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LONDON BRIEFING: FTSE 100 seen flat; Just Eat and Sainsbury's partner

16th Jan 2023 07:50

(Alliance News) - With US financial markets closed for a public holiday on Monday and after better-than-expected data for the UK economy on Friday, stocks in London were set to start the week slightly higher.

UK gross domestic product grew by 0.1% month-on-month in November, slowing from October's unrevised growth of 0.5%. The economy defied expectations which anticipated it to shrink by 0.2% in November, according to consensus cited by FXStreet.

GDP was helped by the start of the football World Cup, which boosted consumer-facing sectors, the Office for National Statistics explained.

In further signs of emerging stability for the UK economy, the average asking price for a house in the UK rose in January, according to the data from Rightmove on Monday.

The average price of a property coming to the market for sale rose to GBP362,438 in January, up 0.9% from GBP359,137 in December. Rightmove said this was the biggest increase at this time of year since 2020.

"After the market's uncertain final few months of 2022, this familiar seasonality is a tentative sign of stability...It's still early days, but this is a more encouraging start to the year than many anticipated," Rightmove said.

In UK company news, ITM Power issued a warning on its full-year results, while AstraZeneca completed its acquisition of clinical-stage biotechnology company Neogene Therapeutics.

Here is what you need to know ahead of the London market open:

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MARKETS

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FTSE 100: called flat at 7,844.00

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Hang Seng: down 0.2% at 21,706.14

Nikkei 225: closed down 1.1% at 25,822.32

S&P/ASX 200: closed up 0.8% at 7,388.20

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DJIA: closed up 112.64 points, or 0.3%, at 34,302.61

S&P 500: closed up 15.92 points, or 0.4%, at 3,999.09

Nasdaq Composite: closed up 78.05 points, or 0.7%, at 4,000.70

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EUR: higher at USD1.0835 (USD1.0820)

GBP: higher at USD1.2230 (USD1.2209)

USD: higher at JPY128.10 (JPY127.85)

Gold: higher at USD1,916.75 per ounce (USD1,911.40)

(Brent): lower at USD84.63 a barrel (USD84.80)

(changes since previous London equities close)

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ECONOMICS

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Monday's key economic events still to come:

US Martin Luther King Day holiday. Financial markets closed.

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The UK foreign secretary will resume talks with his European Commission counterpart as speculation mounts that London and Brussels could be nearing a breakthrough on the Northern Ireland protocol. James Cleverly will speak to Maros Sefcovic, the commission's vice-president, on Monday over a proposal to iron out issues with post-Brexit trade arrangements affecting Northern Ireland and Great Britain. Political expectation about the prospect of an accord has grown, with suggestions that cross-Channel relations have improved since Rishi Sunak became prime minister. The announcement last week that a deal had been reached on sharing real-time data on goods travelling from Great Britain to Northern Ireland was seen as a step towards an overall resolution.

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BROKER RATING CHANGES

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Investec cuts HSBC to 'hold'

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Jefferies cuts abrdn to 'hold' ('buy') - price target 215 (210) pence

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Bofa cuts Burberry to 'underperform' ('neutral') - price target 2,000 pence

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COMPANIES - FTSE 100

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Pharmaceutical firm AstraZeneca completed its acquisition of Neogene Therapeutics, a clinical-stage biotechnology company focused on the discovery, development and manufacturing of T-cell receptor therapies. Neogene Therapeutics now will operate as a wholly-owned subsidiary of Astra, with operations in both Amsterdam and Santa Monica, California. AstraZeneca bought Neogene Therapeutics for an initial payment of USD200 million. It will pay an additional consideration of up to USD120 million if milestones are met.

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Food delivery app Just Eat announced a partnership with supermarket chain J Sainsbury for grocery delivery in the UK. The partnership will launch with more than 175 Sainsbury's stores by the end of February. As a result of the contact, Just Eat customer will have access to thousands of products, including Sainsbury's own brand products, for delivery, it says.

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COMPANIES - FTSE 250

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Asset manager Ashmore said that in the final quarter of 2022 its assets under management increased by USD1.2 billion to an estimated USD57.2 billion. At September 30, Ashmore had USD56.0 billion in AuM. Ashmore said the increase was due to a positive investment performance of USD3.8 billion, offset by net outflows of USD2.6 billion. "Reflecting a modest easing of global macro concerns, the Emerging Markets delivered strong returns over the quarter with the main fixed income and equity benchmark indices rising by between 5% and 10%. Ashmore's active investment processes delivered outperformance in the period across a broad range of fixed income and equity strategies, reflecting the typical profile of alpha creation as markets begin to recover from oversold levels," Ashmore explained.

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Primary care property investor Assura said it had a portfolio of 607 properties with an annualised rent roll of GBP141.6 million as of the end of 2022. It is currently on site with 11 developments which have a total cost of GBP121 million. However, Assura noted its net initial yield as of December 31 was 4.86%. It explained this represented a 7% reduction in its portfolio value which, at the end of 2022, stood at GBP2.7 billion.

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QinetiQ announced it has won a GBP80 million contract with the UK Ministry of Defence. The contract will provide specialist mission data and electronic warfare skills solutions, alongside training and IT support, the firm explained. QinetiQ will work with the UK MOD for a 10-year period. Chief Executive James Willis said: "The contract demonstrates how the MoD works closely with industry to build the skills of the future and introduce innovative approaches to enhance mission capability." QinetiQ is an engineering firm operating primarily in the defence and security markets.

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OTHER COMPANIES

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ITM Power said it has become clear that the outcome for the year ending April 30 will be "materially different" from current guidance, with lower revenue and a higher earnings before interest, taxation, depreciation and amortisation loss. The hydrogen-generating electrolyser system manufacturer said this conclusion came following a review of its operations after the appoint of Dennis Schulz as chief executive. The main factors hurting its outcome for the full-year are losses on customer contracts, legacy commitments for earlier product generations causing on-site support costs, warranty provisions, and inventory write-downs originating from iterations of product designs during manufacturing. ITM Power outlined a 12-month priorities plan, which will be presented in full on January 31, which aims to make ITM Power a "more focused" company. It covers three main areas: its core product portfolio, plans for future testing and automation and its approach to capital allocation and costs.

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NewMed Energy said it continues to promote its proposed merger with Capricorn Energy on the existing terms, saying this is the most compelling option for all stakeholders. However, NewMed also says it continues to consider alternative strategic options to the merger with Capricorn, which is facing pushback on the deal from shareholder Palliser Capital Master Fund.

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By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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