6th Nov 2024 07:49
(Alliance News) - The FTSE 100 was called 1.1% higher early Wednesday as Donald Trump moves closer to a victory in the US presidential election, winning key swing state Pennsylvania.
"The US yields are pushing higher on expectation of further debt ballooning under a Donald Trump presidency," commented Swissquote's Ipek Ozkardeskaya. "Bitcoin hit a fresh record. In the traditional currency markets, the US dollar is rallying against most majors this morning."
She continued: "In equities, the divergence is clear. The major US index futures are in the positive territory, with the Dow Jones futures leading gains. FTSE futures are flat, whereas the DAX and Eurostoxx futures are clearly not smiling.
"Bloomberg Economics tried to put numbers on the damage that Trump tariffs would cause to the world and the numbers are scary. China's exports to the US could melt by more than 80%, according to them...the British and EU exports could tank by more than 40%. And these numbers would be worse if the trade partners decide to retaliate."
In corporate news, Marks & Spencer reported a 20% surge in half-year profit with the dividend holding firm.
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 91.0 points, 1.1% at 8,263.39
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Hang Seng: down 2.7% at 20,443.07
Nikkei 225: closed up 2.6% at 39,480.67
S&P/ASX 200: closed up up 0.8% at 8,199.50
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DJIA: closed up 427.28 points, 1.0%, at 42,221.88
S&P 500: closed up 1.2% at 5,782.76
Nasdaq Composite: closed up 1.4% at 18,439.17
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EUR: down at USD1.0745 (USD1.0917)
GBP: down at USD1.2868 (USD1.3003)
USD: up at JPY153.91 (JPY152.08)
Gold: down at USD2,725.22 per ounce (USD2,736.94)
(Brent): down at USD74.46 a barrel (USD76.10)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
10:00 CET eurozone composite PMI
11:00 CET eurozone PPI
15:00 CET European Central Bank president Christine Lagarde speaks
09:50 CET France composite PMI
08:00 CET Germany factory orders
09:55 CET Germany composite PMI
09:30 GMT UK construction PMI
10:30 EST US EIA crude oil stocks
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Republican presidential candidate Donald Trump wins the key swing state of Pennsylvania, with its 19 electoral votes, US broadcasters Fox News, CNN and NBC project based on voter surveys and initial vote counts. This puts Trump close to the 270 electoral college votes needed to secure a victory in the presidential election against Vice President Kamala Harris. Earlier on Wednesday news broke that Trump won Georgia and North Carolina. Fox News later declared Donald Trump the winner of the US presidential election, the only network to make the call, after projecting he would win key battlegrounds Pennsylvania and Wisconsin. Republicans wrested the US Senate from Democratic control, US media also projected early Wednesday, ending four years in the minority and providing a huge boost to the party in its quest to dominate every branch of government. A Trump victory could provide a headache for Federal Reserve boss Jerome Powell as he continues his battle to bring inflation to heel.
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UK Chancellor Rachel Reeves will be grilled by MPs on Wednesday over a series of tax hikes and increased spending unveiled in the UK autumn budget. A change to the UK's debt rule that was announced to unlock billions in borrowing is also likely to come under scrutiny as the chancellor appears before Parliament's Treasury Select Committee. Reeves used October's financial statement to confirm an increase to employer national insurance contributions, changes to inheritance tax rules for farmers and a rise in the minimum wage. Taxes were raised to a historic high, with GBP40 billion extra a year in revenue used to pour into schools, the NHS, transport and housing.
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German Chancellor Olaf Scholz's three-way coalition is facing its toughest test of unity since it came to power in 2021, as a budget dispute threatens to tear the government apart. A series of high-level meetings on Wednesday will determine whether the centre-left coalition of Scholz's Social Democrats, the Greens and the liberal Free Democrats have enough common ground to continue governing together until the next elections due in September 2025. Coming on top of numerous other disputes and tensions between coalition leaders, the budget problems have led to weeks of speculation that Germany may be heading for early elections. The main sticking point is how a huge hole in the 2025 budget can be plugged, and how the ailing German economy can be dragged back to growth as it faces another year of being in recession. Added to that, all three parties in the coalition are performing miserably in the polls. The FDP in particular is polling under the crucial 5% mark for entering parliament.
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Japan's services sector slipped into decline last month, joining the manufacturing economy in contraction territory, numbers showed. The au Jibun Bank services purchasing managers' index fell to 49.7 points in October, from 53.1 in September. It signalled a decline in services activity, as the PMI fell below the 50 point mark. It is the first decline in services output since June. The composite PMI fell to 49.6 in October, down sharply from 52.0 in September.
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Kemi Badenoch will face off against Keir Starmer at Prime Minister's Questions for the first time as Tory leader. The former minister is preparing for her debut battle at the despatch box on Wednesday in a closely watched exchange that will mark the beginning of a new style of opposition. Starmer will be braced for a grilling on policies announced in last month's budget, which included fresh inheritance tax measures that have since prompted a fallout among farmers. Badenoch's blunt and confrontational style is likely to contrast at times with the prime minister's cautious and measured approach to politics.
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BROKER RATING CHANGES
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Berenberg cuts Smith & Nephew to 'hold' (buy) - price target 1,050 (1,450) pence
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RBC raises Burberry to 'outperform' (sector perform) - price target 900 (650) pence
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Goldman cuts Asos price target to 360 (410) pence - 'sell'
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COMPANIES - FTSE 100
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Marks & Spencers has released its half-year results, with pretax profit up 20% to GBP391.9 million from GBP325.6 million the year before. Revenue rose 5.7% to GBP6.48 billion from GBP6.13 billion. The firm's interim dividend however remained flat at 1 pence per share. Marks & Spencer said trading for the second half is on track and it expects to make further progress in the rest of 2024, although it expects the currently uncertain environment with elevated cost inflation to persist.
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Beazley said in its latest trading update that it is on track for 2024 guidance, with insurance written premiums in the first nine months of the year up 7% annually to USD4.63 billion from USD4.33 billion. Net insurance written premiums also rose 7% to USD3.79 billion from USD3.53 billion. Premium rates were flat, however, having risen 5% the prior year. The firm's combined ratio guidance for the year stays at about 80%.
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COMPANIES - FTSE 250
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AO World announced that the UK Financial Conduct Authority has given notice that it intends to approve the company's planned GBP10 million takeover of musicMagpie. The firms announced that they had agreed the cash acquisition in early October. AO World said it expects the acquisition scheme of arrangement to become effective in the fourth quarter of this year or the first of 2025.
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OTHER COMPANIES
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Dalata Hotel Group has exchanged contracts to buy the entire issued share capital of CG Hotels Dublin Airport, which holds the long leasehold interest in Dublin Airport's Radisson Hotel, for EUR83 million. The total consideration will be financed from Dalata’s existing cash and banking facilities, the company said. The deal is set to close in the first half of 2025. "Dublin remains a strategic growth market for Dalata and this transaction, with the Maldron Hotel Dublin Airport operating licence due to expire in January 2026, represents a very attractive opportunity for the group to secure a well invested four-star hotel, in close proximity to Terminal 2 in Dublin Airport," Dalata added.
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By Emma Curzon, Alliance News reporter
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