12th Feb 2025 07:49
(Alliance News) - London's FTSE 100 is called to open flat on Wednesday, failing to replicate some more confident trade seen in Asia, with a US inflation reading ahead.
Prior to the data, Federal Reserve Chair Jerome Powell said the central bank is in no rush to cut rates.
"The first part of Fed Chairman Jerome Powell's congressional testimony yesterday was largely uneventful. He essentially reiterated what was already known, namely that the Fed is under no pressure to cut interest rates quickly as the real economy remains solid. Unless Donald Trump surprises us with new tariff threats, the focus today should be on the US inflation figures for January," Commerzbank analyst Michael Pfister commented.
Wednesday's data is expected to show the pace of annual US consumer price inflation was unmoved at 2.9% at the start of the year, according to FXStreet cited consensus.
In early UK corporate news, housebuilder Barratt Redrow said it expects annual profit to land at the top end of consensus. Merchant bank Close Brothers revealed a GBP165 million provision set aside in relation to motor commissions.
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 just 0.9 points at 8,776.49
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Hang Seng: up 2.5% at 21,826.06
Nikkei 225: up 0.4% at 38,963.70
S&P/ASX 200: up 0.6% at 8,535.30
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DJIA: closed up 123.24 points, 0.3%, at 44,593.65
S&P 500: closed up 2.06 points at 6,068.50
Nasdaq Composite: closed down 0.4% at 19,643.86
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EUR: higher at USD1.0363 (USD1.0349)
GBP: higher at USD1.2444 (USD1.2421)
USD: higher at JPY153.44 (JPY152.31)
GOLD: lower at USD2,891.57 per ounce (USD2,906.30)
(Brent): lower at USD76.61 a barrel (USD76.81)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
13:30 GMT US CPI
15:30 GMT US EIA crude oil stocks
19:00 GMT US monthly budget statement
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The UK government's budget spending plans are expected to provide a "temporary boost" to economic growth although this could be dragged by Trump tariffs, an economic think tank has said. Inflation is also predicted to have accelerated at the start of this year, putting continued pressure on budgets, according to the National Institute of Economic & Social Research, Niesr. In its quarterly economic outlook report, Niesr said it was projecting that the UK economy would grow by 1.5% this year, lifting its previous forecast of 1.2%. It said the growth would be driven mainly by the increased spending programme announced in the October budget, which it expected would have a "tangible effect" throughout the year. But economists at the organisation said this was likely to "only be a temporary boost" for growth.
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Ministers in the UK have pledged another GBP350 million to help build affordable and social rent homes, as Angela Rayner has said that the government "can't afford not to" hit their 1.5 million housebuilding target. Officials have said that up to 2,800 extra homes will be built with an extra GBP300 million for the affordable homes programme committed on Wednesday, half of which will be social rent. GBP50 million will also be given to the local authority housing fund, with the expectation that this will produce "over 250" more council homes. The government has pledged to build 1.5 million homes over the course of the Parliament, but there have been warnings that there are not the staff available to fulfil the promise. Asked whether she was worried about the target being met, Deputy Prime Minister & Housing Secretary Rayner said that she is "determined" to meet the challenge. "We will meet that target because we can't afford not to," Rayner told broadcasters.
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BROKER RATING CHANGES
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Morgan Stanley starts GSK with 'underweight' - price target 1,450 pence
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Morgan Stanley starts AstraZeneca with 'overweight'
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COMPANIES - FTSE 100
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Barratt Redrow announced it will kick off a GBP100 million share buyback programme, and the housebuilder said it was "pleased" by its first half outturn. Pretax profit in the 26 weeks to December 29 improved 23% to GBP117.2 million from GBP95.2 million a year earlier. Revenue rose 23% also to GBP2.28 billion from GBP1.85 billion. Those half-year numbers where only what Barratt Developments achieved a year prior, so does not include Redrow, an acquisition it sealed in August to form Barratt Redrow. Aggregated revenue, so including Redrow, amounted to GBP2.49 billion in the half year to December 31, 2023. Pretax profit totalled GBP186.9 million over that period. Chief Executive David Thomas said: "I am pleased with the performance we have achieved in the first half of the year, continuing to deliver outstanding homes to customers across the country and further building on our unrivalled reputation for quality, service and sustainability. The integration of Redrow is progressing well and we are on track to deliver at least GBP100 million of cost synergies, GBP10 million ahead of the original target. As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January, building a strong forward sales position. As a result, we now expect our full year adjusted profit before tax will be towards the upper end of market expectations." Barratt Redrow puts adjusted pretax profit consensus at GBP542 million, with a range between GBP506 million to GBP588 million. Looking further it ahead, it provided medium-term guidance for the newly combined group. It expects to deliver 22,000 homes per year in the medium-term, with the operating margin reaching around 15%. The operating margin in the half-year just ended was 5.0%, slipping from 5.3%. Barratt Redrow declared a 5.5 pence per share interim dividend, up 25% from 4.4p. In addition, it is kicking off a share buyback programme which will return GBP100 million per year, starting with a GBP50 million portion in the second half of its financial year.
