5th Nov 2024 07:58
(Alliance News) - The FTSE 100 was called to open lower on Tuesday morning, while across the pond Americans are set to head for the polls in the extremely tight presidential election.
London market participants will pay close attention to today's UK and US composite purchasing managers' index releases - as well as comments from a Bank of England governor, in light of last week's budget and ahead of this week's rate call.
Swissquote's Ipek Ozkardeskaya noted the "good news from China" as "the Caixin's PMI index showed a stronger-than-expected rebound in activity in October, also supported by a rebound in factory output. To top it all off, news that China is now considering a plan to lift the local governments’ debt ceiling and to shift some of their hidden debt onto their formal, official financial statements to reduce financial burden of the local governments and give more transparency to the picture, also helped."
As for the US, Ozkardeskaya believes that "the major risk today is not a Harris or a Trump win, but it’s the reality that a Harris win could be heavily contested by Trump and lead to violence and chaos, and more uncertainty than necessary and hit sentiment".
In corporate news, things are looking up for Vodafone and Three's planned merger as the UK competition regulator has reported that investment in networks and customer protection could address its concerns, allowing the GBP15 billion deal to proceed.
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 0.2% at 8,166.84
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Hang Seng: up 1.4% at 20,860.35
Nikkei 225: closed up 1.1% at 38,474.90
S&P/ASX 200: closed down 0.4% at 8,131.80
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DJIA: closed down 257.59 points, 0.6%, at 41,794.60
S&P 500: closed down 0.3% at 5,712.69
Nasdaq Composite: closed down 0.3% at 18,179.98
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EUR: flat at USD1.0890 (USD1.0889)
GBP: up at USD1.2979 (USD1.2972)
USD: up at JPY152.19 (JPY151.94)
Gold: up at USD2,737.36 per ounce (USD2,735.26)
(Brent): up at USD75.02 a barrel (USD74.70)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
US election day
15:30 CET eurozone European Central Bank President Christine Lagarde speaks
09:00 GMT UK new car sales
09:30 GMT UK composite PMI
09:20 GMT UK Bank of England Governor Andrew Bailey speaks
09:00 CET Spain unemployment
08:30 EST US trade balance
08:55 EST US Redbook index
09:45 EST US composite PMI
10:00 EST US ISM services PMI
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Proposed legislation aimed at creating the "first smoke-free generation" is set to be introduced in UK Parliament. The Tobacco & Vapes Bill, which prevents anyone born after January 1 2009 from legally smoking by gradually raising the age at which tobacco can be bought, will be introduced in the House of Commons on Tuesday. It is hoped the "historic" legislation could "save thousands of lives and protect the NHS", according to ministers. Indoor smoking ban powers could also be extended to some outdoor spaces, with children's playgrounds, and outside schools and hospitals being considered. The bill will introduce restrictions on vape advertising and sponsorship, as well as restricting flavours, displays and the packaging of e-cigarettes to reduce their appeal to children and young people. Disposable vapes will be banned from June 1 2025 under separate environmental legislation. Health Secretary Wes Streeting said: "Unless we act to help people stay healthy, the rising tide of ill health in our society threatens to overwhelm and bankrupt our NHS. Prevention is better than cure."
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China's service economy climbed at a faster rate in October, with employers hiring more staff, survey data published by S&P Global showed. The seasonally adjusted headline Caixin China general services business activity index rose to 52.0 points in October from 50.3 in September. Moving further above the neutral 50-point mark separating growth from contraction, it indicates activity growth accelerated. The reading easily beat the FXStreet-cited market consensus of 50.5 for October. "As a result of rising workloads and improved confidence about future output, service providers in China continued to raise staffing levels in October. On the price front, selling prices were unchanged whilst input cost inflation softened," S&P Global said. The Caixin General composite purchasing managers' index improved to 51.9 points in October from 50.3 in September. This also was helped by the manufacturing PMI reading, out on Friday last week, rising to 50.3 points in October from 49.3 in September. Higher output in October was boosted by a renewed rise in new business, while the volume of unfinished work returned to growth after a brief contraction in September, S&P Global said.
