21st Oct 2024 07:52
(Alliance News) - London's FTSE 100 is called to open largely flat on Monday, in a tentative start to the week, despite rate cuts in China.
China's central bank on Monday said it had cut two key interest rates to historic lows, in the latest move by Beijing to boost sluggish spending and kickstart the world's second-largest economy.
The one-year loan prime rate, which constitutes the benchmark for the most advantageous rates lenders can offer to businesses and households, was cut to 3.1% from 3.35%.
The five-year LPR, the benchmark for mortgage loans, was cut to 3.6% from 3.85%.
"The elephant in the room remains China's property market. Without a clear bottom in sight, any broader economic recovery is going to be on shaky ground. Hyping up the recovery—it's simply wishful thinking until this property mess is cleaned up," SPI Asset Management analyst Stephen Innes commented.
In local UK corporate news, AstraZeneca said a rare disease drug got backing from an EU medicinal committee. Eyes are on BHP as a UK class action related to the Samarco tailings dam disaster in Brazil kicks off. Ten-pin bowling operator Hollywood Bowl said it is "pleased" with its annual performance.
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 slightly at 8,360.45
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Hang Seng: down 1.4% at 20,505.42
Nikkei 225: down 0.1% at 38,954.60
S&P/ASX 200: up 0.7% at 8,344.40
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DJIA: closed up 36.86 points, 0.1%, at 43,275.91
S&P 500: closed up 0.4% at 5,864.67
Nasdaq Composite: closed up 0.6% at 18,489.55
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EUR: lower at USD1.0856 (USD1.0858)
GBP: lower at USD1.3037 (USD1.3040)
USD: lower at JPY149.50 (JPY149.54)
GOLD: higher at USD2,730.42 per ounce (USD2,717.31)
(Brent): higher at USD73.22 a barrel (USD72.45)
(changes since previous London equities close)
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ECONOMICS
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UK home buyer demand "remains strong", though prices this month rose at a softer pace than usual, according to figures from property portal Rightmove. Average new seller asking prices in October edged up 0.3% to GBP371,958 from GBP370,759 in September, when prices had risen 0.8% from August. Rightmove said the October change was "much lower" than the "average seasonal" 1.3% on-month rise for this month. On an annual basis, the average asking price in October rose 1.0%, slowing from 1.2% growth the prior month. Rightmove said the number of sales being agreed in October jumped 29% on-year, "a strong rebound from the weaker market a year ago". "With a greater choice of properties to consider, buyers are making use of their increased negotiating power, helping to keep price rises subdued," Rightmove commented. There was a 17% rise in people contacting agents about homes for sale - suggesting that underlying buyer demand "remains strong" - and the number of available properties rose 12% to "the highest per estate agent since 2014, intensifying competition to find affordability-stretched buyers, some of whom may also have pre-budget jitters".
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The UK prime minister has insisted the government will "keep our manifesto pledges" amid reports the chancellor could extend the freeze on income tax thresholds in this month's budget. Chancellor Rachel Reeves may be considering pushing the freeze beyond its current expiry date of 2028 in a move that could raise GBP7 billion, according to reports by the Financial Times. Continuing the freeze could help plug some of the GBP40 billion gap the chancellor is grappling with in an effort to avoid a return to austerity. Labour's manifesto promised not to increase rates of income tax, but included no mention of tax thresholds. Senior Labour figures included the freeze in a list of "25 Tory tax rises" before the election. Other measures reported to be under consideration include increasing employers' national insurance contributions, raising fuel duty for the first time since 2010, changes to rules on inheritance tax and stamp duty, and a levy on e-cigarettes, according to reports across the media. The Treasury has so far declined to comment on budget speculation, but when asked about possible tax changes during a press conference in Berlin, Keir Starmer said: "We are going to keep our manifesto pledges."
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BROKER RATING CHANGES
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RBC cuts Intertek to 'sector perform' (outperform) - price target 5,000 (5,200) pence
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JPMorgan starts Genuit Group with 'neutral' - price target 535 pence
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COMPANIES - FTSE 100
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AstraZeneca said its Wainzua drug has been recommended for approval by an EU medicinal committee for some sufferers of rare disease amyloidosis. The verdict from the Committee for Medicinal Products for Human Use, which backed the drug for approval in the EU, is based on "positive" results in a phase 3 probe. The drug is being commercialised alongside Carlsbad, California-based biotech Ionis Pharmaceuticals. The disease can lead to nerve damage and is "generally fatal within a decade", AstraZeneca said. The drug will be the only approved treatment for the disease in the EU if it receives European Commission backing.
