5th Mar 2025 07:49
(Alliance News) - Stocks were called higher on Wednesday despite promises of further tariffs from the US, following news that China's latest service sector reading surpassed expectations.
"Trump's tariffs went live yesterday, sending global markets—including the US indices—tumbling, until rumours of a potential rollback started circulating," commented Swissquote's Ipek Ozkardeskaya. "High volatility is driving investors toward safe havens like bonds and gold, while the Trump-fueled rally in the US dollar index has already reversed."
She continued: "There are now rumours circulating that he may roll back some of the tariffs...The news flow becomes annoying, of course, as crucial decisions change in a matter of minutes. The market reaction is often aggressive, the volatility is rising, and investors are naturally moving toward the safer pockets of the market. As such, bond are performing better than equities since Trump was elected President and portfolio allocations to gold are lifted."
Meanwhile in corporate news, Games Workshop predicted that full-year pretax profit will surpass expectations, while Breedon increased its full-year dividend and announced a new acquisition.
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 53.0 points, 0.6% at 8,812.00
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Hang Seng: up 2.9% at 23,611.92
Nikkei 225: up 0.2% at 37,418.24
S&P/ASX 200: down 0.7% at 8,141.10
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DJIA closed down 670.25 points, 1.6%, at 42,520.99
S&P 500: closed down 1.2% at 5,778.15
Nasdaq Composite closed down 0.4% at 18,285.16
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EUR: higher at USD1.0656 (USD1.0525)
GBP: higher at USD1.2807 (USD1.2712)
USD: higher at JPY149.70 (JPY148.56)
GOLD: higher at USD2,915.36 per ounce (USD2,908.04)
OIL (Brent): higher at USD71.05 a barrel (USD70.29)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
China People's Political Consultative Conference continues
China National People's Congress continues
10:00 CET eurozone composite PMI
11:00 CET eurozone PPI
09:55 CET Germany composite PMI
11:00 GMT Ireland unemployment
09:00 GMT UK new car sales
09:30 GMT UK composite PMI
14:30 GMT UK Treasury Select Hearing on the Monetary Policy Report
08:15 EST US ADP unemployment
09:45 EST US composite PMI
10:00 EST US ISM services PMI
10:00 EST US total vehicle sales
10:30 EST US EIA crude oil stocks
14:00 EST US Fed's Beige Book
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Keir Starmer has welcomed Volodymyr Zelensky's "steadfast commitment to securing peace" as the Ukrainian leader said he was "ready to work under President Trump's strong leadership" to end the war with Russia. The UK prime minister spoke with his Ukrainian counterpart and said that "no one wanted peace more" than Kyiv. It comes as Zelensky has called for a "truce in the sky" and a "truce in the sea" if Russia agrees to the same and said it is "time to make things right" after his clash in the Oval Office with Donald Trump last week. Starmer had previously spoken to Trump about the need to secure a lasting peace in Ukraine, hours before the White House paused military aid to Kyiv on Monday. Issuing a read out of the call between the leaders, a Downing Street spokeswoman said: "The prime minister updated on his discussion with President Trump last night. "It was vital that all parties worked towards a lasting and secure peace for Ukraine as soon as possible, the prime minister added.
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The UK's diplomatic push on securing peace in Ukraine will continue as the defence secretary heads to Washington on Wednesday, after Volodymyr Zelensky said he was "ready" to work with US President Donald Trump. Talks about a possible peace will continue when UK Secretary of State for Defence John Healey meets his US counterpart Pete Hegseth on Thursday. On Tuesday evening a report had suggested that the long-awaited minerals deal between Kyiv and Washington could be back on, after sources told Reuters that the US president had indicated he wanted to announce the agreement in his headline address to Congress. However, a Fox News correspondent tweeted on Tuesday evening to say that Secretary to the Treasury Scott Bessent had said there is "no signing" planned. UK Defence Secretary John Healey's trip was agreed last week after Keir Starmer announced an uplift in the UK's defence spending to 2.5% of GDP, and comes just days after the US halted military aid to Kyiv. Diplomatic efforts had continued on Tuesday, with the prime minister speaking once again to the Ukrainian leader before his X post. In their call, Starmer had pushed the idea that it was vital for "all parties" to work towards peace. It came after a further call with the US president on Monday. Zelensky posted on X on Tuesday to say that Ukraine is "ready to come to the negotiating table as soon as possible" to secure peace.
