22nd May 2025 07:52
(Alliance News) - London's FTSE 100 is called to open lower on Thursday, following underwhelming trade in Asia, and a slump in New York, where US fiscal worries weighed.
A weak 20-year bond auction compounded the worries on Wednesday.
"Because here's the bottom line: the strength and credibility of the US Treasury market is the real foundation of the US exceptionalism narrative. It's not Apple or Nvidia. It's the fact that the US has been able to fund its economy and respond to crises through this unparalleled debt market. That's what's made the US so globally dominant. And that special status is something investors gave—and something they could take away," Swissquote analyst Ipek Ozkardeskaya commented.
"We saw clear signs of that yesterday when the US Treasury's 20-year bond auction fell flat. Yields hit around 5.10%—the highest since the tenor was reintroduced in 2020. Weak demand triggered a broader selloff across the curve, pushing 10-year yields to 4.60% and 30-year yields back above the 5% mark. This was the market's way of signalling a lack of confidence in the US government and its policy direction."
In early UK corporate news, BT reported growth in annual profit, miner Rio Tinto announced its boss will step down and Johnson Matthey pledged a capital return to shareholders after selling a unit to Honeywell International.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called down 0.5% at 8,727.96
----------
Hang Seng: down 1.1% at 23,557.09
Nikkei 225: down 0.8% at 36,985.93
S&P/ASX 200: down 0.5% at 8,348.70
----------
DJIA: closed down 816.80 points, 1.9%, at 41,860.44
S&P 500: closed down 1.6% at 5,844.61
Nasdaq Composite: closed down 1.4% at 18,872.64
----------
US 10-year Treasury yield: 4.58% (4.54%)
US 30-year Treasury yield: 5.09% (5.02%)
----------
EUR: lower at USD1.1327 (USD1.1389)
GBP: lower at USD1.3424 (USD1.3443)
USD: lower at JPY143.25 (JPY143.63)
GOLD: higher at USD3,330.51 per ounce (USD3,312.03)
OIL (Brent): lower at USD64.17 a barrel (USD65.08)
(changes since previous London equities close)
----------
ECONOMICS
----------
Thursday's key economic events still to come:
09:00 BST eurozone flash composite PMI
08:30 BST Germany flash composite PMI
09:00 BST Germany Ifo business climate
09:30 BST UK flash composite PMI
13:30 BST UK BoE Chief Economist Huw Pill speaks
11:50 BST UK BoE Deputy Governor Sarah Breeden speaks
12:00 BST UK BoE Monetary Policy Committee member Swati Dhingra speaks
13:30 BST US Chicago Fed national activity index
13:30 BST US initial jobless claims
14:45 BST US flash composite PMI
15:00 BST US existing home sales
15:30 BST US EIA natural gas stocks
16:00 BST US Kansas City Fed manufacturing activity
----------
UK government borrowing rose by more than expected to GBP20.2 billion last month, mounting further pressure on Chancellor Rachel Reeves to meet her fiscal rules. The Office for National Statistics, ONS, said public sector net borrowing rose to its fourth-highest April figure on record after increasing GBP1 billion year-on-year. The state borrowing figure reflects the difference between government spending and its income, largely through tax receipts. The latest figure showed that the chancellor had to borrow more money than expected over the month, surpassing analyst predictions of GBP17.6 billion. It comes as Reeves seeks to meet her fiscal rule of balancing day-to-day spending with revenues by 2029-30, while improving public services and targeting accelerated economic growth. The rise in borrowing was largely linked to increases in public sector pay, national insurance payments and higher benefits and state pensions. Deputy director for public sector finances at the ONS Rob Doody said: "At GBP1 billion higher than the same time last year, this April's borrowing was the fourth highest for the start of the financial year since monthly records began more than 30 years ago. Receipts were up on last April, thanks partly to the higher rate of national insurance contributions. However, this was outweighed by greater spending, due to rising public services' running costs and increases in many benefits and state pensions."
----------
UK consumer sentiment improved in May as domestic economic growth picked up and the threat of a global trade war cooled, survey data from the British Retail Consortium showed. According to the BRC-Opinium consumer sentiment monitor, expectations for the state of the UK economy over the next three months rose to a net score of negative 36, improved from negative 48 in April. Consumers' expectations for their personal financial situations also improved to negative 12 from negative 16. Consumer expectations of their overall personal spending remained at positive 10 in May, while expectations for their spending on retail fell to zero from three in April. The BRC said trade agreements with the US and India may have helped increase consumer confidence in May. "It is hoped the latest EU deal will drive further confidence in the outlook for the economy and personal finances," Dickinson said. Consumer expectations hit a record low in April's survey as fears for a potential trade war with the US weighed.
