8th May 2025 07:50
(Alliance News) - London's FTSE 100 is poised to open higher, ahead of an expected Bank of England rate cut, and after a US-UK trade arrangement tease.
The BoE decision, shortly after midday, will be accompanied by the latest batch of economic forecasts in the monetary policy report.
"The main focus will be on how dovish the guidance will be. Given recent comments from officials highlighting the disinflationary impact of US tariffs and the BoE's history of surprises, there is a risk of a dovish shift, which would hurt the pound," Commerzbank analyst Michael Pfister commented.
On Wednesday, the Federal Reserve left rates unmoved, as expected.
Donald Trump will announce a trade deal with the UK on Thursday, US media has reported, after the president touted a "major" upcoming agreement on social media.
The New York Times and Politico reported that Trump was set to agree to a deal with the UK, citing multiple people familiar with the plans.
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 8,606.03
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Hang Seng: up 0.4% at 22,785.51
Nikkei 225: up 0.5% at 36,959.12
S&P/ASX 200: up 0.2% at 8,191.70
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DJIA: closed up 284.97 points, 0.7%, at 41,113.97
S&P 500: closed up 0.4% at 5,631.28
Nasdaq Composite: closed up 0.3% at 17,738.16
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EUR: lower at USD1.1281 (USD1.1344)
GBP: lower at USD1.3285 (USD1.3342)
USD: higher at JPY144.39 (JPY143.39)
GOLD: lower at USD3,330.91 per ounce (USD3,386.18)
(Brent): lower at USD61.14 a barrel (USD61.45)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 BST Ireland CPI
12:02 BST UK interest rate decision
13:30 BST US initial jobless claims
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Donald Trump will announce a trade deal with the UK on Thursday, US media has reported, after the president touted a "major" upcoming agreement on social media. The New York Times and Politico reported that Trump was set to agree to a deal with the UK, citing multiple people familiar with the plans. Trump had written earlier on Wednesday the "major trade deal" would be announced with a "big, and highly respected country." He said he would announce the deal at a 10:00 am, or 14:00 GMT, news conference in the Oval Office at the White House, and he touted the deal as the "first of many."
Trump imposed sweeping tariffs on US trading partners last month but temporarily froze most of them to allow for the negotiation of trade deals. He has been claiming for weeks that countries were lining up to strike trade agreements with the US. The Times said it was not clear whether a US trade deal with the UK had been finalised or if the two countries would announce a framework for an agreement that would be subject to further negotiation. The UK earlier this week struck a free trade agreement with India, its biggest such deal since leaving the EU, after negotiations relaunched in February following US tariff threats. Britain has sought to bolster trade ties across the world since it left the EU at the start of the decade under Brexit, a need that became more pressing after the US unleashed tariffs that risk causing weaker economic growth. UK Prime Minister Keir Starmer will provide an update on trade talks with the US later on Thursday, Downing Street has said. A Number 10 spokeswoman said talks with the US had been "continuing at pace and the prime minister will update later today".
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The UK government is on track to miss its key fiscal rules, increasing the likelihood of tax hikes later this year, an economic think tank has warned. Economic growth is also on track to be weaker than previously expected this year, according to the National Institute of Economic & Social Research.
Fresh forecasts from the organisation indicated that a slowdown in domestic demand and global economic uncertainty will impact potential growth throughout the year. It predicted that the UK economy will grow by 1.2% in 2025 "amid low business confidence, high uncertainty and rising cost pressures". In its previous forecasts in February, Niesr had pointed to 1.5% growth for the year. The think tank indicated that the reduced level of growth will result in lower than previously predicted tax receipts. As a result, it said the government is now expected to miss its fiscal rules requiring UK national debt as a share of the economy to fall and to be on course for a budget surplus. In the government's spring statement, Chancellor Rachel Reeves said state finances were on track to give a headroom worth around GBP9.9 billion by 2029/30. Niesr's forecasts suggest this could now be set for a shortfall of GBP62.9 billion over this time frame, suggesting the Treasury could need to look at more spending cuts or tax increases to achieve a surplus.
