16th Apr 2025 07:41
(Alliance News) - London stocks were called to open lower on Wednesday, amid signs of escalation in the trade dispute between the US and China.
Trump ordered a probe that may result in tariffs on critical minerals, rare-earth metals - for which China dominates global supply chains - and associated products such as smartphones. This follows Trump accusing China of going back on a major deal with US aviation giant Boeing – following a Bloomberg news report that Beijing ordered airlines not to take further deliveries of the company's jets.
Meanwhile, Ottawa offered tariff relief to automakers on condition they maintain production in Canada. Canada has imposed a 25% tariff on vehicle imports from the US, but companies that continue to manufacture vehicles in Canada will be allowed to import a certain number of cars and trucks made in the US tariff-free.
In corporate news, Bunzl reduced full-year guidance and Mitie is launching a new buyback.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 60.5 points, 0.7%, at 8,188.62
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Hang Seng: down 2.6% at 20,903.28
Nikkei 225: down 1.6% at 33,726.16
S&P/ASX 200: down 1.7 points at 7,760.00
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DJIA: closed down 0.4%, at 40,368.96
S&P 500: closed down 0.2% at 5,396.63
Nasdaq Composite: closed down 8.32 points at 16,823.17
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EUR: higher at USD1.1369 (USD1.1303)
GBP: higher at USD1.3271 (USD1.3229)
USD: lower at JPY142.22 (JPY143.01)
GOLD: higher at USD3,288.55 per ounce (USD3,223.88)
OIL (Brent): lower at USD63.85 a barrel (USD64.39)
(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 current account
11:00 CEST eurozone CPI
08:30 EDT US retail sales
09:15 EDT US industrial production
09:45 EDT Canada interest rate decision
10:30 EDT US EIA crude oil stocks
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UK consumer price inflation eased in March, driven by falling fuel and recreation costs, data from the Office for National Statistics showed on Wednesday. The consumer price index rose 2.6% in the 12 months to March, slowing from 2.8% in February and below the 2.7% FXStreet-cited market consensus expectation. On a monthly basis, prices increased 0.3% in March from February, slowing from a 0.4% rise in February from January. The broader measure of inflation, the consumer price index including owner occupiers' housing costs, also known as CPIH also slowed, to 3.4% in March from 3.7% in February. The sharpest downward contributions to annual inflation came from the recreation and culture, housing and household services, and transport categories, according to the ONS. Motor fuel prices fell 5.3% in the year to March, with petrol and diesel both down 1.6 pence per litre on the month. Core CPI, which strips out ENERGY, food, alcohol, and tobacco, edged down to 3.4% from 3.5% in February. Core CPIH also slowed to 4.2% from 4.4%. Services inflation stood at 5.4%, down from 5.7% in February.
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China's economy grew at a greater-than-expected rate in the first quarter, according to figures from the National Bureau of Statistics released on Wednesday. China's gross domestic product increased 5.4% year-on-year in the first quarter of 2025. This latest reading was unchanged from the previous quarter and came in ahead of the 5.1% increase expected according to FXStreet-cited consensus forecasts. China posted a 1.2% quarter-on-quarter GDP increase in the first quarter, missing the 1.4% consensus and easing from 1.6% in the fourth quarter of 2024. The urban surveyed unemployment rate was 5.2% in March, down from 5.4% in February. Industrial production grew 7.7% year-on-year in March with output beating the expected 5.6% increase and accelerating from the 5.9% rise recorded in January and February combined. Additionally, total retail sales of consumer goods rose 5.9% year-on-year in March, up from 4.0% in the first two months of 2025 and ahead of the forecasted 4.2% rise.
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Trump ordered a probe that may result in tariffs on critical minerals, rare-earth metals and associated products such as smartphones, in an escalation of his dispute with global trade partners. China dominates global supply chains for rare metals. Without naming any other countries, the order says that the US is dependent on foreign sources that "are at risk of serious, sustained, and long-term supply chain shocks." It states that this dependence "raises the potential for risks to national security, defence readiness, price stability, and economic prosperity and resilience." The imports targeted include so-called critical minerals like cobalt, lithium and nickel, rare-earth elements, as well as products that partly require these resources, such as electric vehicles and batteries. The order states that critical minerals and their derivatives are essential for US military and ENERGY infrastructure, noting their use in jet engines, missile guidance systems and advanced computing, among others. The Department of Commerce will have up to 180 days to deliver its report to Trump, the order says, adding that any recommendations for action should consider the imposition of tariffs.
