7th Jan 2025 07:52
(Alliance News) - Stocks in London are set to open lower on Tuesday, with a eurozone inflation reading, and US data in focus.
Both batches of data will be scrutinised for what they could mean for the European Central Bank and the Federal Reserve.
"Yesterday gave participants a hint of what may be to come, as conflicting reports on Trump's tariff plans whipsawed markets. Today, eurozone inflation & the ISM services PMI figure highlight the docket," Pepperstone analyst Michael Brown commented.
According to consensus cited by FXStreet, the rate of annual consumer price inflation in the eurozone is expected to have picked up to 2.4% in December, from 2.2% in November.
Brown added: "Despite this lack of further disinflationary progress, the figures are unlikely to deter the ECB from another 25bp cut at the end of this month, as policymakers increasingly focus on downside growth risks."
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 0.5% at 8,208.36
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Hang Seng: down 1.4% at 19,421.29
Nikkei 225: up 2.0% at 40,083.30
S&P/ASX 200: up 0.3% at 8,285.10
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DJIA: closed down 25.57 points, 0.1%, at 42,706.56
S&P 500: closed up 0.6% at 5,975.38
Nasdaq Composite: closed up 1.2% at 19,864.98
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EUR: higher at USD1.0412 (USD1.0397)
GBP: higher at USD1.2553 (USD1.2528)
USD: higher at JPY157.57 (JPY157.22)
GOLD: higher at USD2,640.73 per ounce (USD2,638.63)
(Brent): lower at USD75.97 a barrel (USD76.65)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
08:30 GMT eurozone construction PMI
10:00 GMT eurozone CPI
10:00 GMT eurozone unemployment
08:30 GMT Germany construction PMI
09:30 GMT UK construction PMI
13:30 GMT US trade balance
15:00 GMT US ISM services PMI
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Annual UK house price growth slowed last month, numbers from mortgage lender Halifax showed. House prices rose 3.3% on-year in December, easing from a 4.7% expansion in November. It was the slowest rate of year-on-year price growth since July. On-month, prices fell 0.2%, declining for the first time since March. House prices had risen 1.2% in November from October. "Where does that leave the housing market for 2025? While the housing market has been supported in recent months by falling mortgage rates, income growth and the announcement on upcoming stamp duty policy changes, mortgage affordability will remain a challenge for many, especially as the bank rate is likely to come down more slowly than previously predicted. However, providing employment conditions don't deteriorate markedly from a more recent softening, buyer demand should hold up relatively well and, taking all this into account, we're continuing to anticipate modest house price growth this year," Halifax analyst Amanda Bryden said. From the end of March, the temporary increase in the nil rate stamp duty thresholds will end. For first-time buyers of a home under GBP500,000, the nil rate band falls to GBP300,000 from GBP425,000 currently. For other home buyers, the nil rate band threshold is to decline to GBP125,000, from GBP250,000. The measures were announced by Chancellor Rachel Reeves in the October autumn budget.
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The Christmas trading period failed to provide UK retailers with cause for celebration as they head into a challenging new year, a survey on Tuesday indicated. According to the BRC-KPMG retail sales monitor covering the four weeks from November 24 to December 28, total UK retail sales grew by 3.2% on-year in December, compared with growth of 1.9% the prior year. This was above the 3-month and 12-month average growth figures of 0.4% and 0.7% respectively. The survey noted that November's figures were artificially worsened and December's improved by the later timing of Black Friday this year as it fell into December. However, the reverse was the case in 2023 thus cancelling the effect out for 3-month comparisons. Food sales rose on-year in December by 1.7%, compared to growth of 6.3% realised the year prior. Non-food sales increased 4.4% year-on-year in December against a decline of 2.9% last year. The 3-month average decline was 1.1%, with the decline slightly higher at 1.5% for the 12-month average. In-Store Non-Food sales rose by 0.4% on-year in December, against a 2.9% decline in December 2023. This was above the 3-month average decline of 2.4%, with the 12-month average decline sitting at 2.2%. Online non-food sales rose 11% year-on-year in the final month of the year, compared to the 0.8% decline seen last year. This was significantly above the 3-month average growth of 1.2% and the 12-month average decline of 0.4%. Overall for 2024, total UK retail sales grew by 0.7% with food growth up 3.3% and non-food declining by 1.5%.
