23rd Apr 2025 08:02
(Alliance News) - London stocks opened higher on Wednesday amid renewed hopes for a de-escalation in the US-China trade war, while UK public sector borrowing in March comes in higher than anticipated.
Pepperstone analyst Michael Brown, however, noted "the longer we go without trade deals being struck, or even signs of concrete progress being made, the more the issue is likely to weigh on sentiment. This is particularly the case when, not only are we still waiting for sector-specific tariffs on chips and pharma, but also when the first few trade deals will likely be used as a blueprint for other countries to strike agreements and remove their own 'reciprocal' tariffs."
Gold continued its retreat from the USD3,500 mark crossed on Tuesday, coming in at USD3,306.42 at the London market open on Wednesday, while the dollar began to advance against the yen, at JPY141.63.
In early corporate news, Croda International reports first-quarter sales growth and THG rejects a bid from Selkirk for its Myprotein brand.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: opened 1.2% higher at 8,427.49
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Hang Seng: up 2.3% at 22,055.74
Nikkei 225: closed up 1.9% at 34,868.63
S&P/ASX 200: closed up 1.4% at 7,925.70
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DJIA: closed up 1,016.57 points, or 2.7%, at 39,186.98
S&P 500: closed up 129.56 points, or 2.5%, at 5,287.76
Nasdaq Composite: closed up 429.52 points, or 2.7%, at 16,300.42
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EUR: down at USD1.1386 (USD1.1479)
GBP: down at USD1.3323 (USD1.3383)
USD: up at JPY141.63 (JPY140.73)
Gold: down at USD3,306.42 per ounce (USD3,425.98)
(Brent): up at USD68.49 a barrel (USD67.62)
(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 CEST eurozone flash composite PMI
11:00 CEST eurozone trade balance
11:00 CEST eurozone construction output
21:15 CEST eurozone European Central Bank Governor Philip Lane speaks
21:45 CEST eurozone European Central Bank executive board member Piero Cipollone speaks
09:30 CEST Germany flash composite PMI
09:30 BST UK flash composite PMI
11:30 BST UK Bank of England Chief Economist and Executive Director Huw Pill speaks
18:15 BST UK Bank of England Governor Andrew Bailey speaks
19:00 BST UK Bank of England Deputy Governor Sarah Breeden speaks
14:35 BST US Federal Reserve Governor Christopher Waller speaks
14:45 BST US flash composite PMI
15:00 BST US new home sales
15:30 BST US EIA crude oil stocks
13:30 BST US building permits
19:00 BST US Fed's Beige Book
US IMF Spring meeting
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UK public sector net borrowing was higher than expected in March, figures released by the Office for National Statistics showed on Wednesday. Public sector borrowing totalled GBP16.44 billion in March, up from GBP12.31 billion in February and higher than GBP12.7 billion the year before. It also exceeded an FXStreet-cited consensus of GBP16.05 billion. Notably, February's net borrowing was revised up from a previously reported GBP10.71 billion, which the ONS said was primarily due to improvements of its estimation of the monthly profile of local government debt. It has not changed the quarterly values, it added. It was the third-highest March borrowing since monthly records began in 1993, the ONS noted. "Compared with the annual value of the UK's economy, borrowing in the [full year ended] March 2025 was provisionally estimated at 5.3% of the UK’s gross domestic product, 0.5 percentage points more than in the same twelve-month period a year earlier and the eighth highest value since the financial crisis in the FYE 2009," said the ONS. Borrowing for the year ended March 31 is provisionally estimated at GBP151.9 billion, higher than a GBP137.3 billion forecast by the Office for Budget Responsibility and GBP20.7 billion more than the year before. Also, it reported the current budget deficit was estimated at GBP74.6 billion in the year to March, against a GBP60.7 billion OBR forecast. The deficit was up GBP12.6 billion on-year.
