11th Oct 2024 07:55
(Alliance News) - Equities in London are called to open slightly higher on Friday, shaking off a decline in New York where stocks fell after a stronger-than-expected inflation reading.
US consumer price inflation decelerated more mildly than expected on-year in September. The rate of year-on-year consumer price inflation cooled to 2.4% in September, from 2.5% in August. A slowdown to 2.3% was expected, however.
The rate of core inflation picked up to 3.3%, from 3.2%.
Comments from US central bankers were in focus after the data.
Bloomberg reported that New York Fed President John Williams said progress in moving inflation downward is "steady" despite inevitable "wiggles and bumps in the data".
Chicago President Austan Goolsbee told CNBC that the trend in inflation is a downward move, while Richmond Fed chief Thomas Barkin said it was "definitely headed in the right direction".
However, Atlanta Fed Presidnet Raphael Bostic stood out, putting a pause on the table for the US central bank should inflation continue to land hotter-than-expected.
SPI Asset Management analyst Stephen Innes commented: "If you've been around the rates game long enough, you know how this story can unfold. It always starts with a subtle uptick in inflation, a seemingly innocuous repricing of rates, and a few hawkish remarks from key Fed members. Before you know it, the 'pause' narrative goes full throttle, and what looked like a sure bet for rate cuts suddenly gets much more complicated."
In early UK corporate news, BP warned on weaker refining margins and recruiter Hays posted a net fee decline. Saga, a provider of insurance and holidays for over 50s, said it is in exclusive talks for a deal with Belgium's Ageas.
Elsewhere, data showed the UK economy returned to growth in August.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called up 0.1% at 8,246.03
----------
Hang Seng: Hong Kong closed for Double Ninth Festival
Nikkei 225: up 0.6% at 39,605.80
S&P/ASX 200: down 0.1% at 8,214.50
----------
DJIA: closed down 57.88 points, 0.1%, at 42,454.12
S&P 500: closed down 0.2% at 5,780.05
Nasdaq Composite: closed down 0.1% at 18,282.05
----------
EUR: higher at USD1.0935 (USD1.0929)
GBP: lower at USD1.3046 (USD1.3052)
USD: higher at JPY148.85 (JPY148.47)
GOLD: higher at USD2,640.66 per ounce (USD2,620.84)
OIL (Brent): higher at USD78.32 a barrel (USD78.23)
(changes since previous London equities close)
----------
ECONOMICS
----------
Friday's key economic events still to come:
13:30 BST US PPI
15:00 BST US Michigan consumer sentiment index
----------
The UK economy grew at the pace it was forecast to in August, numbers showed. According to the Office for National Statistics, UK gross domestic product expanded 0.2% on-month in August. The UK economy had tread water in July from June. The August growth was in line with the FXStreet cited consensus. The ONS noted services output rose 0.1% in August from July. It had risen 0.1% in July from June. Industrial production rose 0.5% monthly in August, following a 0.7% fall in July from June. On-year, industrial output fell 1.6% in August, after a 2.2% slide in July. The annual industrial output reading fell short of the FXStreet cited consensus, which predicted a 0.5% fall. The monthly reading beat expectations of a 0.2% rise, however.
----------
The King will join UK Prime Minister Keir Starmer in meeting business leaders from across the world at a reception linked to the Labour government's first major investment summit. Buckingham Palace confirmed Charles' attendance at the event, which will take place on Monday evening at St Paul's Cathedral following the summit. Alongside the prime minister, he will meet guests from sectors including technology, energy and the performing arts. The reception will be held after around 300 industry leaders gather in London for the government's flagship investment summit, at which Starmer will pitch the UK as "open for business" as part of his bid to drive growth into the country. Confirmed speakers include Ruth Porat, chief investment officer at Alphabet and Google, Alex Kendall, chief executive of AI firm Wayve, and Bruce Flatt, head of Brookfield Asset Management.
----------
Taoiseach Simon Harris has hit back at criticism of his curtailed two-day trip to Washington DC. The initial schedule for the trip included a large reception for hundreds of guests in the White House's Rose Garden to mark the centenary of diplomatic relations between the US and Ireland. The event was called off due to the US administration's shifting focus to the hurricane which was barrelling towards Florida. Several opposition politicians have said Harris should not have accepted the invitation to the White House – while Sinn Fein described the visit as a "wasted opportunity" on the Middle East. Speaking to reporters at the final event of his itinerary, Harris hit back at characterisations of the White House engagement as a glorified photo opportunity. He further said it was "absolutely absurd" to suggest the visit was a waste of time and money.
