17th Dec 2024 07:57
(Alliance News) - The FTSE 100 was called to open lower on Tuesday, as central banks in China, the US, Japan and the UK prepare to announce their interest rate decisions this week.
"After the French snap election led to a divided government and an ungovernable France since summer, German politicians gave a no-confidence verdict... [and] will join their French neighbours in political gridlock and uncertainty," commented Swissquote's Ipek Ozkardeskaya. "As a result, the Stoxx 600 appears to be peaking ahead of what's shaping up to be a chaotic Christmas in Europe, while the US continues to revel in the joys of life. There, the atmosphere is completely different.
"The Federal Reserve is preparing to announce an additional 25bp cut that the country doesn't necessarily need on top of a 75bp cut delivered since September."
In corporate news, Chemring reported rising revenue and profit, while Bunzl put out an optimistic trading update.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 47.2 points, 0.6%, at 8,214.85
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Hang Seng: down 0.3% at 19,742,25
Nikkei 225: down 0.2% at 39,364.68
S&P/ASX 200: up 0.8% at 8,314.00
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DJIA: closed down 110.58 points, 0.3%, at 43,717.48
S&P 500: closed up 0.4% at 6,074.08
Nasdaq Composite: closed up 1.2% at 20,173.89
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EUR: lower at USD1.0501 (USD1.0504)
GBP: higher at USD1.2704 (USD1.2694)
USD: higher at JPY153.94 (JPY154.23)
Gold: higher at USD2,655.27 per ounce (USD2,650.30)
(Brent): higher at USD74.09 a barrel (USD73.82)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
11:00 CET eurozone trade balance
11:00 CET eurozone ZEW economic sentiment survey
11:00 CET eurozone European Central Bank executive board member Frank Elderson speaks
10:00 CET Germany Ifo business climate
11:00 CET Germany ZEW economic sentiment survey
08:30 EST US retail sales
08:55 EST US Redbook index
09:15 EST US industrial production
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The UK's unemployment rate remained flat while growth in average earnings notched up a bit. The Office for National Statistics reported that unemployment in the three months to the end of October remained unchanged at 4.3%, compared to the three months to the end of September. Over the same time, the growth in average earnings including bonuses picked up to 5.2% from 4.4%, easily beating the FXStreet-cited consensus of 4.6%. Average earnings growth excluding bonuses increased to 5.2% from 4.9%, outperforming the consensus of 5.0%. Lindsay James, investment strategist at Quilter Investors, said that the data "reflects a labour market that is not yet budging under the strain of the economic headwinds it's facing".
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A former Conservative business secretary and the chair of Rolls-Royce will join trade unionists and business leaders to advise the government on its growth "mission". Greg Clark, who served as business secretary under Theresa May, is one of 16 people appointed to help the government formulate its industrial strategy. Clark, who launched a previous industrial strategy as business secretary in 2017, will join Rolls-Royce Chair Anita Frew and Octopus Energy chief executive Greg Jackson at the first meeting of the Industrial Strategy Advisory Council on Tuesday. Announcing the advisory council ahead of its first meeting, the Department for Business & Trade said the body would help the government "maintain a pro-business environment". Chancellor Rachel Reeves said: "Driving long-term economic growth requires ambition and collaboration. With the Industrial Strategy Advisory Council, we're bringing together the brightest minds to inform our industrial strategy and deliver growth that will improve living standards and that can be felt across every corner of the UK." Chaired by senior Microsoft executive Clare Barclay, other members include TUC assistant general secretary Kate Bell, Barclays UK Chair John Kingman and Shriti Vadera, who chairs both Prudential and the Royal Shakespeare Co. Bell welcomed her appointment, saying the proposed industrial strategy "can show the way to delivering better jobs across the country".
