29th Jul 2024 07:41
(Alliance News) - London's FTSE 100 is called to open higher on Monday, ahead of a trio of central bank decisions and more US earnings, including numbers from the likes of Apple and Microsoft.
The Federal Reserve and Bank of Japan announce interest rate decisions on Wednesday, before the Bank of England of Thursday.
"There is a sense of hope in the market this Monday morning after Friday's [personal consumption expenditures] data boosted the expectation that the Federal Reserve is getting very close to signalling its first rate cut in September. The core PCE came in slightly higher-than-expected – steady at 2.6% instead of a further easing to 2.5%, but the rest of the data was either in line or lower than expected," Swissquote analyst Ipek Ozkardeskaya commented.
"The Fed will start its two-day policy meeting tomorrow and will announce its policy decision on Wednesday. If all goes according to the plan, a strong signal for a September cut should not make a big difference – as it's is already priced in. The risk is that we meet a slightly cautious Powell, in which case there could be some correction in dovish Fed bets. Also this week, the US jobs data will be closely watched."
In early UK corporate news, GSK said its RSV drug received a positive assessment in Europe, while Pearson reported a half-year earnings fall but increased its dividend. Entain said its US BetMGM offering had an "important" half-year,
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 0.4% at 8,317.91
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Hang Seng: up 1.7% at 17,307.40
Nikkei 225: up 2.1% at 38,468.63
S&P/ASX 200: up 0.9% at 7,989.60
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DJIA: closed up 654.27 points, 1.6%, at 40,589.34
S&P 500: closed up 1.1% at 5,459.10
Nasdaq Composite: closed up 1.0% at 17,357.88
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EUR: flat at USD1.0860 (USD1.0859)
GBP: higher at USD1.2873 (USD1.2859)
USD: lower at JPY153.31 (JPY153.75)
GOLD: higher at USD2,392.11 per ounce (USD2,384.60)
(Brent): higher at USD80.71 a barrel (USD79.56)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 IST Ireland retail sales
09:30 BST UK mortgage approvals
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Kemi Badenoch has thrown her hat in the ring and Suella Braverman has bowed out as nominations are set to close in the Conservative Party leadership race. Badenoch, an early favourite with bookmakers, joins Priti Patel, Mel Stride, Tom Tugendhat, James Cleverly and Robert Jenrick to compete for the top job. Writing in The Times, Badenoch said an "incoherent" set of policies were to blame for the party suffering its worst general election result. The shadow housing secretary accused successive Conservative prime ministers of allowing Britain to become "increasingly liberal" and tolerating "nasty identity politics". "We talked right yet governed left," she said.
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BROKER RATING CHANGES
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Citigroup raises BAE Systems to 'buy' - price target 1,440 pence
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Morgan Stanley cuts Drax to 'equal-weight' - price target 670 pence
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COMPANIES - FTSE 100
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GSK said its Arexvy offering received a "positive opinion" from the European Medicines Agency's Committee for Medicinal Products for Human Use. The CHMP gave a promising assessment of the drug in the treatment of 50-59 year olds who are at increased risk of respiratory syncytial virus disease. If it is approved, Arexvy will be the first EU jab to treat RSV in that age group. A decision on EU marketing authorisation for this population is expected by September. "Today's positive opinion is the first time that an indication for adults aged 50-59 has been recommended by CHMP for a RSV vaccine, one of the final steps prior to the extension of the marketing authorisation by the European Commission," GSK explained.
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Education products publisher Pearson expects a yearly outturn in line with expectations, after reporting a decline in half-year earnings. Sales in the first-half of 2024 declined 7.6% to GBP1.75 billion from GBP1.88 billion a year prior. Pretax profit fell 10% to GBP212 million from GBP236 million. Adjusted operating profit was flat at GBP250 million, while underlying sales growth was 2%. Pearson raised its interim dividend by 5.7% to 7.4 pence from 7.0p. "We are implementing plans across all of our businesses that will see us deliver better products & services with greater efficiency. We're also focusing on opportunities to progressively build our presence in materially larger and higher growth markets in which we are well positioned to succeed, with a particular focus on early careers and enterprise skilling," said CEO Omar Abbosh, who took on the post in January. "Since joining Pearson at the start of the year, I have led a comprehensive review of our business and the markets in which we operate. This process has only reinforced my conviction in the potential of Pearson and the vital role we play in helping people realise the life they imagine through learning. Significant demographic shifts and rapid advances in AI will be important drivers of growth in education and work over the coming years, and this plays to Pearson's strengths as a trusted provider of learning and assessment services." For the whole of 2024, it expects underlying sales growth and adjusted operating profit in line with market expectations.
