9th Sep 2024 07:44
(Alliance News) - London's FTSE 100 is called to open higher on Monday, despite sharp falls for US equities on Friday, and a less-than-stellar start to the week for stocks in Asia.
Equities were unnerved by Friday's US jobs report. Total nonfarm payroll employment in the US rose by 142,000 in August, with job gains in construction and healthcare, numbers on Friday showed. In July, nonfarm payrolls rose by 89,000, the outcome revised from an initially reported 114,000 increase.
The latest reading missed the FXStreet-cited market consensus of a 160,000 increase in jobs.
The reading "did little to clear up" whether the Federal Reserve will cut by 25 basis points of 50bp later this month, Pepperstone analyst Michael Brown commented.
This will leave markets "hyper-sensitive to incoming data, wanting more easing than is likely to be delivered".
"Participants came into Friday hoping that the August US jobs report would provide some clarity on the magnitude of the rate cut to be delivered at the September FOMC. They left Friday, and entered the Fed's pre-meeting 'blackout' period, with the outlook remaining a rather murky one," Brown added.
In early UK corporate news, bookmaker Entain said it has made a decent start to the second half, while housebuilder Barratt and Lloyds Banking Group have entered into a development joint-venture with a UK government agency. SigmaRoc's half-year revenue, though it reported a mixed outlook for some end markets.
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 0.6% at 8,232.97
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Hang Seng: down 2.1% at 17,082.06
Nikkei 225: down 0.5% at 36,215.75
S&P/ASX 200: down 0.3% at 7,988.10
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DJIA: closed down 410.34 points, 1.0%, at 40,345.41
S&P 500: closed down 1.7% at 5,408.42
Nasdaq Composite: closed down 2.6% at 16,690.83
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EUR: lower at USD1.1066 (USD1.1104)
GBP: lower at USD1.3113 (USD1.3147)
USD: higher at JPY142.94 (JPY142.12)
GOLD: lower at USD2,486.24 per ounce (USD2,514.36)
(Brent): higher at USD71.76 a barrel (USD71.50)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 BST Ireland industrial production
15:00 BST US wholesale inventories
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US Secretary of State Blinken will head to London to discuss the Middle East and Ukraine, the State Department announced, ahead of a US visit by Prime Minister Keir Starmer. Blinken's visit to London on Monday and Tuesday will be the senior-most by a US official since Starmer's Labour Party won July elections, ending 14 years of Conservative rule. Blinken will take part in a strategic dialogue "reaffirming our special relationship," State Department spokesman Matthew Miller said. He will discuss Asia as well as the Middle East and "our collective efforts to support Ukraine," Miller said in a statement.
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The UK prime minister will make his second visit to the US since coming to office a matter of months ago, according to the White House. Keir Starmer is due to visit Washington DC and meet with President Joe Biden on Friday. The meeting will be the second of its kind between the leaders since Starmer came to office in July, and comes just two months before Americans go to the polls for the presidential election. Their first White House bilateral took place as Starmer attended the Nato summit just days after Labour won the election. Since then, Biden has announced he will not be seeking a second term as president following concerns about his health.
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The leaders of Ireland and the UK will hold annual summits on trade and security, the UK prime minister has said. Starmer said it is a "moment for reset" of relations between the UK and Ireland as he met Irish premier Simon Harris during his first official visit to Dublin. Starmer said they had been able to agree the themes and structures of a summit in March 2025, to be held every year thereafter. The meetings will focus on four key areas: security, justice and global issues; climate, energy technology and innovation; growth, trade and investment; and culture, education and people-to-people connections. In a joint statement, the leaders said this includes a shared interest in areas such as cybersecurity and maritime security, as well as connections through sport and joint cultural projects.
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Building activity in Ireland remained entirely flat last month, but construction companies shed staff after eight straight months of new job creation, purchasing manager's index survey results from S&P Global showed. The BNP Paribas Real Estate construction total activity index registered a neutral 50.0 points in August, up a notch from 49.9 in July, which had indicated marginal contraction. New orders continue to increase last month, according to survey responses, but the pace was slower than the 29-month high reported in July. What's more, Irish construction companies reported a reduction in employment, ending an eight-month string of increases and the biggest cut in jobs in nearly three-and-a-half years. "Construction employment has been on an almost unbroken upward trend since Ireland’s economy reopened after Covid," said John McCartney, head of Research at BNP Paribas Real Estate Ireland. "However, for only the second time in twenty months, hiring went into reverse in August." McCartney noted "there does not appear to be any lack of demand for builders", so the survey results suggest the construction sector in Ireland may be facing labour constraints. Survey respondents also reported a continued increase in input costs, both for materials and for sub-contractors.
