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LONDON BRIEFING: FTSE 100 called up as market prepares for rate call

17th Oct 2024 07:55

(Alliance News) - Stocks were seen green in London on Thursday morning, ahead of a rate call from the European Central Bank, and amid a slew of data from the US.

In early corporate news, Mondi posted lower earnings before interest, tax, depreciation and amortisation for the third quarter, thanks to more planned maintenance shuts and a forestry fair value loss.

Selkirk also announced its intention to raise GBP7.5 million through a placing and at the same time seek admission of its shares on the London Stock Exchange's AIM Market.

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 14.2 points, or 0.2%, at 8,344.30

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Hang Seng: down 0.2% at 20,246.93

Nikkei 225: closed down 0.5% at 38,994.46

S&P/ASX 200: closed up 0.9% at 8,355.90

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DJIA: closed up 337.28 points, 0.8%, at 43,077.70

S&P 500: closed up 0.5% at 5,842.47

Nasdaq Composite: closed up 0.3% at 18,367.08

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EUR: down at USD1.0852 (USD1.0874)

GBP: down at USD1.2984 (USD1.3006)

USD: down at JPY149.59 (JPY149.65)

Gold: up at USD2,682.40 per ounce (USD2,673.31)

(Brent): up at USD74.31 a barrel (USD73.83)

(changes since previous London equities close)

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ECONOMICS

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Thursday's key economic events still to come:

11:00 CEST eurozone trade balance

11:00 CEST eurozone CPI

14:15 CEST eurozone interest rate decision

11:00 CEST Italy trade balance

21:00 BST UK Bank of England Deputy Governor Sam Woods speaks

08:30 EDT US initial jobless claims

08:30 EDT US Philadelphia Fed manufacturing index

08:30 EDT US retail sales

09:15 EDT US industrial production

10:00 EDT US retail sales

10:30 EDT US EIA natural gas stocks

11:00 EDT US EIA crude oil stocks

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European Central Bank policymakers meet on Thursday with fading price pressures and weaker economic activity in the eurozone nudging them towards making another cut to interest rates. Recent data show that inflation in the eurozone has slowed considerably. For the whole of the eurozone, the annual rate of consumer price rises was 1.8% – the first time it has been below the ECB's 2% target in three years. After cutting rates twice already this year, including at their last meeting in September, policymakers initially signalled a preference to wait until December to cut again. But September's below-expectations reading has added to the sense that consumer prices are back under control after they soared in the wake of the coronavirus pandemic and the Russian invasion of Ukraine. "Victory against inflation is in sight," French central bank governor and ECB rate-setter Francois Villeroy de Galhau said last week. "A cut is very likely," he said of Thursday's meeting, adding that "it will not be the last". From its peak of 4%, the ECB has cut its key deposit rate in two increments of 25 basis points, once in June and another time in September.

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Private sector landlords have called on Rachel Reeves to give them new tax breaks to help keep rents down and boost the supply of homes. In a letter to the chancellor ahead of the budget, representative bodies said their members are facing "uncertainty on a number of fronts" and require stability and clarity to help address the "severe shortage of homes" which has left tenants "struggling". Analysis by Rightmove showed average advertised rents have hit a record high amid signs landlords are selling up, with 18% of homes for sale being previously available for rent between July and August. The letter – signed by the National Residential Landlords Association, Propertymark, Goodlord and Large Agents Representation Group – urged the government to reconsider the way the sector is taxed as part of the solution.

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China said Thursday it would boost credit available for unfinished housing projects to more than USD500 billion as it unveiled another round of measures to shore up the sector and try to reignite the economy. At a briefing on Thursday, housing minister Ni Hong offered fresh help, saying Beijing will "increase the credit scale of white-list projects to [CNY4 trillion]" or USD562 billion by the end of the year. The "white list" scheme, announced earlier this year, pushes local authorities to recommend housing projects for financial support and work with banks to ensure their completion. "The urban real-estate financing coordination mechanism should strive to include all eligible real-estate projects in the white-list," Ni said. "An additional one million worn-out homes... will be renovated," he added. "There are many safety hazards and poor living environments in urban villages, and people are eager to renovate." The move, he said, would "be conducive to absorbing the existing stock of commercial housing". However, Chinese property developers listed in Hong Kong declined on Thursday after the briefing fell short of investor expectations for more support for the sector, the Financial Times reports. The Hang Seng Mainland Properties index fell 3.8%, with online listings platform KE Holdings and developer Longfor Group leading losses.

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Japanese exports unexpectedly declined on-year for the first time in 10 months as weaker global demand and a stronger yen hit the country's manufacturers in September. Japan's exports rose 7.2% to JPY9.038 trillion in September from JPY8.433 trillion in August, but were 1.7% lower than JPY9.199 trillion in September 2023. Japan's imports climbed 2.1% to JPY9.332 trillion in September from JPY9.137 trillion in August, and were 2.1% higher than JPY9.138 trillion in September 2023. The country's trade surplus fell to JPY294.34 billion, about USD1.97 billion, in September from JPY703.20 billion in August, but was up from JPY60.56 billion in September 2023.. In September the yen traded at its strongest levels against the dollar for the year to date, briefly hitting JPY140.8. It has weakened in October after new Prime Minister Shigeru Ishiba questioned the need for further interest rate increases by the Bank of Japan.