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UK house price growth picked up in April, according to numbers from Halifax. House prices rose 3.2% on-year last month, picking up speed from a 2.9% increase in March. On-month, prices rose 0.3%, following a 0.5% fall in March from February. "We know the stamp duty changes prompted a surge in transactions in the early part of this year, as buyers rushed to beat the tax-rise deadline. However, this didn't lead to a significant increase in property prices, with the last six months characterised by a stability in prices rarely seen since the pandemic. While the market has cooled slightly since this rush, buyer activity remains strong in comparison to recent years," Halifax analyst Amanda Bryden said. "Mortgage rates have continued to fall, with most lenders now offering rates below 4%. Coupled with positive earnings growth that has outpaced broader inflation, these factors have helped to steadily improve affordability for many buyers."
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BROKER RATING CHANGES
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UBS raises Weir Group to 'buy' (neutral) - price target 2,850 (2,250) pence
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Berenberg starts Telecom Plus with 'buy' - price target 2,600 pence
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COMPANIES - FTSE 100
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Next said its first-quarter went better-than-expected, helped by warmer weather, with the retailer lifting its profit outlook but opting against raising sales guidance. The clothing and homewares seller said full price sales in the 13 weeks to April 26 surged 11% on-year. The outcome was GBP55 million ahead of its forecast for the period. "We believe much of the over-performance in the first quarter has been the result of warmer weather, which has benefited the sale of summer-weight clothing. It is likely that some of these sales have been pulled forward from Q2. So, despite the strength of Q1, we are not increasing our sales guidance for Q2, or the rest of the year," Next added. Nonetheless, it has upped its pretax profit guide to GBP1.08 billion from GBP1.07 billion. The new guide would represent a 6.8% rise from the prior year. The previous guidance would have been a 5.4% on-year rise. It still expects total group sales of GBP6.6 billion for the year. Next added: "As we mentioned in our March guidance, we are more cautious about sales in the second half because the comparative numbers (in autumn winter 2024) were much stronger. In addition, we believe that the full effects of this April's national insurance increases will begin to filter through to the wider economy in the second half." The firm will next update on sales on July 31. It will cover the 26 weeks to July 26.
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InterContinental Hotels Group said it is on track to meet profit consensus for 2025, after a "strong trading performance" in the first-quarter. Revenue per available room, a key metric in the hotel sector, increased 3.3% on-year in the first quarter. The Holiday Inn owner said its RevPAR rose 3.5% in the Americas, 5.0% in the Europe, Middle East, Asia & Africa region, but fell 3.5% in Greater China. "We had strong trading performance and development activity for our world class brands in Q1, despite increased volatility in the macro environment. Global RevPAR grew 3.3%, reflecting the strength of our globally diverse footprint and increases across each of our three demand drivers of Business, Leisure and Groups," Chief Executive Officer Elie Maalouf said. The CEO added: "Looking ahead, while noting that some forward economic indicators have softened, our comparable on-the-books global revenue for Q2 continues to show growth on the same position a year ago. Our ability to capture demand across geographies and chain scales, as well as being heavily weighted to domestic stay occasions, are resilient strengths of our business. As a result, while still early, we remain on track to meet full year consensus profit expectations."
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COMPANIES - FTSE 250
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Automotive-focused engineering firm Dowlais expects its 2025 performance to be at the lower end of guidance amid tariff uncertainty. In the first-quarter of 2024, adjusted revenue fell 2.5% at constant currency to GBP1.3 billion. Its adjusted operating margin, however, improved by 80 basis points on-year to 6.6%. It said "footprint restructuring initiatives and other ongoing performance improvement actions" offset the impact of weaker volumes. Looking ahead, Dowlais added: "The macroeconomic uncertainty resulting from the imposition of US tariffs, including specific tariffs on the automotive sector, has increased since March. We do not expect our full year performance to be materially affected by the direct financial impact of these current tariffs. Based on our strong historical track record, we expect to fully recover these additional costs from customers through commercial actions and other performance initiatives. The impact of tariffs on consumer demand has led to downward revisions in industry forecasts. In April 2025, S&P revised its 2025 industry outlook, now projecting a 3.3% decline in light vehicle production excluding China, and a 1.7% decline globally." It now expects its full-year performance to be towards the low end of its guidance range for 2025, which is for a "flat to a mid-single digit adjusted revenue decline" and an adjusted operating margin of between 6.5% and 7.0% in constant currency. "The group's adjusted free cash flow is now expected to be lower than the prior year, given the lower volumes and higher restructuring costs," it added. "We anticipate the tariff-related cost recovery to be second-half weighted. This will result in a weaker trading and cash first-half performance, before a material improvement in the second half, driven by the timing of the tariff recoveries." Dowlais announces half-year results on August 7.