----------
The number of new job postings increased in the UK in April, figures showed, but the labour market is facing "strong headwinds". The Recruitment & Employment Confederation said that new postings rose to 729,029 in April, up 0.4% from a month prior. However, the overall number of active job postings fell to 1.5 million, down 4.8% from March this year. According to REC, recruiters have indicated that a mix of rising costs, the Easter holiday and US tariff-linked uncertainty played a role in this month's figures.
----------
Republicans announced Wednesday they will vote early Thursday on US President Donald Trump's sprawling domestic policy mega-bill pairing tax relief with spending cuts that critics say would decimate health care while ballooning the debt. The "One Big, Beautiful Bill Act" would usher into law Trump's vision for a new "Golden Age," achieved through cuts to public services to pay for a 10-year extension of his 2017 tax cuts. But it is dangling by a thread, with independent analysts warning it will increase the deficit by as much as USD4 trillion over a decade, rattling fiscal hawks who say the country is careening toward bankruptcy. The nonpartisan Congressional Budget Office predicted it would boost the incomes of the richest 10% while making the bottom 10% poorer, through hundreds of billions of dollars in cuts to health care and food aid. House Speaker Mike Johnson set a May 26 - Memorial Day - deadline for passing the package but is anticipating attendance problems at the back end of the week and set a rare overnight vote, expected around 0430 EDT, 0930 BST.
----------
BROKER RATING CHANGES
----------
Redburn raises Lloyds Banking Group to 'buy' (neutral) - price target 100 (60) pence
----------
Berenberg raises Central Asia Metals to 'buy' (hold) - price target 230 (190) pence
----------
COMPANIES - FTSE 100
----------
Telecommunications firm BT upped its dividend and reported annual profit growth, though "lower international sales and handsets" weighed on its top line. In the year to March 31, pretax profit rose 12% GBP1.33 billion from GBP1.19 billion. BT's profit was aided by the non-repeat of a GBP488 million impairment of goodwill incurred in the prior year. Revenue weakened 2.1% to GBP20.36 billion from GBP20.80 billion. Adjusted revenue fell at roughly the same pace to GBP20.37 billion from GBP20.84 billion. Adjusted earnings before interest, tax, depreciation and amortisation improved 1.3% to GBP8.21 billion from GBP8.10 billion. Normalised free cash flow shot up 25% to GBP1.60 billion. "Although revenue declined year-on-year driven mainly by lower international sales and handsets, strong cost control and a step-up in focus and transformation resulted in growth in both Ebitda and normalised free cash flow, allowing us to increase our dividend," Chief Executive Allison Kirkby said. BT raised its final dividend by 1.2% to 5.76 pence per share from 5.69p. Its total dividend was 2.0% higher at 8.16p per share from 8.00p. Looking to the new year, it expects an adjusted Ebitda between GBP8.2 billion and GBP8.3 billion. It predicts adjusted revenue of around GBP20 billion. Kirkby added: "The momentum in, and impact of, our full fibre programme is such that we are now raising our build target by 20% to up to 5 million UK premises in FY26, keeping us comfortably on track to reach 25 million by the end of 2026, while maintaining our cash flow guidance. We are now only one year away from our inflection to GBP2 billion of normalised free cash flow, our target for FY27, and remain on track to deliver GBP3 billion by the end of the decade."
----------
Rio Tinto said Jakob Stausholm will step down from the chief executive position "later this year", following the end of a succession process. Stausholm, appointed to the position at the start of 2021, will continue to lead the miner while a successor is appointed. "Rio Tinto Chair Dominic Barton said: "Under Jakob's leadership, Rio Tinto has restored trust with key stakeholders, aligned our portfolio with the commodities where demand growth is strongest, built a diverse and talented management team, and set a compelling growth trajectory. Our focus on these things is undiminished and our strategic priorities are unchanged. This is a natural moment to appoint Jakob's successor, as we look ahead to our next phase in which we will double down to deliver greater operational performance to realise the full potential of our assets. I would like to thank Jakob for his significant contribution to Rio Tinto at a critical time in its evolution."