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BROKER RATING CHANGES
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Barclays cuts Burberry to 'underweight' (equal weight) - price target 540 (820) pence
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Jefferies raises Rightmove to 'hold' (underperform) - price target 720 (450) pence
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COMPANIES - FTSE 100
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Entain said it has performed well so far in its second half, with the Ladbrokes owner returning to growth in its UK and Ireland online betting offering "earlier than expected". The firm, providing an update on its "strategic progress and trading performance" ahead of investor meetings this week, said the improved momentum seen in the second-quarter has continued into the third. Online net gaming revenue growth in the second-half so far is "ahead of our expectations", with the UK & Ireland online division returning to year-on-year growth.
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Housebuilder Barratt Developments said it has entered into a joint-venture deal with lender Lloyds Banking Group and the UK government's housing and regeneration agency Homes England. The JV will be the master developer for "multiple large scale, residential-led developments". The developments will include 1,000 to more than 10,000 homes, alongside "a variety of community facilities and employment uses". "This is a long-term partnership, initially backed by combined equity funding of up to GBP150 million provided equally by the partners. The partnership brings together the essential skills, expertise and long-term approach, with the ability to unlock and scale the capital required to bring larger sites into production, enabling both major and SME homebuilders to build the new homes and communities the country needs," Barratt said.
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COMPANIES - FTSE 250
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C&C Group said it expects to report earnings in the first-half of its financial year in line with market expectations, and the cider maker announced the launch of a new share buyback. Net revenue for the six months to August 31 is expected to be down 3% on-year at constant currency. Underlying operating profit is forecast to land in the EUR39 million to EUR41 million range, so in line with expectations. The firm, whose brands include Bulmers and Tennent's, had reported operating profit before exceptional items of EUR30.5 million in the first half of the prior year, on net revenue of EUR872.5 million. "While current market conditions remain challenging, improving efficiencies, business simplification, winning customers and brand distribution remain our top priorities. We remain confident on achieving our operating profit target for the current financial year and making progress towards the operating profit target of EUR100 million by FY2027," C&C said. The firm added that it will start a EUR15 million tranche of a share buyback on Monday. The buyback is part of a larger plan to return EUR150 million to investors in share repurchases over the next three financial years.
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Computacenter reported a decline in half-year profit, which it put down to an "expected normalisation of Technology Sourcing volumes". The computer technology and services provider said pretax profit in the six months to June 30 fell 32% on-year to GBP84.0 million from GBP122.8 million a year prior. Revenue was 13% lower at GBP3.10 billion from GBP3.58 billion. Chief Executive Officer Mike Norris said: "Our performance in the first half largely reflected the expected normalisation of Technology Sourcing volumes against an exceptionally strong comparative. At the same time, we have executed well against our strategy by adding seven 'podium' customers in the half, broadening our customer base in North America. Professional Services has also delivered good growth, leveraging our experience in Germany into other markets." Computacenter raised its interim dividend by 3.1% to 23.3 pence per share from 22.6p. The CEO added: "We have made an encouraging start to our third quarter and continue to expect stronger momentum in the second half, resulting in progress in the full year on a constant currency basis."
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OTHER COMPANIES
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Building materials firm SigmaRoc reported a rise in half-year revenue, following the integration of European lime businesses acquired from CRH, though it cautioned that some markets are showing "mixed demand". Revenue in the six months to June 30 jumped 60% to GBP468.8 million from GBP290.0 million a year prior. Pretax profit, however, fell 29% to GBP17.2 million from GBP24.3 million. Administrative expenses were up almost double to GBP69.9 million from GBP36.0 million. Net finance costs surged to GBP26.5 million from GBP7.1 million. SigmaRoc sealed the acquisition of lime businesses in Germany, the Czech Republic and Ireland from CRH in January. Those units are now "fully integrated". A UK lime acquisition was completed in March, with the "integration progressing ahead of schedule". CEO Max Vermorken says: "I am delighted to be sharing these results for the first half of 2024 which have come in ahead of our expectations despite continued mixed markets. The results show the resilience of SigmaRoc's diversified business and operations and are testament to the hard work of all our staff. The integration of the core of the CRH acquisitions has gone well, with Poland completing post period end. We expect to report good progress on the integration of this last piece of the CRH acquisitions later in the year." CRH noted a "positive start" to the second-half. However it warned that "some end markets continue to show mixed demand with areas of weakness remaining in certain areas". These include the German power and auto sectors, it added.
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By Eric Cunha, Alliance News news editor
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