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Worldwide consumption of wine fell in 2024 to its lowest level in more than 60 years, the main trade body said Tuesday, raising concerns about new risks from US tariffs. The International Organisation of Vine and Wine said that 2024 sales fell 3.3% from the previous year to 214.2 million hectolitres. The OIV, whose report was based on government figures, said this would be the lowest sales figure since 1961, when sales were 213.6 million hl. Production is also at its lowest level in more than 60 years, having fallen 4.8% in 2024 to 225.8 million hl. Giorgio Delgrosso, OIV statistics chief, said the wine industry had been hit by a perfect storm with health concerns driving down consumption in many countries while economic factors had added to troubles. The OIV said that the consumer is now paying about 30% more for a bottle now than in 2019-2020 and overall consumption has fallen by 12% since then. The US, the world's top wine market, saw consumption fall 5.8% to 33.3 million hl.
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BROKER RATING CHANGES
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Barclays cuts Rio Tinto price target to 5,300 (6,150) pence - 'overweight'
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Citigroup cuts Hays price target to 110 (120) pence - 'buy'
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Peel Hunt raises Vp to 'buy' (add) - price target 650 pence
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COMPANIES - FTSE 100
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Rio Tinto released production results for the first quarter. It said production and cost guidance for the year are both on track, although it expects shipments of Pilbara iron ore to be at the lower end of the 323 million to 338 million tonnes guidance range due to losses sustained from extreme weather events during the quarter. Meanwhile, for the period Rio Tinto said Pilbara iron ore shipments decreased 9% on-year and 17% against the fourth quarter, to 70.7 million tonnes. Pilbara iron ore production fell 10% on-year and 19% on-quarter to 69.8 million tonnes. Bauxite production in the first quarter totalled 15.0 million tonnes, up 12% on-year and down 3% on-quarter. Development of the Simandou high-grade iron ore project is progressing on schedule and "at an impressive pace", the miner added.
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Bunzl released a trading update for the first quarter. Group revenue rose 0.8% or 2.6% at constant currency against "a more challenging economic backdrop", but adjusted operating profit "was down significantly year-on-year in the first quarter, reflective of an operating margin decline driven by performance in North America and Continental Europe". The international distribution company noted "some revenue softness across our North American businesses" due to the "more uncertain macro environment". Bunzl said it is reducing its 2025 guidance to reflect these operational challenges, now expecting "moderate revenue growth in 2025, at constant exchange rates, driven by announced acquisitions and broadly flat underlying revenue". Bunzl continued: "Group operating margin for the year is expected to be moderately below 8.0%, compared to 8.3% in 2024. Operating margin in the first half of the year is expected to be around 7.0%, with the group's second half operating margin seasonally higher and expected to benefit from actions taken".
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COMPANIES - FTSE 250
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Mitie Group announced its intention to launch a new GBP125 million buyback programme commencing today, noting its "strong balance sheet, and leverage at the lower end of our targeted range". The Glasgow-based engineering, security, cleaning and hygiene services provider completed a GBP100 million buyback earlier this month. Mitie said around six million shares will be held in treasury to satisfy the 2022 Save As You Earn scheme, with repurchased shares exceeding this amount to be cancelled.
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WH Smith released half-year results, reporting a GBP42 million pretax loss for the six months ended February 28 against a GBP28 million profit for the prior year. Total group revenue however rose 3% to GBP951 million from GBP926 million. The retailer declared a dividend of 11.3 pence per share, up from 11.0p, "reflecting strong trading and cash generation combined with the Board's confidence in the future growth prospects of the group". WH Smith said its previously announced GBP50 million buyback is ongoing with GBP27 million worth of shares repurchased as of Tuesday, and that current trading is in line with market expectations. It also announced that it has won a "significant contract at a major East Coast airport" in the US. Chief Executive Carl Cowling commented: "The group has had a good first half with consistent like-for-like growth across all our Travel businesses, and we are well-positioned for the peak summer trading period...The second half of the financial year has started well, and we remain on track to deliver full year results in line with market expectations. We are mindful of the increased level of geopolitical and economic uncertainty, however given the resilient nature of our business, we are well-positioned to benefit from the growth opportunities in global travel retail."
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OTHER COMPANIES
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Belluscura issued a trading update, with first-quarter sales surging to USD912,000 from USD166,000 the prior year. However, the medical device developer said it anticipates that product sold in the US will be subject to a tariff production cost impact of up to 20%. It said it "continues to evaluate additional long-term opportunities to reduce tariff and production costs, such as manufacturing and sourcing components from alternative jurisdictions". Belluscura also confirmed the launch earlier this month of its new X-PLOR 5 portable oxygen concentrator, with full commercial launch of the DISCOV-R anticipated in the third quarter. Also on Wednesday, Belluscura announced the resignation of Chief Financial Officer Simon Neicheril, effective May 2, who intends to move to a new position. Chair Paul Tuson will take responsibility for finance "in the immediate term".
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By Emma Curzon, Alliance News reporter
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