----------
easyJet reported a widened half-year loss on rising costs, but it said current bookings for the seasonally stronger second half suggest it can meet consensus for the full-year. The budget carrier's pretax loss in the six months to March 31 widened to GBP401 million from GBP347 million a year prior. Its headline pretax loss stretched to GBP394 million from GBP350 million. Revenue rose 8.1% to GBP3.53 billion from GBP3.27 billion. Total headline costs rose 8.6% to GBP3.93 billion from GBP3.62 billion. Excluding fuel, total headline costs were 10% higher at GBP2.98 billion, "driven by the volume of flying, longer sector lengths, additional passengers, inflationary pressure and the growth in easyJet holidays". Stripping out the GBP50 million impact from the timing of the Easter period, which in the prior year coincided with the first half, its headline loss would have narrowed. Looking ahead, it said booking for the third quarter are 80% sold. For the fourth, they are 42% sold. "Current bookings are supportive of performance meeting FY25 consensus, although remain mindful that, consistent with this stage each year, there is still an important booking period for peak summer to go," it added. Internally compiled consensus puts annual headline pretax profit at GBP703 million, which would be a 15% rise from GBP610 million.
----------
COMPANIES - FTSE 250
----------
Johnson Matthey reported a rise in annual profit and said it has agreed to sell its Catalyst Technologies business to Honeywell International for GBP1.8 billion, promising to return the bulk of that sum to shareholders. Following the sale, Johnson Matthey said it will be sleeker outfit, focused on its emission reduction technology and platinum group metals offerings. "The sale of CT, together with the compelling investment proposition of JM, are expected to deliver substantial value to JM shareholders," it said. It plans to return GBP1.4 billion of the sale proceeds, around GBP8 per share, to shareholders. The deal is expected to be completed by the first half of the 2026 calendar year. CEO Liam Condon said: "Today's announcement represents a significant milestone in the over 200 year history of Johnson Matthey. Following on from the divestment of our Medical Devices business at a highly attractive valuation, we have now agreed to the sale of our Catalyst Technologies business for GBP1.8 billion. This allows JM to realise a very attractive valuation for this business that fully reflects its strong long-term growth prospects. We will now fundamentally re-shape Johnson Matthey into a more highly focused and leaner business. This will better position us to leverage our strong capabilities and leading market positions in Clean Air and PGM Services." For the year ended March 31, revenue fell 9.1% to GBP11.67 billion from GBP12.84 billion. However, its pretax profit jumped to GBP486 million from GBP164 million. Its bottom line was helped by a GBP482 million profit booked on the disposal of businesses. Johnson Matthey maintained its final dividend at 55.00p per share. Its total dividend was unmoved at 77.00p. Looking ahead, it expects mid single digit percentage growth in group underlying operating profit, at constant precious metal prices and constant currency. Underlying operating profit in the year just ended fell 5.1% to GBP389 million from GBP410 million. It added: "In Clean Air we expect modest growth in operating profit, with a margin of 14-15%. This is based on external data which suggest a 4% decline in global light duty vehicle production for 2025/26, before any potential impact on customer demand due to tariffs." It continued: "If PGM (platinum group metal) prices remain at their current level for the remainder of 2025/26, we expect a limited effect on full year operating profit compared with the prior year."
----------
OTHER COMPANIES
----------
Impax Asset Management said it will kick off a GBP10 million share buyback, and it reported a decline in assets under management during a "challenging" first half. Assets under management at the end of March totalled GBP23.30 billion, falling 33% from GBP35.02 billion at the end of September. It suffered GBP10.02 billion worth of net outflows. Impax said: "At the start of the period, global markets rose sharply but latterly became notably volatile, as investors struggled to interpret the decisions of the new US administration. The highly unusual equity market circumstances that prevailed in the latter half of calendar 2024 came to an abrupt end in January when Chinese artificial intelligence developer DeepSeek shocked industry watchers with the release of its new, cheaper, model, which caused a sell-off across the technology sector." In February and March, sentiment was more cautious amid tariff worries, Impax added. Impax lowered its interim dividend to 4.0p per share from 4.7p. CEO Ian Simm said: "Although many of the investment strategies that we manage lagged generic benchmarks during 2023 and 2024, there are strong signs that this period is behind us and that our investment focus can once again deliver attractive returns. Since the start of the calendar year, our relative investment performance has improved: as at 30 April 2025, 71% of our AUM had outperformed their generic benchmarks since 1 January 2025." Simm added: "As part of the board's capital management approach, we will also consider returning to shareholders surplus capital through share buybacks, while also ensuring there is sufficient capital available to fund future growth opportunities when they arise. In line with this, we intend to return up to GBP10 million of capital to shareholders before the end of the calendar year through a share buyback programme."
----------
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
Impax Asset ManagementJohnson MattheyeasyJetRio TintoBTLloydsCentral Asia Metals