18th Sep 2024 07:49
(Alliance News) - The FTSE 100 is called to open lower on Wednesday, as investors digest a UK inflation reading, and look ahead to a US interest rate decision later.
"This morning is simple – we're all here, waiting, patiently or otherwise, for 7pm London/2pm NY, and for the Federal Open Market Committee's September policy decision to be announced," Pepperstone analyst Michael Brown commented.
"The August US retail sales print beat expectations – rising 0.1% MoM – for the fifth straight August in a row, while US industrial production also delivered a big beat, rising 0.8% last month. Hardly data that cries '50bp cut today!' Of course, markets come into today's FOMC decision incredibly divided, albeit certain that a cut of some description will be delivered. The sell-side consensus favours a 25bp move. The USD OIS curve prices the meeting as a 45% chance of 25bp vs. 55% chance of 50bp. Fed fund futures are a touch more dovish, at 40% of 25bp vs. 60% of 50bp."
The Bank of England is expected to leave bank rate unmoved at 5.00% on Thursday, that view possibly cemented by the latest UK data. The rate of annual consumer price inflation remained at 2.2% last month, but services price growth accelerated.
In early UK corporate news, AstraZeneca reported a US drug approval, while Legal & General announced it has struck a deal to sell its housebuilding arm.
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 0.3% at 8,287.76
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Hang Seng: financial markets in Hong Kong closed for Mid-Autumn Festival holiday
Nikkei 225: up 0.5% at 36,380.17
S&P/ASX 200: flat at 8,142.10
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DJIA: closed down just 15.90 points at 41,606.18
S&P 500: closed up marginally at 5,634.58
Nasdaq Composite: closed up 0.2% at 17,628.06
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EUR: flat at USD1.1119 (USD1.1119)
GBP: up at USD1.3175 (USD1.3164)
USD: lower at JPY141.56 (JPY141.76)
GOLD: higher at USD2,569.01 per ounce (USD2,564.83)
OIL (Brent): lower at USD73.14 a barrel (USD73.60)
(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 BST eurozone construction output
11:00 BST eurozone CPI
12:00 BST Germany Deutsche Bundesbank President Joachim Nagel speaks
13:30 BST US building permits
15:30 BST US EIA crude oil stocks
19:00 BST US interest rate decision
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UK annual consumer price inflation remained at 2.2% last month, though services price growth picked up, reinforcing expectations that the Bank of England will leave rates unmoved later this week. Numbers from the Office for National Statistics on Wednesday showed the annual rate of consumer price inflation landed in line with the FXStreet cited consensus of 2.2%. In July, the pace of consumer price growth picked up to 2.2% from 2.0% in June and May. The Bank of England has a 2.0% inflation target. On-month, consumer prices rose 0.3%, following a 0.2% fall in July from June. On-year, core consumer prices rose 3.6% in August, picking up speed from 3.3% in July and beating consensus of 3.5%. Meanwhile, services prices rose 5.6% on-year in August, accelerating from 5.2% in July. Stubborn services price growth has been in focus in recent months.
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The UK foreign secretary will discuss deepening defence, security ties with Norway and tackling threats from Russia when he meets his Norwegian counterpart. David Lammy called Norway "our eyes and ears in the High North" and "a key ally in the defence of Nato's northern flank" ahead of a trip to the country. He will visit Norwegian Joint Headquarters, the country's military command centre, with Norwegian Foreign Minister Espen Barth Eide. The UK and Norway will agree to further intelligence sharing and cooperation to counter Russian disinformation networks in Europe and beyond, the Foreign Office said. The foreign secretary said: "With the return of war to the European continent, the UK's relationship with Norway, as a key ally in the defence of Nato's northern flank, has never been more important. "We are both unwavering in our support to Ukraine, and together we are training and supporting the Ukrainian armed forces including boosting the country's air defence and maritime capabilities. "Norway acts as our eyes and ears in the High North; our joint work at the Norwegian military headquarters underlines the importance of our work to bolster Europe's defences.