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UK Chancellor Rachel Reeves has pledged to "defend Britain's interests" as she prepares to meet fellow finance ministers in Washington and push for a US trade deal. Reeves will spend three days in the US capital for the International Monetary Fund's spring meetings, which bring together finance ministers and business leaders from across the G7 and G20. It comes amid worldwide economic uncertainty after the IMF said the impact of US President Donald Trump's global tariffs will significantly slow growth in economies around the world, including the UK. The organisation said on Tuesday it is slashing its global growth forecast by 0.5 percentage points this year, with nearly all countries seeing a downgrade. While she champions Britain as a destination for investment, Reeves will also hold her first face-to-face meeting with American counterpart Scott Bessent for talks on an economic deal between the US and UK. As well as seeking to make progress on a US deal, Reeves is also expected to discuss improving trading relations with other nations – something she has previously said the government is keen to do.
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The trade stand-off between Washington and Beijing is not sustainable, US Treasury Secretary Bessent said, predicting the tit-for-tat tariff war would de-escalate soon. Speaking at a closed-door event hosted by JPMorgan Chase, Bessent said the enormous tariffs the world's two biggest economies placed on each other's imports amounted to a reciprocal trade embargo. Bessent was referring to new duties Washington and Beijing have imposed this year. Bessent told the event that he expects a de-escalation in the near future, according to a person who was in the room. He noted that the trade embargo now involves both sides. Such a development should bring markets some relief, he added at the event, which was not open to media. Bessent said there is much to be done at the end of the day with Beijing. But he noted the need for fair trade and said that China needs to rebalance its economy. The Treasury chief stressed that the goal is not to decouple with China, adding that Washington wants to stay engaged – in a manner it considers more fair. He noted that container bookings between both countries have slumped recently as trade tensions heated up. Bessent acknowledged that negotiations with China will likely be tough, however, although reiterating that neither side believes the current situation can carry on indefinitely. On Tuesday, White House Press Secretary Karoline Leavitt told reporters that Washington is "doing very well in respect to a potential trade deal with China." She added: "The president and the administration are setting the stage for a deal...the ball is moving in the right direction."
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The US president said he has no plans to fire Federal Reserve Chair Jerome Powell, whom he has recently berated in criticism that sparked market turmoil. "I have no intention of firing him," President Donald Trump said. "I would like to see him be a little more active in terms of his idea to lower interest rates – it's a perfect time to lower interest rates."
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Efforts to find an end to the war in Ukraine will continue in London with officials from Kyiv along with US and European allies discussing ways to end the bloodshed. The talks have been downgraded from the high-level meeting of ministers which had been expected after US Secretary of State Marco Rubio pulled out. Donald Trump's envoy for Ukraine and Russia Keith Kellogg will represent Washington in the discussions in London instead. The US state department blamed a scheduling issue for Mr Rubio's absence, but it suggests the chances of a breakthrough in London are limited. Meanwhile, Steve Witkoff – a Trump envoy who has been deeply involved in negotiations – is set to return to Moscow this week. Ukraine could be forced to swallow a bitter pill under terms being ironed out between the US and Russia, according to the Financial Times. Russian leader Vladimir Putin has offered to halt his invasion of Ukraine across its current front lines, the newspaper reported. Among the ideas floated by the US for the settlement are Moscow's continued control of occupied Ukrainian regions, and US recognition that Russia owns the Crimean peninsula, the FT said. Ukrainian President Volodymyr Zelensky is unlikely to accept the surrender of Crimea and called for an unconditional ceasefire as the first step to negotiations to end the war.
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Business activity in Japan grew again in April, while the decline in manufacturing decelerated, purchasing managers' index survey results published by S&P Global showed on Wednesday. The au Jibun Bank flash Japan composite PMI output index rose to 51.1 points in April from 48.9 in March. Climbing above the neutral 50-point mark separating growth from contraction, it indicates a return to growth in April. The flash services business activity index improved to 52.2 points in April from 50.0 in March. The flash manufacturing output index rose to 48.9 points in April from 46.6 in March, indicating the pace of manufacturing decline slowed in April. The headline flash manufacturing PMI edged up to 48.5 points in April from 48.4 in March, which S&P Global said indicated a continued decline in the health of the sector for the tenth straight month. "The reading was the second-lowest seen for just over a year, but was consistent with a modest deterioration overall. Helping to lift the index slightly was the softest drop in factory production for four months. However, overall new orders declined at a solid pace that was the fastest since February 2024, with the downturn in new export business also gathering pace," S&P Global said. The composite PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies and a panel of around 400 manufacturers in Japan. The responses were collected between April 9 and 17.