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Renishaw said it is being "impacted by tariffs", as it lowered the top-end of its annual outlook. The provider of manufacturing technologies, analytical instruments, and medical devices said pretax profit in the third-quarter to March 31 rose 20% quarter-on-quarter to GBP28.1 million from the GBP23.5 million achieved in the second-quarter. Revenue increased on-quarter by 7.9% to GBP180.7 million from GBP167.5 million. Revenue was 5% higher on-year, Renishaw added. "We have continued to deliver steady growth in mixed market conditions, with improving demand from semiconductor equipment builders throughout the year and a recent rise in machine tool probing sales. To support our growth strategy, we continue to focus on productivity, managing our portfolio of businesses and making targeted investments in our people, our production facilities, and our new product pipeline. We have an exciting range of new products coming to market in the next few months that will help to drive growth in the years ahead," it said. "We enter the final quarter of the year with good momentum, but we are mindful of the volatile economic backdrop and its potential to impact our customers' investment decisions. We are therefore continuing to focus on pricing strategy and cost control." It now expects annual revenue in the GBP700 million to GBP720 million range, slightly lifting the bottom end of the forecast, but cutting the top end. Its previous guide was for revenue between GBP695 million and GBP735 million. It was similar story for adjusted pretax profit, with its guide now at GBP109 million to GBP127 million, compared to GBP105 million and GBP135 million previously. Renishaw added: "Renishaw is impacted by tariffs introduced by the Trump administration. The USA represents approximately 20% of our global revenues and our factories are based in the UK, Ireland and India. While there is ongoing uncertainty around policy in the medium term, under the current regime our products imported into the USA are either impacted by aluminium and steel tariffs (based on the mass of their material content) or subject to the 'reciprocal' tariff regime. Where required, we are introducing a surcharge to pass on the impact of these additional costs. We continue to assess the potential global impacts of these tariffs on an ongoing basis."
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OTHER COMPANIES
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FD Technologies agreed to a GBP570 million takeover from TA Associates Management. The private equity firm will pay GBP24.50 per share in the company, which provides data analytics and consulting services to finance, technology and energy institutions. The price is a 27% premium to FD's closing price on Tuesday, the day before it entered into an offer period. FD on Wednesday said it was in advanced discussions with TA Associates. FD had said on Wednesday it would be "minded to recommend" a GBP24.50 bid should one materialise. "We are pleased to have reached an agreement with TA which gives shareholders the opportunity to realise value in cash at an attractive premium. The company has been successfully repositioned as a pure-play database software business and returned GBP120 million of capital to shareholders following the sale of our First Derivative consulting business. KX is now strategically positioned to execute the next phase of development for the business. The board is unanimous in its belief that this transaction recognises the quality and underlying value of the business and delivers appropriate value to shareholders," FD Chair Donna Troy said.
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Flutter Entertainment swung to a first-quarter profit as the gambling group reported solid revenue growth and increased investment in technology and development. The sports betting and gambling company, which owns Paddy Power, reported a net income of USD335 million in the first quarter of 2025, swinging from a USD177 million loss a year earlier. Revenue increased 7.9% to USD3.67 billion from USD3.40 billion. Chief Executive Officer Peter Jackson said: "The US regulatory landscape continues to evolve at an exciting pace, and our experienced government affairs teams continue to work on expanding the map in the US. We have seen some momentum during 2025, and we remain confident in both our 2030 expectations for population coverage, and the cadence of roll outs to 2027. Outside of the US, performance across our newly formed International division continues to be positive, with year-over-year revenue growth of 1%...We are benefiting from our scale and geographic and product diversification with good growth in our Southern Europe & Africa region in particular." Looking ahead, the company has lifted full year 2025 revenue guidance to USD16.63 billion to USD17.53 billion, up from USD15.48 billion to USD16.38 billion. In 2024, Flutter reported revenue of USD14.05 billion. However, it lowered its US total adjusted Ebitda forecast to a USD1.01 billion to USD1.25 billion range, from USD1.19 billion to USD1.43 billion. It noted "adverse" results from March Madness, a university basketball tournament in the US.
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By Eric Cunha, Alliance News news editor
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