14th Apr 2023 07:58
(Alliance News) - Stocks in London are set to follow New York into the green, as hopes of a potential pivot from the Federal Reserve boosted sentiment.
In early economic news, wholesale inflation decelerated sharply in Germany last month.
In early UK company news, Dr Martens warned it will miss annual guidance slightly, thanks to weaker wholesale trade and costs from its LA distribution centre. Meanwhile, National Grid said new UK tax measures for capital expenditure will weigh on earnings per share growth over the next few years.
In the economic calendar, US retail sales come at 1330 BST, with US industrial production at 1500 BST.
Meanwhile, large US banks Wells Fargo, JPMorgan and Citigroup report their quarterly earnings, along with asset manager BlackRock.
"The main focus on this US bank earnings season [is] on how much the recent turmoil has hit the sectors profit numbers, not only in terms of the impact of loan demand, whether it be in mortgages or credit card lending, but also in terms of deposit inflow," said CMC Markets analyst Michael Hewson.
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 14.0 points, 0.2%, at 7,857.38
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Hang Seng: up 0.3% at 20,414.06
Nikkei 225: closed up 1.2% at 28,493.47
S&P/ASX 200: closed up 0.5% at 7,362.30
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DJIA: closed up 383.19 points, 1.1%, at 34,029.69
S&P 500: closed up 1.3% at 4,146.22
Nasdaq Composite: closed up 2.0% at 12,166.27
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EUR: up at USD1.1070 (USD1.1053)
GBP: up at USD1.2539 (USD1.2519)
USD: down at JPY132.50 (JPY132.41)
GOLD: up at USD2,040.28 per ounce (USD2,040.03)
OIL (Brent): up at USD86.36 a barrel (USD87.01)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
US President Joe Biden continues visit to Ireland
08:30 EDT US retail sales
09:15 EDT US industrial production
10:00 EDT US University of Michigan survey of consumers
07:45 CDT US Federal Reserve Board Governor Christopher Waller speaks
17:00 BST US BoE Monetary Policy Committee Member Silvana Tenreyro speaks
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The UK's chancellor has suggested the pension system needs reform to ensure people receive higher returns. Jeremy Hunt said he is concerned that pensioners are not getting "the returns that they could expect", according to the Daily Telegraph. The chancellor was speaking in Washington where he is attending the spring meeting of the International Monetary Fund with other finance ministers. The Telegraph reported the chancellor as saying that Britain's pensions industry is in need of "big reform" and could take inspiration from other countries which allow pension funds to seek higher returns, but which potentially take on more risk.
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Wholesale inflation in Germany slowed in March, according to Destatis figures. On an annual basis, wholesale prices rose 2.0%, cooling markedly from 8.9% in February. This was below FXStreet-cited consensus of 6.2%. "The high annual rate of change for wholesale prices mainly derives from increased prices for food, beverages and tobacco," Destatis said. On a monthly basis, prices rose 0.2% in March, compared to a 0.1% rise the previous month. Consensus had expected a 1.1% fall.
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BROKER RATING CHANGES
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JPMorgan raises Relx price target to 3,100 (2,840) pence - 'overweight'
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Barclays raises CRH price target to 55 (46) EUR - 'overweight'
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COMPANIES - FTSE 100
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National Grid updated on its recent financial year that ended March 31. The electricity infrastructure company said its annual performance was in line with its expectations. It continues to expect underlying earnings per share growth in the middle of its 6% to 8% compound annual growth rate. However, it warned that from financial 2024 to 2026, the UK government's introduction of 'full expensing' tax relief for capital expenditure will impact underlying EPS. It is "economically neutral" to the firm, however. "Expected lower cash tax payable will result in reduced revenues in UK Electricity Transmission and UK Electricity Distribution, resulting in a broadly neutral cash position. However, these impacts, alongside a corresponding increase in IFRS deferred tax liabilities, will result in a net adverse impact to statutory and underlying earnings," it explained. It expects underlying EPS growth between financial 2022 to 2026 to be at the "lower end" of its 6-8% CAGR range.
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COMPANIES - FTSE 250
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Bootmaker Dr Martens said revenue in the year to March 31 was up 10%, with revenue in the fourth quarter up 6%. In constant currency, revenue was up 4% in the year, and flat in the fourth quarter. During the final quarter, the firm noted strong direct-to-consumer trading led by retail growth, though this was partly offset by a weaker wholesale performance. In January, it had guided for annual revenue growth of between 11% and 13%. It now expects annual earnings before interest, tax, depreciation and amortisation of GBP245 million. Back in January, the firm had guided for Ebitda between GBP250 million and GBP260 million. In financial 2022, the footwear brand posted Ebitda of GBP263.0 million. The miss is a result of higher-than-expected expenses related to solving operation issues at its LA distribution centre. Dr Martens maintains its guidance of mid-to-high single-digit revenue growth on a constant currency basis in financial 2024. It expects to recognise around GBP15 million in further costs associated with the LA DC, which will be weighted in the first half. Separately, it said Chief Financial Officer Jon Mortimore would retire, and it is beginning an external search for his replacement.
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Hays said it expects second-half operating profit and conversion rate to be "modestly above" the firm half, provided activity levels remain stable in the fourth quarter ending June 30. During the third quarter, net fees rose 10% on a reported basis, or 5% on a like-for-like basis. "Growth was driven by Temp & Contracting, our largest business and a key strategic focus, as employers shifted their hiring patterns towards more flexible labour, and Perm hiring processes continued to lengthen," said CEO Alistair Cox. Germany produced a "record" performance, with like-for-like net fees rising 23% in the quarter.
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OTHER COMPANIES
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Polling firm YouGov appointed a former Meta Platforms executive as its new chief executive officer. Steve Hatch, who served as Meta's vice president for Northern Europe, will join from August 1. Last October, YouGov announced plans for its Founder & CEO Stephan Shakespeare to leave his role, and become non-executive chair from August 2023. He will replace current Chair Roger Parry. Additionally, YouGov said Nick Prettejohn would join as senior independent director from August, taking over from Rosemary Leith. "Steve brings over 30 years of relevant leadership experience and valuable sector expertise in consumer profiling, e-commerce, and business transformation with a proven track record in scaling technology platforms and digital media businesses," said Chair Roger Parry.
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By Elizabeth Winter, Alliance News senior markets reporter
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