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Kamala Harris pledged a clean break from Joe Biden's presidency Wednesday in an interview with right-wing Fox News aimed at reaching Republican voters wary of Donald Trump. Harris clashed with interviewer Bret Baier on hot-button issues including immigration and gender transition surgery, with the Democratic nominee repeatedly asking "may I finish" when the host talked over her answers. A key moment in the half-hour sit-down came as Harris was being pressed on comments she made last week – that Republicans have seized on – when she said she could not think of anything she would have done differently from Biden during his four years in office. "My presidency will not be a continuation of Joe Biden's presidency," said Harris, 59, who became her party's nominee after the ageing Biden dropped out in July. Harris said she would bring "fresh and new ideas" and added: "I represent a new generation of leadership." Harris also launched into a blistering attack on Republican former president Trump, 78, for threatening to use the military against internal enemies: "He's the one who tends to demean and belittle and diminish the American people. He's the one who talks about an 'enemy within.'"

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BROKER RATING CHANGES

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Goldman Sachs cuts Antofagasta price target to 1,875 (2,000) pence - 'neutral'

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Berenberg raises Quilter price target to 140 (135) pence - 'hold'

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UBS raises Wise price target to 1,030 (1,020) pence - 'buy'

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COMPANIES - FTSE 100

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Mondi provides an update on trading for three months to September 30, as underlying earnings before interest, tax, depreciation and amortisation were lower than the previous quarter at EUR233 million from EUR351 million. The company says this was expected and primarily due to more planned maintenance shuts and a forestry fair value loss. This was in addition to softer seasonal demand and higher input costs. Selling prices in Corrugated Packaging and Flexible Packaging were higher when compared to the previous quarter due to the implementation of paper price increases earlier in the year. After a recovery in pricing at the start of the year, pulp and paper selling prices in Uncoated Fine Paper declined in the quarter. Looking ahead, Chief Executive Officer Andrew King says: "We are making good progress towards completing the paper machine investments at Steti and Duino, both expected to start-up as planned. Overall, our organic growth investments are expected to deliver a meaningful Ebitda contribution from 2025."

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COMPANIES - FTSE 250

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Centamin posts gold production of 131,726 ounces for the quarter ended September 30 from the Sukari Gold Mine, and gold sales of 149,659 ounces. These figures rose 30% and 44% respectively. Total gold production for the nine months of the year is 356,465 ounces. Says guidance remains unchanged, gold production guidance range is between 470,000 and 500,000 ounces per annum. Production is weighted towards the second half, as previously guided.

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OTHER COMPANIES

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N Brown accepts a takeover offer by Falcon 24 Topco, a company owned by Joshua Alliance. The offer values the clothing and footwear online retailer at around GBP191 million, with each N Brown shareholder entitled to receive 40 pence per share in cash. The transaction is expected to close in the first quarter of 2025.

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BHP Group posts disappointing production for the first three months of its financial year on a quarterly basis, but says annual performance was strong across most of its operations. The Melbourne-based diversified miner also indicated it was on track to meet its production guidance for the 2025 financial year. On an annual basis, copper production was up 4.2% at 476,000 tonnes for the first quarter that ended September 30 from 457,000 tonnes in the same quarter a year before. But copper output fell 5.7% from 505,000 tonnes in the fourth quarter to June 30, due to planned maintenance, lower concentrator throughput and production across leaching at Escondida in Chile, and planned lower grades at Spence also in Chile. For the 2025 financial year, annual copper production is seen between 1.84 million tonnes and 2.04 million tonnes, compared to 1.86 million tonnes a year earlier.

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Selkirk announces its intention to raise GBP7.5 million through a placing and at the same time seek admission of its shares on the London Stock Exchange's AIM Market. Assuming a GBP7.5 million raise, expects 20% of the shares will be held by Kelso Ltd, the wholly owned subsidiary of Kelso Group Holdings PLC, the main market listed acquisition vehicle; and 18% of the shares will be held by funds controlled by Belerion Capital Group, where Iain McDonald, proposed executive chair, is the manager.

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Taiwan's TSMC says that its full-year revenue was forecast to grow nearly 30%, after the world's biggest chipmaker recorded a better-than-expected performance in the third quarter. "We now forecast our full year revenue to increase by close to 30% in US dollar terms," Chair CC Wei said during a conference call with analysts. TSMC – which is listed in Taipei and New York – said net profit in the three months to September hit NTD325.26 billion, or USD10.1 billion, up 54% from the same period last year. Revenue in the period grew 36% on-year to USD23.5 billion, the firm said in a statement. "In the third quarter, revenue increased 12.8% quarter over-quarter, as our business was supported by strong smartphone and AI-related demand for our industry leading 3nm and 5nm technologies," the company said in a statement.

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By Holly Beveridge, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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