1st May 2025 07:47
(Alliance News) - London stocks were called to open higher on Thursday, ahead of the manufacturing purchasing managers' index read for the UK.
The US manufacturing PMI is also due on Thursday afternoon. This follows Wednesday's news that the country's GDP contracted by more than expected in the first quarter.
"Sales tumbled 2.5%, down from 3.3%, while a core inflation gauge jumped from 2.6% to 3.5% - well above the 3.1% expected," said Swissquote's Ipek Ozkardeskaya. "The ADP report confirmed that jobs are being lost faster than forecast.
"In short: US growth contracted and inflation accelerated in Q1. That's the worst possible combination of data. Not only could the US be heading for a recession, but stagflation may be knocking on the door."
Ozkardeskaya also noted: "The eurozone economy grew by 0.4% in Q1 - dim compared to the US growth figures, but it's twice as fast as expected. Combined with eurozone countries' pledges to spend heavily on defense and security, it suggests that part of the growth loss due to the tariff war could be counterbalanced by higher government spending."
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 58.7 points, 0.7%, at 8,553.55
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Nikkei 225: up 1.0% at 36,420.91
S&P/ASX 200: up 0.2% at 8,145.60
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DJIA: closed up 141.74 points, 0.4%, at 40,669.36
S&P 500: closed up 0.2% at 5,569.06
Nasdaq Composite: closed down 0.1% at 17,446.34
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EUR: lower at USD1.1302 (USD1.1365)
GBP: lower at USD1.3296 (USD1.3357)
USD: higher at JPY144.35 (JPY142.66)
GOLD: lower at USD3,239.87 per ounce (USD3,308.91)
OIL (Brent): lower at USD60.97 a barrel (USD62.60)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
UK local elections
09:30 EDT Canada manufacturing PMI
China Labor Day. Financial markets closed.
eurozone Labor Day. Financial markets closed.
France Labor Day. Financial markets closed.
Germany Labor Day. Financial markets closed.
Ireland Labor Day. Financial markets closed.
09:30 BST UK manufacturing PMI
08:30 EDT US initial jobless claims
09:45 EDT US manufacturing PMI
10:00 EDT US ISM manufacturing PMI
10:30 EDT US EIA natural gas stocks
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US officials have reached out to their Chinese counterparts for talks on vast tariffs that have hammered markets and global supply chains, a Beijing-backed outlet said on Thursday citing sources. Punishing US tariffs that have reached 145% on many Chinese products came into force in April, while Beijing has responded with fresh 125% duties on imports from the US. And on Thursday Yuyuan Tantian, a Chinese outlet linked to state broadcaster CCTV, said citing sources that Washington was "proactively" reaching out to China via "multiple channels" for talks on the tariffs. "From a negotiation standpoint the US is currently the more anxious party," the outlet, which blends analysis with news reporting, said on the X-like platform Weibo. "The Trump administration is facing multiple pressures," it added.
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The UK "welcomes" the signing of an economic deal between the US and Ukraine, the Foreign secretary said. Late on Wednesday, the US Treasury announced a "reconstruction investment fund" for Ukraine, with Ukrainian prime minister Denys Shmyhal describing it as "truly an equal and good international deal". Ukraine's economy minister Yulia Svyrydenko confirmed both parties had signed the deal, writing on X: "I thank everyone who contributed to this Agreement and helped make it stronger. This document is capable of delivering success for both our countries — Ukraine and the US." In a post on X early on Thursday, David Lammy said: "The UK welcomes steps taken by the US and Ukraine to sign an economic partnership. The UK's support for Ukraine remains steadfast. With our 100-year partnership, we are deepening economic and security ties for the future generations of both of our countries."
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Polls in England have opened for local elections, as Labour faces its first electoral test since taking power last July. UK Prime Minister Keir Starmer's party faces a twin challenge of council and mayoral elections across England and a by-election in Runcorn & Helsby, a seat Labour won convincingly in 2024 but that is expected to go down to the wire in a contest with Reform UK. Labour has sought to cast Thursday's contest as a test not for Starmer but for Conservative leader Kemi Badenoch, with Deputy Prime Minister Angela Rayner saying the elections were "predominantly… the Tories trying to retain seats that are in the shires".
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16 EU countries have requested exemptions from the bloc's public debt rules so they can ramp up defence spending, the EU said Wednesday. In an easing of its once strict rule on budget deficits, Brussels will now let states splash out up to 1.5% of national output on defence for four years without fear of breaching its strict public debt limits. Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Slovenia, Slovakia and Finland have decided to trigger the budget exemption clause, an EU statement said.