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US President Donald Trump has said he would introduce reciprocal tariffs on goods from most of the US's trading partners. He made the announcement during a speech to Congress on Tuesday, hours after the introduction of tariffs against neighbours Canada and Mexico, as well as China. Just after midnight, Trump put 25% tariffs on Mexican and Canadian imports, although he limited the levy to 10% on Canadian energy. He also doubled his 10% levies on Chinese imports in a series of moves that took US tariffs to the highest level since the 1940s. "Other countries have used tariffs against us for decades, and now it's our turn to start using them against those other countries," he said. He promised that from April 2, reciprocal tariffs will be imposed for most of the country's trading partners. "That's reciprocal, back and forth. Whatever they tax us, we will tax them," he said. Mexico's President Claudia Sheinbaum said she plans to announce retaliatory tariffs against the US on Sunday. Canadian Prime Minister Justin Trudeau earlier on Tuesday diagnosed Trump's tariffs on Canadian imports as simply "a very dumb thing to do".
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US President Donald Trump has vowed to keep up his campaign of "swift and unrelenting action" in reorienting the nation's economy, immigration and foreign policy. His comments came in an unyielding address to Congress that left Democratic legislators registering their dissent with stone faces, placards calling out "lies" and one member's ejection. The president's address, clocking in at a record 99 minutes, added up to a defiant sales pitch for the policies Trump promised during his campaign and leaned into during his first weeks back in office. He pledged to keep delivering sweeping change to rescue the nation from what he described as destruction and mistakes left by his predecessor Joe Biden. He seldom addressed his comments directly to the American people, who are trying to keep up with the recent upheaval, while repeatedly needling the Democratic lawmakers seated before him. Trump, who has billionaire adviser Elon Musk orchestrating his efforts to slash the size and scope of the federal government, said he is working to "reclaim democracy from this unaccountable bureaucracy" and threatened federal workers anew with firings if they resist his agenda. Musk, who was seated in the House gallery, received a pair of standing ovations from Republicans in the chamber, as the president exaggerated and shared false claims that tens of millions of dead people over 100 years old are receiving Social Security payments.
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Business activity in China continued to expand in February with improvements across both the services and manufacturing sectors, numbers showed Wednesday. The Caixin China general composite purchasing managers' index rose to 51.5 in February, up from 51.1 in January. A reading above the 50.0 neutral mark indicates an overall increase in business activity from the previous month and an overall decrease when below. Wang Zhe, senior economist at Caixin Insight Group, said: "This marked the 16th straight month of expansion, with improved supply and demand in both [the manufacturing and services] sectors. Overall price levels remained subdued, with sales prices in manufacturing and services declining to varying degrees. Overall employment saw a slight contraction, dragged down by the manufacturing sector. Despite this, market sentiment remained upbeat." The general service PMI increased to 51.4 in February, surpassing FXStreet-cited forecast estimates of 50.8 and up from 51.0 in January. On Monday, S&P Global reported that the Caixin China general manufacturing PMI rose to 50.8 in February, up from 50.1 in January, above the consensus forecast of 50.3. The PMI figures are compiled monthly by S&P Global using responses to a survey sent to purchasing managers in a panel of around 650 manufacturers and 650 services companies, both private and state-owned. The composite figure is a weighted average of both manufacturing and services.
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Business activity growth in Ireland continued in February amid a slow down in the service sector, numbers showed Wednesday. The AIB Ireland composite purchasing managers' index posted 53.4 in February, up from 52.3 in January. A reading above the 50.0 neutral mark indicates an overall increase in business activity from the previous month and an overall decrease when below. Specifically, the services PMI eased for the third month in a row to 53.2 in February, down from 53.4 in January. David McNamara, AIB Chief Economist, said: "The expansion was driven by an increase in new and outstanding business, but growth in client demand was weaker on the month. On Monday, S&P Global reported that the AIB Ireland manufacturing PMI rose to 51.9 in February, up from 51.3 in January. The PMI is compiled monthly by S&P Global using responses to a survey sent to purchasing managers in a panel of around 250 manufacturers and 400 service sector companies. The composite figure represents a weighted average of both the services and manufacturing PMI.
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BROKER RATING CHANGES
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Exane BNP cuts NatWest to 'neutral' (outperform) - price target 555 (530) pence
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RBC starts Moonpig with 'outperform' - price target 310 pence
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Deutsche Bank Research cuts Reach price target to 182 (190) pence - 'buy'
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COMPANIES - FTSE 100
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Games Workshop, in a very brief update, announced that trading in January and February has been ahead of expectations, with strong trading across both its core business and licensing. Consequently, the Warhammer owner said, its pretax profit for the year ending June 1 is estimated to be ahead of expectations.
