26th Feb 2025 07:53
(Alliance News) - London stocks were set to open higher on Wednesday morning, with UK Prime Minister Keir Starmer flying to the US for talks with Donald Trump.
The prime minister will travel to Washington DC after facing his weekly grilling in the House of Commons, following his announcement of a dramatic increase in the size of the UK's war chest, paid for by cutting the international aid budget.
In corporate news, Hikma Pharmaceuticals reported "another strong year" with "double digit revenue growth, increased profits and a resilient margin".
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 53.1 points, 0.6% at 8,721.77
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Hang Seng: up 3.7% at 23,879.03
Nikkei 225: down 0.3% at 38,142.37
S&P/ASX 200: down 0.1% at 8,240.70
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DJIA: closed up 0.4%, at 43,621.16
S&P 500: down 0.5% at 5,955.25
Nasdaq Composite: closed down 1.4% at 19,026.39
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EUR: slightly lower at USD1.0497 (USD1.0501)
GBP: flat at USD1.2651 (USD1.2653)
USD: higher at JPY149.38 (JPY148.84)
GOLD: higher at USD2,911.90 per ounce (USD2,895.74)
OIL (Brent): lower at USD72.65 a barrel (USD72.86)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 GMT Ireland construction output
10:00 SAST South Africa CPI
09:00 CET Spain PPI
16:30 GMT UK Bank of England External member of the Monetary Policy Committee Swati Dhingra speaks
10:00 EST US new home sales
10:30 EST US EIA crude oil stocks
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UK Prime Minister Keir Starmer will fly to the US on Wednesday ahead of crunch talks with Donald Trump on Thursday, as Chancellor Rachel Reeves urged European allies to follow the UK in raising defence spending. The prime minister will travel to Washington DC after facing his weekly grilling in the House of Commons. Meanwhile, European nations must "step up and do more on defence", Reeves said after the UK pledged to raise defence spending from its current 2.3% to 2.5% of the UK's economic output by 2027. The UK will spent GBP13.4 billion more on defence every year from 2027, according to Starmer, something he acknowledged will require "extremely difficult and painful choices". To fund "the biggest sustained increase in defence spending since the end of the Cold War", development assistance aid will be slashed from its current level of 0.5% of gross national income to 0.3% in 2027, a move which triggered fierce criticisms from charities. The prime minister defended his choice, telling reporters it was "necessary for the protection of our country".
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Ukrainian President Volodymyr Zelensky is expected to visit the US on Friday. Kyiv has agreed to a minerals deal which had been pushed for by the new US administration, according to Ukrainian officials, which could be signed off when their president visits Washington. Zelensky had claimed the 50% share of rare minerals initially demanded by America would have been akin to selling his nation, but Ukraine now appears satisfied the deal will lead to a continued flow of US military support in its war against Russia. Ukraine's Deputy Prime Minister Olha Stefanishyna said the minerals deal was part of wider talks between the two countries. "We have heard multiple times from the US administration that it's part of a bigger picture," she told the Financial Times.
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French President Emmanuel Macron is due to inform EU leaders about his recent talks with US President Donald Trump via video conference on Wednesday. The conference is mainly intended to prepare for the special EU summit on Thursday next week. At the summit, the heads of state and government will discuss how to respond to the drastic change of course in US policy on Ukraine. On Monday, Macron was the first European leader to be received at the White House by Trump in his second term. Macron urged that the Europeans, who were left out of recent talks on Ukraine between US and Russian representatives, be more closely involved in negotiations.
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Iran on Wednesday condemned a new round of US sanctions as a "clear sign of hostility" after Washington blacklisted more than 30 people and vessels linked to its oil trade. Washington announced the measures on Monday, targeting the head of the national oil company and others accused of brokering oil sales. It was the second wave of sanctions in less than a month since US President Donald Trump reinstated his "maximum pressure" policy on Tehran. The sanctions were a "clear sign of the hostility of American policymakers towards the welfare, development, and happiness of the great people of Iran", said foreign ministry spokesman Esmaeil Baqaei. In a statement, he called the measures a "wrongful, unjustified, illegitimate act that violates the human rights of the Iranian people", and held Washington responsible.