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Donald Trump said on Monday night that he had chosen the former investment bank founder and forthright China hawk George Glass as the next US ambassador to Japan, the Financial Times reports. The president-elect announced his nomination of Glass, who served as US ambassador to Portugal during Trump's first presidency, on the Truth Social network. The appointment follows a marked hardening of the US stance towards China during the Biden administration, and efforts to fortify the Japan-US alliance in the face of rising regional tensions. Trump said that Glass, who co-established Pacific Crest Securities in 1990 and was a major fundraiser during this year's campaign, would bring "his business acumen to the Ambassador's position".
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Canada's Deputy Prime Minister Chrystia Freeland quit in a surprise move after disagreeing with Justin Trudeau over US President-elect Donald Trump's tariff threats. The resignation of Freeland, 56, who also stepped down as finance minister, marked the first open dissent against Prime Minister Trudeau from within his cabinet, and may threaten his hold on power. Liberal leader Trudeau lags 20 points in polls behind his main rival, Conservative Pierre Poilievre, who has tried three times since September to topple the government and force a snap election. "Our country today faces a grave challenge," Freeland said in her resignation letter to Trudeau, pointing to Trump's planned 25% tariffs on Canadian imports. "For the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada."
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US President-elect Donald Trump praised Japan's SoftBank for its decision to invest USD100 billion in the US and create 100,000 new jobs, a big win for his incoming administration. "This historic investment is a monumental demonstration of confidence in America's future," Trump said during a press conference at his Mar-a-Lago residence in Florida, flanked by SoftBank chief executive Masayoshi Son. "It will help ensure that artificial intelligence, emerging technologies and other industries of tomorrow are built, created and grown right here in the USA," added Trump, who takes office from US President Joe Biden next month. Speaking alongside Trump, Son confirmed the investment company's financial commitment, adding that Trump's victory had "tremendously increased" his confidence in the US economy.
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France's central bank downgraded its 2025 growth forecast to 0.9% from 1.2%, citing "increased uncertainty" for the economic outlook both at home and abroad. The bank also reduced its forecast for 2026 by 0.2 percentage points to 1.3% – a figure it also expects for 2027. The latest forecasts come two days after Moody's downgraded France's credit rating to Aa3 on the back of months of political crisis and a budget standoff that brought a change of prime minister. For 2024, the bank maintained its projection at 1.1%, as in 2023, based on a fourth quarter of zero growth. The new macroeconomic projections have been made "in a national and international context of increased uncertainty", explained Olivier Garnier, Banque de France director general of statistics, studies & international affairs.
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China's foreign minister said that Beijing and Washington can achieve "many great things" if they work together, ahead of next month's inauguration of president-elect Donald Trump. But top diplomat Wang Yi also warned against what he called the US' "crude interference" on the issue of Taiwan. Wang said China's policy towards the US "has not changed" during a Tuesday address in Beijing that reflected on the country's diplomatic work in the past year and its expectations for the future. He said that economic working groups and cooperation on cross-border drug control "fully prove that as long as China and the US cooperate, we can accomplish many great things". He also, however, repeated a warning over Taiwan, saying Beijing "resolutely opposed illegal and unreasonable suppression by the US, especially its crude interference in China's internal affairs" including the status of the self-ruled island. "We must take a firm and strong response, resolutely defend our own legitimate rights and interests, and safeguard the basic norms of international relations," Wang said. Taiwanese officials said last week that China had held its biggest maritime drills around the island in years, deploying around 90 ships from near the southern islands of Japan to the South China Sea.
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German President Frank-Walter Steinmeier has a marathon series of talks ahead of him after Chancellor Olaf Scholz requested that the Bundestag be dissolved and a new election be called. Before granting that request, Steinmeier plans to talk to the leaders of all the parliamentary groups and factions in the Bundestag to determine whether there is still a possibility for a stable government majority. Sources told dpa that Rolf Mutzenich, of Scholz's centre-left Social Democrats, and opposition leader Friedrich Merz, from the conservative Christian Democrats, are expected at Bellevue Palace, the presidential residence, this Tuesday. On Wednesday, the Green parliamentary group leaders Katharina Droge and Britta Hasselmann are invited, followed by the pro-business Free Democrats parliamentary group leader Christian Durr. On Thursday, the president will then speak with Alice Weidel and Tino Chrupalla of the far-right Alternative for Germany, as well as with Heidi Reichinnek and Soren Pellmann from the Left Party, and then with Sahra Wagenknecht from the upstart BSW.