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Ladbrokes owner Entain hailed a first-half of "accelerating momentum" for its BetMGM US joint-venture. It said BetMGM's net revenue from operations rose 6% on-year in the first six months of 2024 to USD1.0 billion. Second-quarter growth spiked to 9%, from 3% in the first. It reported a loss before interest, tax, depreciation, and amortisation of USD123 million, an outcome "consistent with expectations of 2024 being an investment year". "The first half of this year has been very important in laying the groundwork for BetMGM's future. 2024 is a year of investment, focusing on improving our customer experience and stepping up our level of investment in players. We are encouraged to see this strategy delivering accelerating momentum. We have exceeded our goals for both acquisition and retention, which should lead to higher year-over-year revenue growth for the second half of this year into 2025," Chief Executive Officer Adam Greenblatt said. "Our iGaming business continues to perform strongly with attractive returns, and to maximize this strength and momentum, we plan to deploy additional marketing in the back half of this year. Our execution roadmap, building momentum and prospects ahead all support our confidence in BetMGM's strong future." The BetMGM joint-venture is co-owned by one-time Entain suitor MGM Resorts International.
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COMPANIES - FTSE 250
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Food producer Cranswick hailed "robust demand" in its first-quarter. Revenue rose 6.7% on-year, in the 13 weeks to June 29, "driven by strong volume growth". Like-for-like revenue growth was 6.4%. "Premium product ranges performed particularly well. Easing input costs have been reflected in selling prices," Cranswick said. "Export sales volumes were strongly ahead but were offset by reduced pricing in the Far East and EU albeit there are early signs that Far East prices are starting to firm. Pet Products revenue was strongly ahead of the prior year reflecting the continued onboarding of the Pets at Home business." Cranswick said it has left its annual outlook unchanged.
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ME Group International said it has struck a deal with Motor Fuel Group, which will see the FTSE 250 listing roll-out 300 of its Wash.ME Revolution laundry machines across forecourts in the UK. "These machines give consumers access to self-service, large-capacity, energy-efficient, high-speed washing and drying laundry services, 24 hours a day, seven days a week. Today, ME Group operates more than 1,462 Wash.ME Revolution laundry machines across the UK & Republic of Ireland and 5,957 machines globally, and continues to rapidly expand its estate through the ongoing rollout of new machines in high footfall locations," ME Group. The machines will be installed over the next five years.
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OTHER COMPANIES
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Transport system services provider Journeo said it has won a deal with Metroline Manchester worth GBP2.1 million. Journeo will provide its on-board bus safety systems and cloud-based services to the bus operator. "Journeo will install the latest high-definition digital CCTV systems on approximately 300 new vehicles that are due to enter service in January 2025. Each vehicle will be fitted with a Journeo Edge gateway, providing a secure connection to cloud-based services within the Journeo Portal," the company explained.
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CT Automotive said trading in 2024 has gone "as planned" so far. The maker of interior components to the automotive industry said demand was as expected over the first half of the year, noting some "volume moderation". "The board anticipates this effect to be partially offset in the second half of the year by additional volumes from new programme launches with a number of Tier 1 and original equipment manufacturer customers, including Ford, Marelli and Rivian, which commenced production in [the second-quarter]," CT Automotive said. For the full-year, it expects a gross margin improvement from the 22% achieved in 2023. CEO Simon Phillips said: "2024 is proceeding as planned and we have good visibility over production demand into the medium term. We see significant scope for expansion in all three of our production centres in China, Mexico and Turkey through a combination of potential new business wins and growth with existing customers. Combined with the margin improvements ongoing, the outlook for revenues and profit for 2025 and beyond is positive." It will report half-year results in "late September".
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SIG is mulling going cap in hand to investors in a bid to raise up to GBP150 million, Sky News reported on Saturday. The building materials firm is considering a fundraise between GBP100 million and GBP150 million. Shares in the company closed up 1.8% at 26.48 pence each in London on Friday, giving it a market capitalisation of around GBP312.8 million. The stock is down some 20% year-to-date. Sky News said the company did not want to comment on "market speculation". The firm had secured some GBP165 million from an equity raise during the pandemic, including backing from private equity firm Clayton, Dubilier & Rice. CD&R has roughly a 29% stake in SIG. The Sheffield-based supplier of insulation, roofing, commercial interiors and construction products said in June that market conditions have remained challenging in the calendar year to date. SIG said softness in the building and construction sector had been most notable in French and German markets, and in the end markets of its UK Interiors business. As a result, SIG at the time said it expects 2024 full year underlying operating profit to be in the range GBP20 million to GBP30 million, below an analyst range. SIG at the time had put the analyst range at between GBP36.7 million to GBP43.0 million.
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By Eric Cunha, Alliance News news editor
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