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The head of the International Seabed Authority has criticised US President Donald Trump's order to fast-track deep-sea mining in the open ocean outside US territorial waters. "No state has the right to unilaterally exploit the mineral resources of the area outside the legal framework established by [the UN Convention on the Law of the Sea]," ISA head Leticia Carvalho said in a statement. "It is common understanding that this prohibition is binding on all states, including those that have not ratified UNCLOS," she added. The ISA must both oversee any exploration or mining of coveted resources - such as cobalt, nickel or manganese - in international waters, and protect the marine environment, according to UNCLOS.
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BROKER RATING CHANGES
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Goldman Sachs cuts Glencore price target to 300 (310) pence - 'buy'
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Barclays cuts Aston Martin Lagonda price target to 100 (175) pence - 'overweight'
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Deutsche Bank Research raises GlobalData to 'buy' (hold) - price target 215 pence
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COMPANIES - FTSE 100
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Lloyds Banking said it "delivered sustained strength in financial performance" in the first quarter. Pretax profit totalled GBP1.52 billion, down 7% from GBP1.63 billion the previous year. Underlying net interest income however rose 3% to GBP3.29 billion from GBP3.18 billion. "This reflected a banking net interest margin of 3.03%, up 8 basis points year on year [up 6 basis points compared to the fourth quarter of 2024], alongside higher average interest-earning banking assets of GBP455.5 billion," Lloyds said. Operating costs rose 6% to GBP2.6 billion, "combining inflationary pressures, timing of strategic investment including planned higher severance front-loaded into the first quarter of 2025 and business growth costs". Lloyds reaffirmed its full-year guidance, which includes an approximate underlying net interest income of GBP13.5 billion and return on tangible equity of 13.5%.
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London Stock Exchange Group "started the year strongly, delivering another quarter of good growth", Chief Executive David Schwimmer said in a trading statement. Gross profit rose 8.1% to GBP2.05 billion in the first quarter, from GBP1.89 billion the year before. Total income including recoveries rose 8.2% to GBP2.35 billion from GBP2.18 billion. Income for Data & Analytics was up 5.1% at constant currency and 4.4% reported, to GBP1.04 billion from GBP999 million. Looking ahead, the group is "confident of further growth and improvement" to its earnings before interest, tax, depreciation & amortisation margin this year, "leading to strong growth in equity free cash flow". It confirmed its full-year guidance which includes organic constant currency growth in total income excluding recoveries of 6.5% to 7.5%, including faster Data & Analytics organic growth.
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Pharmaceutical firm GSK said a trial of Nucala, whose generic name is mepolizumab, showed positive results in the treatment of chronic obstructive pulmonary disease. The results showed a 21% reduction in the annualised rate of moderate-to-severe exacerbations in a wide COPD population. The study assesses mepolizumab, a monoclonal antibody that targets interleukin-5, in a variety of COPD patients. Nucala is not yet approved for the treatment of COPD in any country, but regulatory submissions are under review in several countries, GSK said, including the US, China and the EU. Nucala is an add-on prescription maintenance treatment that is used for patients with severe eosinophilic asthma.
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COMPANIES - FTSE 250
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C&C Group announced that it will commence a share buyback programme starting Thursday, worth up to EUR15 million. The drinks company intends to return up to EUR150 million to shareholders over financial 2025, 2026 and 2027 through a combination of dividends and buybacks, it said. The programme will end no later than September 1.
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Drax Group said it expects 2025 adjusted Ebitda to be around the top end of consensus estimates [between GBP848 million and GBP896 million] in light of its "strong" first-quarter performance. It said it has index-linked agreements worth over GBP650 million, "providing high-quality earnings which extend visibility of the group's contracted earnings to 2043", and that its Pellet Production business and Drax Power Station are both "performing well". It also has around GBP2 billion of contracted forward power sales between 2025 and 2027 on its renewable obligation biomass, pumped storage and hydro generation assets.
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OTHER COMPANIES
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Smurfit WestRock will permanently close its coated recycled board mill in St. Paul, Minnesota, and will discontinue production at its containerboard mill in Forney, Texas. It expects these moves to cut its containerboard and CRB capacity by over 500,000 tonnes. The paper-based packaging company also said it has initiated consultations with local works councils in Germany, with a view to permanently closing two converting facilities there. "While closing facilities is never an easy decision, it is based on a realistic expectation of current and future capacity needs, operating costs and an unrelenting focus on improving our business," said CEO Tony Smurfit.
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By Emma Curzon, Alliance News reporter
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