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Severn Trent ahead of its Capital Markets Day said it is confident it can deliver a third consecutive AMP of sector-leading operational performance, including reducing leakage by over 30% in the decade to 2030. "As a result, we are guiding to net operational outperformance in AMP8 of over GBP300m in nominal prices. This includes up to GBP50m in Price Control Deliverables, PCDs, with the rest derived from ODI rewards," the water utility firm said. Its investment plans include putting "an extra GBP50m into infiltration programmes to keep groundwater out of our sewers and reduce processing and treatment costs". It continued: "Looking beyond AMP8, we see this as the beginning of a multi-decade investment cycle. In addition to the real RCV growth of 45% in AMP8, our Long Term Delivery Strategy (LTDS) indicates an RCV growth rate of around 20% on average each AMP over the next 25 years, underpinned by investment to mitigate and adapt to climate change, population growth and tightening environmental standards."
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Beazley announced that its board has approved the up to USD500 million share buyback programme outlined in its annual results on Tuesday. The programme will start on Wednesday, the insurer said, and will continue until the earlier of the date on which the maximum amount has been purchased or until February 28, 2026.
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COMPANIES - FTSE 250
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Breedon released its full-year results, with revenue increasing 6% to GBP1.58 billion from GBP1.49 billion, "driven by our entry into the US", and pretax profit decreasing 7% to GBP125.4 million from GBP134.4 million. The total dividend for 2024 is 14.5p per share, up 7% from 13.5p in 2023, "reflecting our confidence in the future". The construction materials firm said enquiry levels have "remained encouraging" so far this year and that "The economic landscape in the US is robust while RoI is strong, benefiting from a budget surplus and net inward migration". Also, Breedon announced its acquisition of Lionmark Construction Companies LLC for an enterprise value of USD238 million. The deal is "expected to provide immediate and attractive financial returns while maintaining a strong and flexible balance sheet," Breedon said. Lionmark is a Missouri-headquartered construction materials and surfacing solutions business with a focus on road infrastructure end markets.
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Quilter reported its 2024 results. Total income rose to GBP5.45 billion from GBP4.63 billion in 2023, the London-based wealth manager said, although pretax profit decreased to GBP35 million from GBP88 million. Total expenses rose to GBP5.41 billion from GBP4.54 billion. Total assets under management & administration rose 12% to GBP119.4 billion from GBP106.7 billion. Quilter also proposes a full-year dividend of 5.9p per share, up 13% from 5.2p. "2024 was an excellent year in terms of net inflows, revenue momentum, cost discipline and profit growth," said Chief Executive Officer Steven Levin. "Both our High Net Worth and Affluent segments delivered good profit progress and significantly higher new business levels. These results demonstrate the benefit of our scale dual-distribution model which has made us the UK's largest and fastest growing retail advised platform provider. We have started the year well and look forward to building on this momentum in 2025 and beyond."
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OTHER COMPANIES
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Flutter Entertainment said it had made an excellent start to 2024 after reporting strong sales growth in the fourth quarter. The bookmaker, which owns Betfair and Paddy Power, reported net income of USD156 million in the three months to December 31 swung from a net loss of USD902 million a year prior. Adjusted earnings before interest, tax, depreciation and amortisation increased 4% to USD655 million from USD632 million. Revenue rose 14% to USD3.79 billion from USD3.31 billion and average monthly players rose 7.5% to 14,605 from 13,588. For financial 2024, Flutter reported net income of USD162 million, swung from a net loss of USD1.21 billion a year prior. Adjusted Ebitda increased 26% to USD2.36 billion from USD1.88 billion. Revenue rose 19% to USD13.90 billion from USD12.33 billion and average monthly players rose 13% to 13,898 from 12,325. Flutter said US revenue rose 14% despite the most customer friendly NFL results in 20 years with a record sportsbook structural gross revenue margin of 14.5%, and excellent iGaming revenue growth of 43%. Ex-US revenue increased 14% driven by structural sportsbook revenue margin expansion, favourable sports results and excellent iGaming momentum. In the UK & Ireland, strength was driven by sustained sportsbook and iGaming product innovation. Flutter said 2025 has "started well". Full-year 2025 guidance represents year-over-year growth at the midpoint of 13% revenue and 34% adjusted Ebitda, the firm added.
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By Emma Curzon, Alliance News reporter
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