----------
BROKER RATING CHANGES
----------
JPMorgan places Croda on 'negative catalyst watch'
----------
JPMorgan cuts Vistry to 'neutral' (overweight) - price target 970 (1,550) pence
----------
COMPANIES - FTSE 100
----------
BP said it expects to report better than expected Upstream production for the third-quarter, but refining margins are to be "weaker". The oil major said it expects to show a higher net debt for the end of the quarter, "driven primarily by the impact of weaker realized refining margins and by the rephasing of around USD1 billion of divestment proceeds into the fourth quarter". BP said that in its products segment, there will be "weaker realized refining margins" in the range of USD400 million and USD600 million. Brent prices were weaker over the course of the third quarter, BP added. The North Sea benchmark averaged USD80.34 a barrel in the third-quarter, down from USD84.97 in the second. In the Upstream division, production for the quarter is now expected to be "broadly flat compared to the prior quarter". It had previously expected output to be lower than the second-quarter's. BP announces third-quarter results on October 29.
----------
COMPANIES - FTSE 250
----------
Hays reported a decline in net fees in its first-quarter, as the recruiter continues to be hurt by "tough market conditions". Net fees declined 15% on-year in the quarter ended September 30. There was a 21% decline in permanent recruitment net fees, and a 11% fall in temporary. Chief Executive Dirk Hahn said: "Net fees in the quarter were down as expected reflecting the tough market conditions, particularly in Perm where we see longer time to hire and low levels of confidence which we expect to continue. Given this backdrop, we remain resolutely focused on operational rigour through business line prioritisation, resource allocation, and efficiency initiatives." Hays noted that consultant headcount decreased by 2% in the quarter and by 18% year-on-year. It added: "We believe our consultant headcount capacity is appropriate for current market conditions and expect this will remain broadly stable in Q2 25. Our focus on business line prioritisation and optimal resource allocation will position Hays strongly for when end markets recover." Its current financial year will benefit from some cost savings, it added. It will see an annualisation of GBP60 million worth of savings secured in the prior year, and the initial boost from GBP30 million worth of savings it is aiming for by the end of financial 2027. "This programme is progressing well and, as a result of our actions, our current periodic cost base is slightly below GBP80 million, lower than our previous guidance of GBP82 million," Hays added. Looking ahead, it expects pre-exceptional operating profit for the first-half to be weaker than the second half of the prior financial year.
----------
OTHER COMPANIES
----------
E-commerce firm THG said it raised GBP95.4 million from an "oversubscribed and upsized fundraise", and it noted backing from Sports Direct owner Frasers Group. The firm had on Thursday said that it is seeking to raise GBP75 million from investors to help "demerge" its Ingenuity division. The fundraise saw "strong support from new investors and existing shareholders". Frasers made a "strategic investment" of GBP10 million in the company, THG added. That backing is "in addition" to the money raised to demerge the Ingenuity unit. THG raised the funds at 49 pence per share, a 5.2% discount to its closing price on Thursday. Funds will help go towards the demerger of its Ingenuity arm, which THG first announced in September. Ingenuity, the firm's technology platform will trade as a standalone independent private entity and have no recourse to THG post demerger, the Manchester-based e-commerce retailer said. The remaining group will consist of what THG called its "highly cash generative" Beauty and Nutrition divisions. THG's board has approved a valuation of Ingenuity of GBP100 million. THG on Thursday said that what remains of the company following the demerger will be included in the FTSE UK Index reclassification in March 2025.
----------
Saga, a provider of services to people aged 50 and over, said it is in exclusive with Belgian insurer Ageas to establish a 20-year partnership for motor and home insurance. In addition, a deal could see Ageas acquire Saga's Insurance Underwriting business, Acromas. Saga said in the partnership, dubbed Affinity, Ageas would pay GBP80 million upfront and potentially GBP30 million in a contingent consideration in 2026, and up to GBP32 million in 2032. The additional considerations will be subject to policy volume and profit targets. To acquire Acromas, Ageas would pay a total of GBP67.5 million, meanwhile, Saga added. Separately, Saga said its pretax loss in the half-year to July 31 stretched to GBP104.0 million from GBP77.8 million. Its bottom line was hurt by a GBP138.3 million impairment in Insurance Broking goodwill. Revenue rose 13% on-year to GBP404.8 million from GBP358.1 million.
----------
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.