4th Jan 2023 07:48
(Alliance News) - Stocks in London are set to open higher on Wednesday, continuing a decent start to the new year and for now overlooking recessionary fears which are hanging over markets.
The FTSE 100 had added 1.4% on Tuesday.
US stocks fell overnight, spooked by a poor US purchasing managers' index print. PMI reports from across the eurozone, as well as another US reading, come later on Wednesday. Minutes from the Federal Reserve's most recent meeting are posted in the evening.
In the UK, shop price inflation faded ever-so-slightly last month, figures showed, as consumer brace for another "difficult year".
According to the latest British Retail Consortium-NielsenIQ tracker, shop price annual inflation decelerated to 7.3% in December, from 7.4% in November.
China's Covid situation remained in focus.
An "overwhelming majority" of the EU's 27 member countries want passengers coming from China to be systematically tested for Covid before departure, the European Commission said.
However, travellers testing positive for Covid after arriving in the UK from China will not be forced to quarantine, a UK Cabinet minister said.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called up 27.21 points, or 0.4%, at 7,581.30
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Hang Seng: up 2.8% at 20,715.46
Nikkei 225: closed down 1.5% at 25,716.86
S&P/ASX 200: closed up 1.6% at 7,059.20
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DJIA: closed down just 10.88 points at 33,136.37
S&P 500: closed down 0.4% at 3,824.14
Nasdaq Composite: closed down 0.8% at 10,386.98
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EUR: higher at USD1.0577 (USD1.0550)
GBP: higher at USD1.2006 (USD1.1980)
USD: lower at JPY130.49 (JPY130.89)
Gold: higher at USD1,850.95 per ounce (USD1,829.14)
Oil (Brent): lower at USD81.66 a barrel (USD83.03)
(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 EU services PMI
09:55 CET Germany services PMI
09:30 GMT UK money and credit
09:30 GMT UK monetary and financial statistics
07:00 EST US MBA weekly mortgage applications survey
08:55 EST US Johnson Redbook retail sales index
10:00 EST US ISM manufacturing PMI
10:00 EST US job openings and labor turnover survey
14:00 EST US Federal Open Market Committee meeting minutes
16:30 EST US API weekly statistical bulletin
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The new general secretary of the Trades Union Congress has called for an urgent meeting with the UK Prime Minister Rishi Sunak in a bid to break the deadlocked industrial disputes sweeping across the country. Paul Nowak called for a change in government direction, saying ministers should open pay negotiations with unions. It comes as rail workers continue a 48 hour strike, with more stoppages planned this month in the transport industry, NHS and civil service. In a letter to Sunak, Nowak said public services were in crisis after years of "underfunding and understaffing." He wrote: "We can't solve these problems without a fair deal for the people on the frontline. "Every month experienced employees are quitting, with one in three public service staff now taking steps to leave their professions or actively considering it. Around half of Britain's railway lines are closed and only a fifth of services are running as tens of thousands of workers at Network Rail and train operators walk out on the second day of the strike, with another to begin on Friday. On Wednesday, the DVSA driving examiners' strike starts in London, the South East, South Wales and the South West, while traffic officer service workers at National Highways will continue their walkout. Meanwhile, industrial action by the UK-wide National Highways and Rural Payments Agency staff will continue. London bus workers at Abellio will also begin a two-day strike – the first in a series of action planned by the group throughout January.
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Demand weakness further drove the downturn in Japan's manufacturing sector in December, data from S&P Global showed. The au Jibun Bank S&P Global manufacturing purchasing managers' index fell to 48.9 in December, from 49.0 in November. This marked the second consecutive month of deterioration for the sector. Any figure above 50.0 denotes growth, while a number below suggests decline. The greatest influence on decline in the headline PMI number came from new orders, said S&P Global. "Forward looking indicators are increasingly painting a gloomier picture for Japan's manufacturing sector in the future. Companies have cut back input buying sharply, and business sentiment waned to a seven-month low," explained Laura Denman, economist at S&P Global Market Intelligence.
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BROKER RATING CHANGES
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Bernstein cuts Aveva to 'market-perform' ('out-perform') - price target 3,200 (2,900) pence
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Jefferies cuts Capricorn Energy to 'hold' ('buy') - price target 270 (290) pence
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Jefferies cuts CVS Group to 'hold' ('buy') - price target 2,060 (1,970) pence
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COMPANIES - FTSE 100
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Flutter Entertainment has begun approaching candidates to become its next chair, Sky News reported. The gambling group operating brands such as Sky Bet and Paddy Power has hired search firm Russell Reynolds Associates to identify a successor to Gary McGann. The company hopes to name a successor later in 2023, according to city sources, Sky News said. McGann joined the board in November 2014, meaning he would no longer be deemed independent under the City corporate governance code by the end of this year. Senior Independent Director Holly Keller Koeppel is leading the search for its next chair, reported Sky News.
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RS Group completed its USD275 million acquisition of Mexican automation product distributor, Risoul. RS originally announced the acquisition in August and said at the time that the deal would "significantly strengthen" its position in Mexico. For the year that ended on September 30, Risoul generated revenue of USD166 million and earnings before interest and tax of USD19 million.
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COMPANIES - FTSE 250
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Home REIT said that Alvarium RE as entered into an agreement to sell its investment advisor, Alvarium Home REIT Advisors, to a newly formed entity owned by the management of Alvarium Home REIT Advisor. The real estate investor explained that the arrangements were made prior to the recently completed merger and listing of Alvarium Investments in the US. The firm added that all arrangements in regard to its investment advisory agreement with Alvarium Home REIT remain unchanged.
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OTHER COMPANIES
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Ryanair reported double-digit growth in passenger traffic in December against the previous year. Passenger numbers grew 21% to 11.5 million from 9.5 million the previous year. The airline operated over 65,500 flights in December with a load factor of 92%, compared to 81% a year prior. For the whole of 2022, traffic more than doubled to 160.4 million guests.
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Textile technology firm HeiQ said that sales in the fourth quarter of 2022 were impacted by a "significant" deterioration in consumer demand as a result of worsening macroeconomic conditions. This reduction in sales has also been compounded by brands increasing their levels of inventory to all-time highs after the pandemic, due to persisting supply chain concerns. Consequently, HeiQ's customer base had around 70% less demand in the final quarter of 2022. Sales in China especially suffered due to pandemic related lockdowns. HeiQ now expects revenue for the year to be 20% below market expectations at between USD54 million and USD55 million. The firm's pretax loss is expected between USD2.5 million and USD3.5 million.
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Seeing Machines announced three collaborations for solutions ranging from vision-based sensing for low-light driving conditions to infrared driver and high-speed camera connectivity to help monitor driver fatigue and distraction. They will be showcased at the CES 2023 industry event this week. Chief Executive Paul McGlone said: "The strategic partnerships we have agreed with other leading technology firms, coinciding with CES 2023, are testament to the best-in-class driver monitoring solutions that we have developed over 20 years. These solutions are increasingly being adopted by global automakers that need to meet new safety-standard requirements for all their car models in the near future."
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By Heather Rydings, Alliance News senior economics reporter
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