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The US House of Representatives passed a budget blueprint on Tuesday designed to deliver President Donald Trump's agenda on immigration, tax reform and deep government spending cuts. The Republicans' resolution passed by 217 to 215, with a single ruling party holdout joining all of the chamber's Democrats in voting against it. The resolution sets the blueprint for the 2025 federal government budget, with House committees now tasked with finding more than USD1.5 trillion in spending reductions and USD4.5 trillion in extended tax cuts over a decade. With the resolution in its current form, Republicans appear set to make up to USD880 billion in cuts to Medicaid and other social safety net programs, including food stamps, if they want to extend the tax cuts, AFP reported. Speaker Mike Johnson said he expected to have the budget on President Trump's desk in the White House by early May.
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Hong Kong will cut public spending and restore fiscal balance by mid-2027 after a string of huge deficits. Officials are under pressure to balance the books as Hong Kong faces its toughest fiscal test in three decades, with annual deficits exceeding USD20 billion in three of the past four years. Financial Secretary Paul Chan on Wednesday said the government will contain spending in a way that minimises the impact on public services and livelihoods. A "cumulative reduction" of government recurrent expenditure by 7% through to 2027-28 would take place, he said in his annual budget speech. Chan also said the government would set aside HKD1 billion, approximately USD129 million, to set up a Hong Kong AI Research & Development Institute, in a bid to make the city "an international exchange and co-operation hub for the AI industry".
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BROKER RATING CHANGES
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Goldman Sachs cuts Croda International price target to 3,800 (4,400) pence - 'neutral'
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Goldman Sachs starts Mitie with 'neutral' - price target 150 pence
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Jefferies cuts TT Electronics price target to 88 (97) pence - 'hold'
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COMPANIES - FTSE 100
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Hikma Pharmaceuticals reported its annual results for 2024. Revenue rose 9% to USD3.13 billion from USD2.88 billion in 2023. Pretax profit surged to USD455 million from USD281 million, while basic earnings per share increased 88% to 162 US cents from 86 cents. Hikma also hiked its total dividend for the year by 11% to 80 cents from 72 cents. "It's been another strong year for Hikma with double digit revenue growth, increased profits and a resilient margin," commented Chief Executive Officer Riad Mishlawi. "We continued to invest in the business to support our future progress, with a strategic acquisition alongside new partnerships and agreements. This momentum combined with our diversified portfolio, leading market positions and increasing investment in R&D, underpin our positive outlook for 2025 and confidence in the future."
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Coca-Cola Europacific Partners and THG are set to join the FTSE 100 and FTSE 250, after both changed listing arrangements, while John Wood Group's share price slump means an exit from the mid-cap index is likely. The findings were announced by FTSE Russell in its indicative quarterly index review changes for March. The indicative findings are based on data as of the market close on Friday. The actual review is conducted using data this time next week and is announced after the market close next week Wednesday. Soft drink bottler Coca-Cola Europacific Partners transferred to the Equity Shares Commercial Companies category of the Main Market in November. It paved the way for inclusion in the FTSE Index Series from March. It has a market capitalisation of over GBP30 billion. It will replace insurer Hiscox in the FTSE 100. Hiscox shares have fallen around 4% over the past year. E-commerce firm THG also announced a listing category change, and it is now set for the FTSE 250 index. Atalaya Mining Copper is also set for promotion to the mid-cap benchmark. Exiting, however, may be Essentra, STEM-focused recruiter SThree and engineering and consulting business Wood Group.