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South Korean prosecutors on Tuesday told impeached President Yoon Suk Yeol to appear by the weekend for questioning over his failed martial law bid or face possible arrest, the Yonhap news agency said. Yoon, suspended from office by parliament on Saturday, is being investigated over alleged insurrection by both South Korean prosecutors and a joint team of police, defence ministry and anti-corruption investigators. The president and some of his inner circle face possible life imprisonment, or even the death penalty, if found guilty. He remains under a travel ban. The joint investigation unit also launched a raid on Yoon's security service in an attempt to obtain phone records. The unit had previously asked that the suspended president appear to answer questions on Wednesday but were rebuffed by his office, an official told reporters.
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BROKER RATING CHANGES
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Kepler Cheuvreux starts Marks & Spencer with 'buy' - price target 467 pence
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UBS raises London Stock Exchange to 'buy' (neutral) - price target 13,500 (11,500) pence
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COMPANIES - FTSE 100
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Bunzl said it expects 2024 revenue to be up 3% on 2023 at constant currency, "driven by acquisitions", but either flat or down 1% at reported rates. Within underlying revenue, it expects volume growth in the third quarter to continue in the fourth quarter. However it said deflation is likely to be more persistent than previously anticipated, with Continental Europe in particular having a slight impact on adjusted operating profit for the year. Nonetheless, it expects adjusted operating profit in 2024 to represent a strong annual increase at constant exchange rates, with a "strong" anticipated operating margin. "Looking ahead, despite uncertainties relating to the wider economic and geopolitical landscape, the group expects robust revenue growth in 2025, at constant exchange rates, driven by announced acquisitions and slight underlying revenue growth," Bunzl added.
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COMPANIES - FTSE 250
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Chemring for the year to October 31 declared a final dividend of 5.2 pence, up 13% on-year, also lifting its annual dividend 13% to 7.8p from 6.9p. It said its full-year performance was in line with expectations despite first-half headwinds: for example, revenue rose to GBP510.4 million from GBP472.6 million. Pretax profit increased to GBP53.3 million from GBP44.1 million, and underlying Ebitda rose to GBP93.7 million from GBP88.5 million. Chemring also said its order book at October 31 totalled GBP1.04 billion, up 16% from GBP921.6 million one year prior; and 77% of its 2025 revenue is covered by the order book. Looking ahead, it expects 2025 to be in line with expectations, including a similar weighting toward the second half.
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The UK Competition & Markets Authority has cleared Carlsberg's acquisition of Britvic. The companies' boards agreed on Carlsberg's recommended cash offer for Britvic's entire shares capital in early July. Carlsberg expects a court-sanctioned scheme of arrangement for the takeover to become effective on January 16.
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OTHER COMPANIES
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GSTechnologies reported a pretax loss of USD110,000 for the six months ended September 30, from USD737,000 the year before. Revenue increased "nearly nine-fold" on-year to USD2.2 million from USD256,000. "H1 25 was a period of significant development for the group, with a substantial increase in revenues and significantly reduced losses," commented Chair Tone Kay Kim. "We are a focused, 'pure play' fintech group with solid platforms on which to build as we continue to develop and roll out our GS Money solutions." Looking ahead, Kim added: "In the second half of the financial year we are looking to continue to grow revenues substantially from all the group's businesses...We will also continue to explore further value enhancing acquisition opportunities that can assist with accelerating the development of the group. I believe GST is extremely well positioned for the future and I look forward to reporting on our further progress in the coming months."
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By Emma Curzon, Alliance News reporter
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