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COMPANIES - FTSE 250
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Hollywood Bowl said it achieved record annual revenue, and it expects profit to land ahead of market expectations. The ten-pin bowling operator said it expects to report revenue of GBP230.4 million in the six months to September 30, up 7.2% on-year. UK revenue alone rose 3.8%, it said, while at constant currency, Canada revenue jumped 42%. Hollywood Bowl expects to post earnings before interest, tax, depreciation and amortisation, on a pre-IFRS 16 basis, ahead of market expectations and above GBP65.0 million. According to company-compiled consensus, market expectations stand at GBP64.1 million. "We are pleased with our full year performance, both financially and operationally. We have delivered further profitable growth, demonstrating the success of our proven, customer-led strategy. We have continued to grow our estate in the UK and Canada and drive strong returns through the ongoing investment in our centres. Our team's dedication to providing consistently excellent customer experiences is reflected in increased dwell time, higher spend per game and positive customer feedback. We remain confident in the long-term opportunity for future profitable growth across both the UK and Canada," Chief Executive Officer Stephen Burns said.
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OTHER COMPANIES
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BHP and joint-venture partner Vale are continuing negotiations for a full and final settlement in a Brazil lawsuit related to the 2015 Samarco dam disaster. A class action in the UK kicks off on Monday, meanwhile. BHP has previously said it considers this case to be needless. The Brazil negotiations are being conducted by the Brazilian Federal Court of the 6th region, which includes the state of Minas Gerais, where the Samarco tailings dam was. Tailings are waste materials from mining operations. A dam in Samarco burst in November 2015, almost nine years ago, resulting in damage and death. BHP said the parties are "negotiating a settlement proposal that would provide a total financial value" equal to USD31.7 billion. "The final settlement is expected to provide reparation for the impacts of the dam failure and resolve the Federal Public Prosecution Office claim and all existing claims by the Public Authorities in relation to the dam failure," BHP said. "Under a final settlement agreement, Samarco would be the primary obligor for the settlement obligations and BHP Brasil and Vale are each secondary obligors of any obligation that Samarco cannot fund or perform in proportion to their shareholding at the time of the dam failure, which is 50% each." The matter is also going through the English High Court, in a class action which BHP has previously said is "unnecessary because they duplicate matters already covered" in Brazil. "BHP does not consider that it is liable to the claimants in the English Proceedings and will continue to defend the English proceedings," it said in July. Pogust Goodhead, which is representing claimants in the UK class action, on Saturday noted a trial begins on Monday. "Unlike the agreement proposed by BHP, the lawsuit filed in the UK by approximately 620,000 victims of the tragedy – represented by Pogust Goodhead – focuses on the individual rights, seeking to compensate for the specific material and moral damages suffered by each affected party. In addition to residents of the affected regions, indigenous communities and quilombolas, the lawsuit also includes 46 municipalities, 1,500 companies and faith-based institutions," the law firm said. "Our clients were not included or consulted at any time during the settlement process in Brazil, which has been conducted behind closed doors and under confidentially since the beginning. The proposal announced by BHP, therefore, does not reflect the reality of the losses suffered by the clients of the English lawsuit."
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Cerillion expects annual profit to be "comfortably ahead" of consensus, and the company said its total new orders spiked to a best-ever level. The billing, charging and customer relationship management software solutions provider said it traded well in the second half of the year to September 30. Revenue for the full-year of GBP43.8 million is expected, up from GBP39.2 million. Adjusted pretax profit is to be "comfortably ahead of the consensus market forecast" of GBP17.9 million, an improvement from GBP16.8 million the year prior. "Total new orders signed in the year were significantly greater than in any previous year, reflecting new customer wins as well as the growing value of the installed base," Cerillion said. "The company has entered the new financial year with a robust back-order book and a strong sales pipeline, which includes some large opportunities. The board continues to view growth prospects very positively."
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By Eric Cunha, Alliance News news editor
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