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COMPANIES - FTSE 250
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TBC Bank hailed record profit in 2024, and the firm lifted its dividend. TBC hailed "robust growth momentum in Georgia alongside fast-paced expansion in Uzbekistan". Pretax profit in 2024 rose 16% to GEL1.54 billion, around GBP443.0 million, from GEL1.33 billion in 2023. Net profit climbed 15% to a record GEL1.31 billion. Net interest income was 16% higher at GEL1.90 billion from GEL1.64 billion. Net fee and commission income rose 26% to GEL520.4 million. "Among the highlights for 2024, I would like to point to the excellent achievements of our digital banking ecosystem in Uzbekistan. Over the past year, TBC Uzbekistan has scaled up, with its total users increasing by 37% to over 18 million and its loan book more than doubling. The foundations for future growth have been laid through investments in key infrastructure, AI initiatives, world-class talent and a suite of new core products," CEO Vakhtang Butskhrikidze said. "As a team, we achieved a great deal in 2024, but as always there remains much to do, and we look forward to 2025 being another year of further scaling up our business in Uzbekistan and continuing to deliver strong and profitable growth in Georgia. I am confident we are fully on track to meet the mid-term targets we have set for 2025." TBC Bank upped its final dividend by 19% to GEL5.55 per share, taking its total payout to GEL8.10, up 12%. "Together with a GEL50 million buyback, this brings total capital returns to shareholders for 2024 to GEL499 million, or 39% of net profit," it added. it had returned 35% of its net profit to shareholders in 2023, and that had been boosted from 30% in 2022.
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OTHER COMPANIES
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BHP Group said that its Chair Ken MacKenzie will retire at the end of March after eight years. The mining company said Ross McEwan will succeed MacKenzie as chair from March 31. MacKenzie joined the board in September 2016 and has served as chair since September 2017. During his tenure as chair, MacKenzie oversaw the strategic transformation of BHP's portfolio towards future-facing commodities, BHP said. "BHP is a simpler, more productive and more resilient company and this has been a result of a talented and committed team focused on creating sustainable long-term value for our shareholders, our supply chain, partners and our communities," MacKenzie said.
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South32 said the Australian government has approved the expansion of its alumina refining operation Worsley. The federal endorsement come after Western Australia okayed the new Worsley project late in December last year. The Perth-based mining group said on Wednesday Worsley Alumina has received Federal environmental approval for the Worsley mine development project. The federal approval is subject to conditions which are substantively consistent with the state environmental approval received in December, South32 said.
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Close Brothers said it has set aside GBP165 million after the merchant bank reviewed its provision assessment in relation to an ongoing motor finance matter. Close Brothers said: "The group has been reviewing its accounting assessment of these matters, as previously stated. As a result, the group anticipates that it will recognise a provision in the H1 2025 financial statements in relation to motor commissions of up to GBP165 million. This includes estimates for certain potential operational and legal costs, as well as estimates for potential remediation for affected customers." Close Brothers said the provision is expected to reduce its common equity tier 1 ratio to 12.0% on a pro-forma basis, from 13.5% at the end of last year. This would still be "significantly above our applicable regulatory requirement of 9.7%", it added. It added: It expects management actions, including the sale of its asset management arm, to increase its CET1 ratio to around 13% by the end of this financial year, which concludes in July. Close Brothers said it achieved a "robust performance" in the six months to January 31. It expects adjusted operating profit of GBP104 million in its Banking arm for the period. On broker Winterflood, it added: "While Winterflood remains well placed for a recovery in investor confidence, its performance continued to be impacted by unfavourable market conditions, resulting in an expected operating loss of approximately GBP1 million in the period." Group adjusted operating profit of GBP75 million is expected, excluding its asset management which will be sold to funds managed by Oaktree Capital Management.
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By Eric Cunha, Alliance News news editor
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