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COMPANIES - FTSE 250
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Aston Martin Lagonda reported a 9% decline in total wholesale volumes for 2024, to GBP6.03 billion from GBP6.62 billion. Revenue decreased 3% to GBP1.58 billion from GBP1.63 billion. However for the fourth quarter, wholesale volumes rose 8% to GBP2.39 billion from GBP2.22 billion, although revenue edged 1% lower to GBP589.3 million from GBP593.3 million. Aston Martin's pretax loss meanwhile widened to GBP289.1 million from GBP239.8 million, and its adjusted loss before interest and tax widened to GBP82.8 million from GBP79.7 million. Chief Executive Officer Adrian Hallmark however commented: "We are committed to demonstrating that our strategy delivers long-term growth. This starts in 2025 where we expect materially improved financial performance to deliver positive adjusted Ebit for the full year and free cash flow in the second half of 2025."
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Morgan Sindall reported results for 2024, including revenue increasing 10% annually to GBP4.55 billion from GBP4.12 billion. Pretax profit jumped 19% to GBP171.9 million from GBP143.9 million, while basic earnings per share rose 11% to 281.4p from 254.2p. Morgan Sindall also increased its total dividend for the year by 15% to 131.5p per share from 114.0p. "Looking ahead, while there is continued uncertainty in the wider macroeconomy, we remain positive for the year ahead," commented CEO John Morgan. "Together with our high-quality and growing order book spread across a wide number of sectors, we are well-positioned for the future and on track to deliver an outcome for 2025 which is in line with our current expectations."
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Metro Bank has agreed to sell a portfolio of approximately GBP584 million performing unsecured personal loans, with an estimated approximate GBP11 million gain on sale upon completion. It expects the transaction, it said, to result in a June 30 pro-forma improvement in Metro Bank's CET1 ratio by around 81bps and total capital plus MREL ratio of about 129bps from 22.2% to 23.5%. The portfolio has a gross book value of GBP584 million with a weighted average rate of around 5.3%, Metro said, and consists of performing unsecured personal loans with an average remaining fixed-rate term of about 2.4 years. "The sale of the portfolio is in line with Metro Bank's strategy to reposition its balance sheet and enhance risk-adjusted returns on capital," the company said. "The transaction is capital accretive and creates additional lending capacity to enable Metro Bank to continue its asset rotation towards higher yielding commercial, corporate, SME lending and specialist mortgages."
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OTHER COMPANIES
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Heathrow has said a 31% surge in annual profits and a record year for passengers underscores the need for it to build a third runway. Owners of the west London airport reported pre-tax profit of GBP917 million for 2024, up from GBP701 million in 2023, with a 6% rise in annual passengers travelling through its four terminals to 83.9 million. But revenue fell 3.5% to GBP3.56 billion and underlying earnings also dropped 8.7% to GBP2.04 billion, which Heathrow said was a result of lower charges paid by airlines, set by regulator the Civil Aviation Authority. UK Chancellor Rachel Reeves gave her backing for Heathrow's third runway project in a speech on growth last month. The airport responded by saying it would submit detailed plans to the government in the summer. Heathrow Chief Executive Thomas Woldbye said: "2024 underscores why Heathrow is the UK's gateway to growth. Our colleagues welcomed a record number of passengers with good service, cargo volumes increased 10% boosting British trade, and we invested over GBP1 billion to improve facilities and boost resilience which creates more value for customers at Britain's front door. Securing future economic growth means investing in the infrastructure that powers it." Referring to the third runway plan, Woldbye said Heathrow will make "the largest private investment in the UK's transport network" over the next decade to modernise the airport and make it "a competitive world-class hub fit for the future".
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CleanTech Lithium announced that it now expects its Australian Securities Exchange listing to launch in April and complete in May, instead of completing in March or April as claimed in February. The firm said: "While the ASX listing process is taking longer than initially expected, the board and our advisers believe that waiting for a positive decision by the end of March on entering the streamlined direct negotiation process for the Special Lithium Operating Contract for Laguna Verde and completing the pre-feasibility study will significantly strengthen our investment case in the Australian market." Also, CleanTech said that Tony Esplin, nominated as CEO designate in November, "has reconsidered his position and, for personal reasons, will not be taking up his intended appointment as CEO". Executive Chair Steve Kesler will continue as interim CEO while the board re-engages with alternative candidates, the company added.
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By Emma Curzon, Alliance News reporter
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