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BROKER RATING CHANGES
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Goldman Sachs starts Phoenix Group with 'sell' - price target 543 pence
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Goldman Sachs raises Lancashire to 'buy' (neutral) price target 750 (745) pence
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COMPANIES - FTSE 100
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Drugmaker AstraZeneca said it has landed a US approval for its Fasenra autoimmune disease treatment. The drug has been backed to treat adults suffering with eosinophilic granulomatosis with polyangiitis. EGPA is a rare form of vasculitis, that can result in organ damage. "Fasenra is already well established for the treatment of severe eosinophilic asthma, and with this approval, physicians in the US will now be able to offer an important new, convenient single monthly subcutaneous injection to their patients with EGPA. Today's news demonstrates the potential of Fasenra to help patients suffering from eosinophilic diseases beyond severe asthma," said Ruud Dobber, Astra's executive vice president of its BioPharmaceuticals arm.
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Legal & General has agreed to sell its housebuilding unit CALA Group to funds managed by Sixth Street Partners and Patron Capital. The unit has been sold at an enterprise value of GBP1.35 billion, and L&G said it stands to receive cash proceeds of GBP1.16 billion. The financial services firm, which offers products including life insurance and pensions offerings, had in June set out plans to create a "simpler and better-connected business". L&G plans to focus on three divisions, Institutional Retirement, Asset Management and Retail. In addition, it announced a new Corporate Investments Unit to maximise the value of non-strategic assets, with CALA sitting in that division. L&G added on Wednesday: "Disposal proceeds from the sale will primarily be used, as they become available, to reinvest in the group in line with our strategy and the capital allocation framework set out at the capital markets event. The board will also consider the proceeds as part of the group's announced intention to increase returns to shareholders through ongoing buybacks."
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COMPANIES - FTSE 250
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Carex soap owner PZ Cussons reported a swing to an annual loss, with its bottom line hurt by one-off hits and a revenue decline. Revenue in the year ended May 31 declined 20% to GBP527.9 million from GBP656.3 million a year prior. It posted a pretax loss of GBP95.9 million, swinging from profit of GBP61.8 million. Hurting its bottom line, it reported a GBP140.6 million hit from 'adjusting items'. "This related primarily to a GBP107.5 million foreign exchange loss arising from the devaluation of the Nigerian naira. A charge of GBP24.4 million was incurred due to the impairment of the Sanctuary Spa brand in the first half of the year, and costs of GBP10.1 million were incurred on simplification and transformation projects," PZ explained. It announced what it labelled an interim dividend of 2.10 pence per share, down 44% from its final dividend of 3.73p a year prior. It means its total dividend amounts to 3.60p, also down 44% on-year, "reflecting the impact of the naira devaluation on earnings per share". PZ noted it has an earnings cover of approximately two times. Looking ahead, it said: "The FY25 financial year has started positively, with Group like-for-like revenue growth of 4.7% driven by strong growth in both our Africa and Europe and Americas regions, partly offset by adverse phasing of shipping in Asia." It expects operating profit for the new year between GBP47 million and GBP53 million, assuming average foreign exchange rates seen in the first-quarter of the financial year continue. Based on these exchange rates, operating profit for the year just ended would have amounted to around GBP40 million. PZ reported an operating loss for the year just gone of GBP83.7 million, swinging from profit of GBP59.7 million. Adjusted operating profit fell 21% to GBP58.3 million from GBP73.3 million.
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OTHER COMPANIES
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Inkjet printing technology firm Xaar reported an earnings decline, but reported its first-half performance as "resilient" in the face of tough market conditions. Revenue in the first-half of 2024 fell 17% to GBP28.6 million, from GBP34.5 million a year prior. Its pretax loss stretched to GBP2.8 million from GBP1.8 million. The revenue decline "reflects the expected ongoing decline of the legacy ceramics market [and] order delays", Xaar explained. Chief Executive Officer John Mills commented: "We remain confident in our strategy which is increasingly demonstrating the unique capabilities of our printhead technology. Our pipeline of opportunities has increased in quality in both existing and new application areas and increasing numbers of OEM's are engaged in, or actively planning, new product launches incorporating Xaar printheads."
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By Eric Cunha, Alliance News news editor
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