17th Mar 2023 07:53
(Alliance News) - London's FTSE 100 is called to open higher on Friday, ending a tumultuous week in the green.
It is still on track for a weekly loss, however, with banking sector turmoil proving to be the undoing of equity markets this week.
A wild week has seen banking shares sold off in light of the Silicon Valley Bank collapse and liquidity worries at Credit Suisse.
US fiscal and monetary policymakers have looked to reassure depositors and markets, however.
The Federal Reserve has lent US banks nearly USD12 billion under a new one-year lending program unveiled on Sunday. The total outstanding amount of all advances under the Bank Term Funding Program reached USD11.9 billion by Wednesday, the US central bank announced in a statement on Thursday.
US Treasury Secretary Janet Yellen said the banking system remains sound despite market anxiety.
In early UK company news on Friday, heat treatment firm Bodycote reported annual earnings growth. The UK's antitrust watchdog is concerned the takeover of healthcare software firm Emis by UnitedHealth will lessen competition.
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 0.8% at 7,467.53
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Hang Seng: up 1.5% at 19,500.19
Nikkei 225: up 1.2% at 27,333.79
S&P/ASX 200: closed up 0.4% at 6,994.80
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DJIA: closed up 371.98 points, 1.2%, at 32,246.55
S&P 500: closed up 1.8% at 3,960.28
Nasdaq Composite: closed up 2.5% at 11,717.28
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EUR: up at USD1.0665 (USD1.0619)
GBP: up at USD1.2165 (USD1.2110)
USD: up at JPY133.12 (JPY133.09)
GOLD: higher at USD1,929.43 per ounce (USD1,918.22)
(Brent): higher at USD75.23 a barrel (USD74.21)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
10:00 GMT EU consumer price index
10:00 GMT EU labour cost index
09:30 GMT UK Bank of England inflation attitudes survey
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A decision to ban TikTok from UK government phones after a security review has been criticised by China. The ban, announced on Thursday by Cabinet Office minister Oliver Dowden, will still allow ministers and officials to use the Chinese-owned app on their personal phones. Prime Minister Rishi Sunak had been under pressure from senior MPs to follow the US and the EU in barring the video-sharing app from official devices. A Chinese embassy spokesperson accused the government of acting "based on its political motive rather than facts". TikTok, owned by Chinese internet company ByteDance, said it was "disappointed" with the decision and said bans were based on "fundamental misconceptions and driven by wider geopolitics". As ministers were urged to go further and remove it from personal devices as well, Cabinet minister and prominent parliamentary TikToker Grant Shapps vowed to continue using it with precautions on his own phone. Dowden announced the "precautionary move" – which is not being extended to members of the public – with "immediate effect". He said it was a prudent and proportionate step following "advice from our cyber security experts" as he noted risks around how sensitive information can be accessed by TikTok.
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The leader of the Democratic Unionist Party has denied being pressured by US politicians to sign up to the new Brexit deal on trade for Northern Ireland. Jeffrey Donaldson told the PA news agency that the US administration and other political figures in Congress had been "very understanding" of his party's desire to seek further assurances from the UK government following the signing of the Windsor framework. He held talks with US national security advisor Jake Sullivan in the White House on Thursday to discuss the framework, which is aimed at removing some of the economic barriers on Irish Sea trade created by Brexit's contentious Northern Ireland protocol. The DUP is currently blocking devolution at Stormont in protest at the terms of the protocol. While the party says the Windsor framework has gone some way to address its concerns, it says some "fundamental problems" remain with the new accord. Donaldson, who is in Washington to attend St Patrick's themed events this week, is now seeking further clarity and assurances from the UK government to address his party's continuing concerns.
