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LONDON BRIEFING: Glencore finally seals deal for Teck coal business

14th Nov 2023 07:45

(Alliance News) - Stocks in London are expected to open lower on Tuesday, with investors focusing on US inflation data.

The US annual consumer inflation rate is expected to have cooled to 3.3% in October, from 3.7% in September, according to consensus cited by FXStreet.

Consumer prices are forecast to rise by 0.1% in October month-on-month, which it noted would be a meaningful deceleration from the 0.4% print in September. However, core inflation is expected to be 0.3% month-on-month for a second consecutive month, and remain at 4.1% on an annual basis.

"An inflation read in line with expectations, or ideally softer than expected, should give further support to the Federal Reserve doves, cement the idea that the Fed is done hiking the interest rates and boost the rate cut expectations for next year," said Ipek Ozkardeskaya, Swissquote Bank senior analyst.

In local economic news, UK unemployment was steady last month, though bonuses drove up wages by more than expected, figures from the Office for National Statistics showed on Tuesday.

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 14.7 points, 0.2%, at 7,411.13

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Hang Seng: up 0.1% at 17,440.21

Nikkei 225: closed up 0.3% at 32,695.93

S&P/ASX 200: closed up 0.9% at 7,010.70

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DJIA: closed up 54.77 points, or 0.2%, at 34,337.87

S&P 500: closed down 0.1% at 4,411.55

Nasdaq Composite: closed down 0.2% at 13,767.74

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EUR: up at USD1.0707 (USD1.0696)

GBP: up at USD1.2301 (USD1.2264)

USD: up at JPY151.63 (JPY151.59)

Gold: slightly lower at USD1,944.54 per ounce (USD1,945.38)

Oil (Brent): up at USD82.72 a barrel (USD82.39)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

UK BoE Chief Economist Huw Pill and MPC Member Swati Dhingra speak

11:00 CET EU GDP

11:00 CET EU employment

11:00 CET Germany ZEW indicator of economic sentiment

06:00 EST US NFIB index of small business optimism

08:30 EST US CPI

08:30 EST US real earnings

08:55 EST US Johnson Redbook retail sales index

12:35 CST US Fed Chicago President Austan Goolsbee speaks

16:30 EST US API weekly statistical bulletin

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The unemployment rate for the period from July to September was 4.2%, unchanged from the June to August period. The ONS began to use 'experimental' unemployment data last month, owing to a low response rate for its survey. In the three months to September, annual growth in average total pay, excluding bonuses, was 7.7%. This was in line with market consensus, as cited by FXStreet. The figure for the previous three-month period was 7.8%. Whilst the pace eased slightly from the prior period, the ONS noted it is still among the highest annual growth rates since comparable records began in 2001. Including bonuses, average pay growth was 7.9%, which overshot market expectations of 7.4%. It was 8.2% in the three months to August, upwardly revised from 8.1%.

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BROKER RATING CHANGES

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Morgan Stanley cuts Reckitt Benckiser to 'equal-weight' (overweight)

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Berenberg cuts InterContinental Hotels to 'hold' (buy) - price target 6,000 (6,500) pence

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CFRA raises BAE Systems to 'hold' (sell) - price target 1,100 (800) pence

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COMPANIES - FTSE 100

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Miner and commodities firm Glencore said it has entered a binding agreement with Teck Resources Ltd to buy a 77% stake in its steelmaking coal business, Elk Valley Resources, for USD6.93 billion. This follows a series of approaches after Glencore first approached the Canadian firm with a takeover proposal in the Spring. Teck had rebuffed the offer, dubbing it "unsolicited and opportunistic". On Tuesday, Glencore also said it has agreed with Nippon Steel Corp that it will hold a 20% equity interest in EVR, with Posco to hold the remaining 3%. Glencore will also acquire USD250 to USD300 million in shareholder loan from Teck to EVR, to be repaid out of EVR's cashflows. "These world-class assets and the experienced people that operate them are expected to meaningfully complement our existing thermal and steelmaking coal production located in Australia, Colombia and South Africa," said CEO Gary Nagle.

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Imperial Brands said in the year to September 30 it brought in flat revenue of GBP32.48 billion, edging down 0.2% from GBP32.55 billion a year before. On a net basis, the Bristol-based tobacco company said adjusted revenue rose 2.8% to GBP8.01 billion from GBP7.79 billion, with next-generation products net revenue up 26%. It reported that strong tobacco pricing helped to mitigate a volume decline of 10%, driven by its Russian exit and weakness in US mass market cigars. Pretax profit rose to GBP3.11 billion from GBP2.55 billion year-on-year. Dividend per share was raised 4.0% to 146.82p from 141.17p. Looking ahead, it expects to deliver low-single-digit revenue growth, with adjusted operating profit close to the middle of a mid-single-digit range - both at constant currency.

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COMPANIES - FTSE 250

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Bootmaker Dr Martens said it has appointed Giles Wilson as its new finance chief. Wilson will join in 2024, with a date to be confirmed and announced in due course. He joins from William Grant & Sons Ltd, owners of premium drinks brands including Glenfiddick Scotch Whisky, Balvenie Whisky and Hendrick's Gin. Prior to this, he was CFO at John Menzies.

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By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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