholder Frasers Group for a general meeting. Sports Direct owner Frasers said boohoo "urgently needs to address the management of its business". Frasers owns 27% of the online fashion retailer. Frasers is requisitioning a general meeting of boohoo with an aim to add Mike Ashley, the FTSE 100 listing's own founder and major shareholder, to the boohoo board as chief executive. Frasers also wants to add Mike Lennon, an "experienced restructuring professional" to the boohoo board. boohoo earlier this month launched a strategic review amid a downturn in sales. It had also agreed a new GBP222 million debt facility with a consortium of its existing relationship banking group, which Frasers hit out at on Thursday. "Frasers' view is that the terms of the debt refinancing are wholly unsatisfactory. Frasers considers the refinancing to be a step backward for the company and an appalling outcome for shareholder," Frasers said. "Had boohoo engaged constructively with Frasers on the refinancing, alternative solutions could have been fully explored which may have resulted in a more favourable outcome for all stakeholders."
boohoo added: "The boohoo board is in the process of reviewing the content and validity of the requisitions with its advisers. A further announcement will be made in due course." The Frasers announcement comes after the retailer's proposal to acquire handbags maker Mulberry was rebuffed.
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By Eric Cunha, Alliance News news editor
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