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BROKER RATING CHANGES
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JPMorgan cuts Vodafone to 'underweight' (neutral) - price target 62 (72) pence
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Jefferies cuts Aston Martin price target to 70 (120) pence - 'hold'
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Barclays cuts Flutter Entertainment price target to 23,500 (24,400) pence - 'overweight'
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COMPANIES - FTSE 100
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Fresnillo reported attributable gold production in the first quarter that ended March 31 is up 11% on-year, as a result of higher ore grade, increased volumes of ore process and recovery rates at Herradura, though offset by lower ore grade at Saucito and lower ore grade and volume of ore processed at Cienega. Attributable silver production for the quarter, however, was down 8.4% from the year before, due to the cessation of mining activities at San Julian, as well as a decreased ore grade and volume of ore processed at Cienega. Against the prior quarter, gold production fell 24% to 156,100 ounces and silver production declined 9.7% to 12.4 million ounces. The Mexico-focused precious metals producer maintains its prior outlook for 2025, with attributable silver production expected between 49.0 million and 56.0 million ounces and attributable gold production expected between 525,000 and 580,000 ounces. This compares to silver production of 56.3 million ounces and gold production of 631,573 ounces in 2024. Attributable lead production for 2025 is forecast at 56,000 to 62,000 ounces and attributable zinc production is projected to be between 93,000 and 103,000 ounces.
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Croda International said sales in the first quarter that ended March 31 total GBP442 million, up 8.1% from GBP409 million the year before. The specialty chemicals firm said sales within its Life Sciences arm improved 10% to GBP134 million, its Consumer Care unit delivered 7.6% on-year growth to GBP255 million, and Industrial Specialties sales increased 6.0% to GBP53 million. Adjusted pretax profit for the quarter is "in line with our expectations", noted Croda, as "sales growth was driven by higher sales volumes with the price/mix headwinds we saw in 2024 starting to diminish". Croda said it has successfully implemented its plan to realise GBP25 million in cost savings during 2025 and identify further opportunities to improve operational efficiency. The company maintains its 2025 adjusted pretax profit guidance of GBP265 million to GBP295 million, which would represent at least a 1.9% rise from GBP260.0 million in 2024.
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OTHER COMPANIES
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Fast-moving consumer products manufacturer and distributor Supreme expects to report revenue of around GBP235.0 million for its financial year that ended March 31, rising 6.3% from GBP221.1 million the year before but falling short of an around GBP240 million company-compiled market consensus. Adjusted earnings before interest, tax, depreciation and amortisation are anticipated to be at least GBP40.0 million, up 5.0% from GBP38.1 million a year prior and in line with analyst forecasts. Supreme also expects trading for financial 2026 to be in line with market expectations, citing a consensus for revenue of around GBP231 million and adjusted Ebitda of about GBP36.6 million. "The board remains confident of the group's future prospects", Supreme said, with its acquisitions of both Clearly Drinks and Typhoo Tea during the year seeing the group's entry into the soft drinks and hot beverages market. The company notes that vape sales remain in line with internal estimates ahead of the UK disposable vape ban scheduled for June 1. Supreme will release financial 2025 results on July 1.
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THG confirms it has received and rejected a "wholly unsolicited, largely unfunded, highly conditional and non-binding" bid for the acquisition of its Myprotein brand from Selkirk. The offer had ascribed a headline value of GBP400 million to GBP600 million to Myprotein, the e-commerce retailer said, with the consideration primarily in the form of newly-issued Selkirk shares, and the remainder payable in cash from a new equity and debt issuance. The issuance "was largely unfunded and without appropriate detail on the source", THG said. The company believed the offer to "fundamentally" undervalue the Myprotein brand and its prospects, and confirms there has been no further engagement with Selkirk since the proposal was rejected. THG is due to release its full-year results and a first-quarter trading update around April 30.
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By Emily Parsons, Alliance News reporter
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