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BROKER RATING CHANGES
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Morgan Stanley raises Shell to 'overweight' (equal-weight) - price target 3,070 (2,560) pence
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Berenberg cuts Synthomer price target to 230 (265) pence - 'buy'
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COMPANIES - FTSE 100
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Next upped its annual outlook after better-than-expected Christmas trading. The clothing and homewares retailer said full price sales in the nine weeks to December 28 rose 6.0% on-year. Adjusting for the effect of the end-of-season sale, which "flattered" its outturn, full price sales were up 5.7%. It had guided for growth of 3.5%. "The over-achievement adds GBP27 million to full price sales," Next said. It now expects pretax profit for the year to January 25 of GBP1.01 billion, a rise of 10% on-year. It had previously expected a profit rise of 9.5%. It now predicts total group sales of GBP6.30 billion, its outlook raised from GBP6.27 billion. For the following financial year, it expects full price sales growth of 3.5% and pretax profit to rise 3.6% to GBP1.05 billion. "We have been cautious in our outlook for both the UK and overseas," Next added. "We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy." Next is due to announce annual results for the current year on March 27. Next said it plans to raise prices to offset roughly GBP13 million of wage cost hikes. "This will require an increase of around 1% in selling prices on like-for-like garments over and above any factory gate price increases. Fortunately, we are seeing 0% inflation in factory gate prices. So although we are increasing our bought-in gross margins, we still expect our prices to rise by less than the Bank of England's target for inflation of 2%," it said.
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GSK said a treatment has received breakthrough therapy designation in the US to treat bone cancer. The B7-H3 antibody-drug conjugate received the designation, which aims to quicken the development and review of treatments. B7-H3 is being evaluated to treat sufferers of relapsed or refractory osteosarcoma, who have progressed on at least two prior lines of therapy. "This latest regulatory designation for GSK'227 exemplifies the potential of our targeted ADC in patients with difficult to treat cancers. For patients with relapsed or refractory osteosarcoma, there is an urgent unmet medical need with no approved treatment options once the cancer returns a second time, and chemotherapy provides limited benefit in this setting," said Hesham Abdullah, GSK's global head of oncology research & development.
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COMPANIES - FTSE 250
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Coats Group said it has named Hill & Smith's Hannah Nichols as its new chief financial officer. Nichols replaces Jackie Callaway, who steps down as CFO of industrial thread and footwear components maker Coats at the conclusion of its annual general meeting on May 21. Callaway will "assist with an orderly transition" until June 30. Infrastructure products and services firm said Nichols will step down from the company at the end of March. Chair Alan Giddins said: "Hannah has played an important role in the success of Hill & Smith since being appointed CFO over five years ago, and I wish her all the best in her new role. The search for Hannah's successor is underway, and I am confident we will find a high-quality candidate."
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OTHER COMPANIES
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Serica Energy said its production in the second half of 2024 was "disappointing" on woes at the Triton asset. The North Sea-focused oil and gas firm said production averaged 34,600 barrels of oil equivalent per day in 2024. In the fourth-quarter alone, it totalled 25,100, down from 26,000 in the third, 42,400 in the second and the 45,100 achieved in the first three months of 2024. "Production in the second half of 2024 was clearly disappointing and well below the potential of our asset base. We and our partners are working to improve planning and procedures to optimise maintenance and maximise production resilience going forward. At Triton the key issue has been operating vulnerabilities associated with reliance on a single gas export compressor, and we have stayed in touch closely with the FPSO operator as they worked through root cause analysis in relation to the repeated issues seen in H2 2024," Chief Executive Officer Chris Cox said. "We understand what has caused these issues and, together with our partners, are implementing improvements to support better and more reliable future performance. As the Triton operations continue their ramp-up, we look forward to seeing both enhanced production as the new wells drilled during 2024 contribute fully, and more resilient operations, as we resume operations with two compressors in Q1."
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By Eric Cunha, Alliance News news editor
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