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LONDON BRIEFING: Lloyds profit takes hit; Jet2 cuts guidance

24th Apr 2024 07:42

(Alliance News) - Stocks in London are set to open higher on Wednesday, as the release of some key US data edges closer

London's FTSE 100 hit its record level of 8,076.52 points earlier on Tuesday, though it slipped as the afternoon wore on.

Investors are now turning their attention to key economic indicators from the US, with gross domestic product data out on Thursday and a personal consumption expenditures reading on Friday.

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 0.6% at 8,089.60

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Hang Seng: up 2.1% at 17,180.22

Nikkei 225: closed up 2.4% at 38,460.08

S&P/ASX 200: closed down slightly at 7,683.00

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DJIA: closed up 263.71 points, 0.7%, to 38,503.69

S&P 500: closed up 59.95 points, 1.2%, at 5,070.55

Nasdaq Composite: closed up 245.33 points, 1.6%, at 15,696.64

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EUR: up at USD1.0703 (USD1.0699)

GBP: up at USD1.2454 (USD1.2440)

USD: up at JPY154.86 (JPY154.77)

Gold: up at USD2,327.70 per ounce (USD2,322.78)

(Brent): down at USD87.68 a barrel (USD87.76)

(changes since previous London equities close)

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ECONOMICS

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Wednesday's key economic events still to come:

08:30 EDT Canada retail sales

10:00 CEST Germany Ifo business climate

10:00 CEST Italy consumer confidence

10:00 CEST Switzerland economic sentiment index

08:30 EDT US durable goods orders

10:30 EDT US EIA Crude oil stocks

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UK Prime Minister Rishi Sunak will talk defence and security with German Chancellor Olaf Scholz on Wednesday when the British leader makes his first trip to Berlin since becoming prime minister 18 months ago. Discussions are expected to focus on Ukraine, defence spending levels, and a push by Germany to bolster Nato's air defences in Europe amid Russia's relentless missile strikes on Ukraine. "At this dangerous moment for the world, the UK and Germany are standing side by side to preserve security and prosperity at home and across our continent," said Sunak, hailing "a new chapter" in the countries' relationship. Sunak's visit to Berlin is the second day of a two-day trip to Europe. He visited the Polish capital Warsaw on Tuesday where he pledged to gradually increase UK defence spending to 2.5% of GDP by 2030.

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BROKER RATING CHANGES

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HSBC cuts Ocado price target to 285 (370) pence - 'reduce'

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Barclays raises AB Foods price target to 2,700 (2,400) pence - 'equal weight'

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Peel Hunt cuts Tyman to 'hold' - price target 400 pence

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COMPANIES - FTSE 100

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Lloyds Banking reported that its profit fell, due to lower net income and higher costs, offset by lower impairment. Lloyds said pretax profit came in at GBP1.63 billion in the first quarter, down 28% from GBP2.26 billion annually. Net income fell to GBP4.24 billion, down 9% from GBP4.65 billion. Lloyds CET1 ratio fell to 13.9% from 14.1%. "The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality. Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance," said Chief Executive Charlie Nunn.

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Bunzl said that revenue in the first quarter of 2024 declined by 2.4% at constant exchange rates, with underlying revenue, which is organic revenue adjusted for trading days, declining by 5.4% as expected. "This was mainly driven by volume reduction in our US foodservice redistribution business, the ongoing impact from transitioning customer specific inventory in our US retail business, and deflation," the company said. Looking ahead, Bunzl left its guidance unchanged. The company continues to expect to deliver slight revenue growth in 2024, at constant exchange rates, driven by acquisitions already completed in 2023 and 2024; with underlying revenue declining slightly. Bunzl's operating margin is expected to be slightly below the record level reported for 2023.

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Croda International reported that group sales in the first quarter of the year came in at GBP409 million, down 10% at constant currency versus a "strong" 2023 first quarter comparator. Compared to the fourth quarter, group sales were up 8%, excluding Covid-19 lipid sales in the previous quarter. Chief Executive Officer Steve Foots said: "Consumer Care has made an encouraging start to the year with growth across all business units and a significant improvement in North America. Life Sciences continues to experience more challenging market conditions, particularly in Crop Protection. Overall, we are on track to meet our previously stated group guidance for the full year."

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COMPANIES - FTSE 250

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Mitie Group's third-largest shareholder has sold 40.0 million shares through a placing. The shares were priced at 112 pence each, raising about GBP44.8 million. On Tuesday, Alchemy Special Opportunities Fund IV LP, a London-based investment fund, announced its intention to sell 25 million shares in Mitie. Alchemy is now interested in 31.0 million shares, roughly a 2.3% stake. Mitie will receive no proceeds from the sale.

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OTHER COMPANIES

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Jet2 issued a trading update on the financial year ended March 31. The travel group expects to report profit before foreign exchange revaluation and tax of between GBP515 million and GBP520 million, down from GBP510 million to GBP525 million. It noted that this is up 33% annually and in line with market expectations. Looking ahead, Jet2 said sale seat capacity for Summer 2024 is currently 12.3% higher than Summer 2023 at 17.1 million seats.

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Serica Energy reported that revenue fell to GBP632.6 million in 2023 from GBP812.4 million a year earlier. Pretax profit plummeted to GBP305.6 million from GBP488.2 million. Serica Energy maintained its final dividend of 14p, bringing its total dividend to 23p from 22p. Further, the company said it has begun a GBP15 million share buyback. "This reflects the confidence of the board in the company's current financial position, the cash generating capacity of the portfolio during 2024 and the long-term value of the assets," the company said.

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By Sophie Rose, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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