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BROKER RATING CHANGES
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Deutsche Bank raises GSK to 'buy' ('hold') - price target 1,700 (1,500) pence
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UBS raises London Stock Exchange Group to 'buy' ('neutral') - price target 8,700 (8,500) pence
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Exane BNP cuts Sage to 'neutral' ('outperform')
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COMPANIES - FTSE 100
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UK regulator Ofcom said it will take longer than initially planned to provide a final decision on a broadband plan by BT's Openreach arm. Ofcom said it will need two extra months for its final decision, having initially expected to make one by the end of this month. "The Equinox 2 offer is due to launch on 1 April 2023. To provide certainty and stability for industry, our view is that it would not be appropriate for the offer to launch until we issue our final decision," Ofcom said. "We are considering issuing a direction to Openreach, using our powers under the Communications Act 2003, to achieve this, unless Openreach voluntarily defers the launch of the offer." Ofcom also made reference to an interview with the Financial Times where BT Chief Executive Philip Jansen said the Openreach networking division is shaping up to be an "unstoppable machine" and its success may mean it ends in "tears" for fibre rivals. In February, Ofcom gave Equinox 2 early backing, provisionally considering it to be "not anti-competitive".
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Rolls-Royce has received funding from the UK Space Agency to develop a nuclear reactor for a moon base. The project will look into how nuclear power could be used to support a future base on the moon for astronauts. Scientists and engineers at the British company are working on the micro-reactor programme to develop technology that will provide power needed for humans to live and work on Earth's natural satellite. All space missions depend on a power source, to support systems for communications, life-support and science experiments. Experts suggest nuclear power could potentially dramatically increase the length of lunar missions. The UK Space Agency has announced GBP2.9 million of new funding for the project, which will deliver an initial demonstration of a UK lunar modular nuclear reactor.
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BP was accused of "serious" failings by a US regulator after an explosion at a refinery in Oregon, Ohio. "BP Products North America Inc violated the US Department of Labor's process safety procedures for highly hazardous materials and failed to adequately train the workers," the Occupational Safety & Health Administration said. "As the workers attempted to correct rising liquid levels in the fuel gas mix drum, a flammable vapour cloud formed, ignited and then triggered an explosion in September 2022, causing the deadly burns." The incident claimed the lives of two workers. OSHA proposed USD156,250 in penalties and "cited the company for 10 serious violations, and one other-than-serious violation".
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COMPANIES - FTSE 250
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Heat treatments and specialist thermal processing services provider Bodycote reported annual earnings growth, hailing its ability to pass "inflationary impacts to its customers". Revenue rose 21% to GBP743.6 million in 2022 from GBP615.8 million in 2021. Pretax profit surged 23% to GBP95.3 million from GBP77.5 million. "The group successfully passed on inflationary impacts to its customers during the year through price increases and energy surcharges," Bodycote said. It lifted its final dividend by 8.0% to 14.9 pence per share from 13.8p. It brings its total dividend to 21.3p, up 6.5% from 20.0p. Looking to 2023, Bodycote said: "While there are near-term macroeconomic uncertainties, we expect underlying volume to continue to grow ahead of the background markets, and margins are expected to expand as surcharges moderate."
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OTHER COMPANIES
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The UK's competition watchdog has taken aim at the GBP1.2 billion buyout of Emis buyout by New York-listed UnitedHealth. The acquisition of the healthcare software producer "could reduce competition leading to worse outcomes for the NHS and ultimately patients and UK taxpayers", the Competition & Markets Authority said. As part of its phase 1 probe, the CMA found competition in the fields of population health management and medicines optimisation software would be hurt by the deal. Both Emis and UnitedHealth-owned Optum provide software services to GPs in the UK. Emis and UnitedHealth have until next week Friday to offer proposals to remedy the CMA's concerns. Emis said: "Given the CMA's procedure for considering and accepting undertakings, Emis expects to be able to provide a further update on or around 31 March 2023, which is the statutory deadline for the CMA to determine whether the undertakings in lieu of a Phase 2 reference are acceptable in principle."
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Solar panels producer Verditek said it has signed an exclusive three-year supply agreement with Lindab Profil. Verditek has granted Lindab exclusivity to sell solar building materials in the Nordic countries and eastern Europe. "The agreement has no minimum purchasing obligations for Lindab and there is no guarantee that Lindab will place any orders. However, Verditek has already supplied over EUR100,000 worth of panels to Lindab for a number of projects as well as supply panels for a test and demonstration installation at their home factory in Forslov, Sweden," Verditek said. Lindab is a Swedish firm focused on the development, manufacture and sale of building products.
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By Eric Cunha, Alliance News news editor
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