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The burgeoning services industry in Ireland slipped back slightly last month, but growth of the overall private sector improved thanks to manufacturing. The AIB Ireland services business activity index declined to 53.8 points in October from 55.7 in September, but remained well above the neutral mark of 50 points. David McNamara, chief economist at lender AIB, said the Irish services sector lost some momentum, but the picture remained robust. "Overall, Irish firms reported strong growth in new business, and this was linked to both domestic and foreign demand," he said. The Irish services sector is growing faster than the same sectors in the UK and the eurozone, McNamara noted, though slightly slower than in the US. By contrast, the AIB composite PMI output index improved to 52.6 points last month from 52.1 in September, also well into expansion territory.
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UK retail sales growth slowed in October, numbers from the British Retail Consortium and KPMG showed. UK retail sales rose 0.6% on-year in October, below the three-month average rise of 1.3% and the 12-month average growth of 1.0%. In October 2023, sales had risen 2.6% on-year. "After a good start to autumn, October's sales growth was disappointing. This was part driven by half term falling a week later this year, depressing the October figures, and November sales will likely see more of a boost. Uncertainty during the run-up to the budget, coupled with rising energy bills, also spooked some consumers. Fashion sales took the biggest hit as the mild weather delayed winter purchases," British Retail Consortium analyst Helen Dickinson said. Food sales rose 2.9% on-year in the three months to October, easing from a 7.9% rise a year prior. It fell short of the 12-month average rise of 4.1%. Non-food sales edged 0.1% lower in the same three-month period, though this was a better result than the 1.0% fall registered a year prior. It is also better than the 12-month average decline of 1.6%.
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The Reserve Bank of Australia has decided to leave the cash rate target unchanged at 4.35% and the interest rate paid on exchange settlement balances unchanged at 4.25%. "Taking account of recent data and the updated forecasts, the board's assessment is that policy is currently restrictive and working broadly as anticipated," the RBA said Tuesday. "While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high."
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BROKER RATING CHANGES
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Citigroup raises Severn Trent to 'neutral' - price target 2,467 pence
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JPMorgan raises Pennon to 'overweight' (neutral) - price target 700 (600) pence
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JPMorgan raises Ryanair price target to 19.00 (18.50) EUR - 'overweight'
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COMPANIES - FTSE 100
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The UK Competition & Markets Authority said Vodafone and Three could address competition concerns regarding their planned GBP15 billion merger announced last summer, through investing in networks and customer protections. A "multi-billion-pound commitment to upgrade the merged company's network across the UK, including the roll-out of 5G, combined with short-term customer protections" could resolve issues its investigation identified in September and let the merger, which would create the UK's largest mobile phone network, go ahead. "It provisionally finds that a legally binding commitment to undertake the network integration and investment programme proposed by Vodafone and Three would significantly improve the quality of the merged company's mobile network, boosting competition between mobile network operators in the long term and benefiting millions of people who rely on mobile services," the regulator noted. The CMA added that it will publish a final decision before the December 7 deadline, as invited feedback on its announcement until next week Tuesday.
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COMPANIES - FTSE 250
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TI Fluid Systems issues a trading update for the nine months to September 30. Nine-month revenue has decreased 2.9% annually to EUR2.51 billion from EUR2.62 billion, it said, with CEO Hans Dieltjens saying his company has "delivered a resilient performance in the first nine months of the year in an increasingly challenging and uncertain global automotive market". TI Fluid noted its completion during the period of an EUR40 million buyback with 24.1 million shares. Going forward it expects a low to mid-single digit fall in full-year revenue, with adjusted free cash flow totalling about 30% of adjusted earnings before interest, tax, depreciation and amortisation .
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OTHER COMPANIES
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Ensilica publishes full-year results, saying revenue jumped 23% to GBP25.3 million from GBP20.5 million the year before. Ebitda rose to GBP1.7 million from GBP1.6 million. However the company swung to a GBP52,000 pretax loss from a GBP47,000 profit. Notably, cost of sales increased 32% to GBP16.3 million from GBP12.3 million, while administrative costs came in 11% higher, at GBP8.2 million from GBP7.4 million. Ensilica said it expects financial 2025 revenue to be second-half weighted, and that it is well-positioned to capitalise on growth in semiconductor industry. "The company has started FY 2025 strongly, with key milestones achieved and new business momentum across target sectors including automotive and industrial," it added. However: "Whilst the board is confident of the short-term revenue pipeline, additional external financing may be required should the company experience further delays in contracted customer receipts."
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By Emma Curzon, Alliance News reporter
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