27th Feb 2025 07:51
(Alliance News) - The FTSE 100 was called to open lower on Thursday, following US President Donald Trump's claim that the US will impose 25% tariffs on EU goods.
"Of course, the tariff threats [against Canada and Mexico] are weighing on global sentiment but also on US' own growth expectations," Swissquote's Ipek Ozkardeskaya commented. "The US growth update is due today and is expected to show a slowdown from 3.1% to 2.3% in Q4. If that's the case, you could argue that the doveish Federal Reserve (Fed) expectations will get a boost.
"BUT the tariffs complicate the Fed outlook as they boost inflation expectations at a time inflation is already giving signs of heating up and will certainly limit the Fed's ability to step in and assist."
In corporate news, Hiscox reported "record" annual profit and announced a new share buyback.
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 19.5 points, 0.2% at 8,711.96
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Hang Seng: down 0.6% at 23,644.81
Nikkei 225: up 0.3% at 38,256.17
S&P/ASX 200: up 0.3% at 8,268.20
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DJIA: closed down 188.04 points, 0.4%, at 43,433.12
S&P 500: closed up 0.81 points at 5,956.06
Nasdaq Composite: closed up 0.3% at 19,075.26.
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EUR: lower at USD1.0474 (USD1.0509)
GBP: lower at USD1.2664 (USD1.2692)
USD: flat at JPY149.25 (JPY149.25)
GOLD: lower at USD2,891.74 per ounce (USD2,912.10)
OIL (Brent): lower at USD72.24 a barrel (USD72.83)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
10:00 CET eurozone money supply
08:30 EST US initial jobless claims
08:30 EST US quarterly personal consumption expenditures
08:30 EST US durable goods orders
10:30 EST US EIA natural gas stocks
11:00 EST US Kansas City Fed manufacturing activity
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The newly installed UK ambassador to the US hailed Donald Trump as a "very consequential president" as the UK sought to avoid battles on tariffs with the White House. While addressing a reception at his residence in Washington, Ambassador Peter Mandelson said it was a "very significant moment for our lives, between our two countries and indeed for all the freedom-loving democracies in the world". He added: "And of course one thing we don't need to fight over is trade, because we have this fantastically fair and balanced trade relationship when we reciprocate so much – that's just a little thing for you to remember in the coming weeks." Tariffs imposed by Trump on British steel are set to come into force in March, with the president is also considering other import taxes as part of his drive to protect American businesses. Mandelson once called Trump a "danger to the world" and "little short of a white nationalist and racist" several years ago. He later used a New York Times interview to say that some of his comments about Trump had been "childish and wrong".
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Future growth in the world economy hinges on how US tariffs affect global trade, although the impact on UK inflation could be less than feared, a Bank of England interest rate-setter has said. Economist Swati Dhingra, who is a member of the BoE's Monetary Policy Committee, said the UK was sensitive to changing import prices. Speaking at the 2025 Dow Lecture for the National Institute of Economic and Social Research, she said: "After a sharp recovery from the pandemic, the world economy has stagnated and its future growth will depend on how global trade is affected by the significant shift in US trade policy." The "direct price-increasing effects from US tariffs to UK prices" could be "less than feared" as the main imports, including refined oil, are unlikely to experience cost increases on account of tariffs, Dhingra said. The impact could instead be felt in how the countries that are subject to higher tariffs choose to pass on additional costs to the UK market, she said. "The broader indirect effects through global markets and trade diversion are more likely to dominate and to reduce prices in the UK," according to the economist. "Tariffs are likely to create one-off adjustments in prices, rather than inflationary persistence. "On the overall impact on inflation in the UK, the direct effect of US import costs and dollar strengthening are likely to be offset by reduced global price pressures."
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Trump has said that tariffs on EU products would be 25% in general, and signalled that duties on Canada and Mexico will take effect in early April. Speaking at a cabinet meeting, Trump described the EU – whose creation was encouraged for decades by Washington – as rooted in an attempt to counter the US. "Look, let's be honest, the EU was formed in order to screw the US," Trump said. Asked if he had made a decision on tariff levels for the bloc, Trump added: "We'll be announcing it very soon and it'll be 25%, generally speaking." He said this would hit products including cars, adding that the EU has "really taken advantage of us." Trump has threatened "reciprocal tariffs" on US trading partners to counter "unfair and unbalanced" trade. He has also said he would impose sweeping levies on imports of certain products, such as autos and pharmaceuticals. Since taking office in January, Trump has announced and paused blanket tariffs on US neighbours Canada and Mexico over illegal immigration and fentanyl smuggling.
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US Secretary of State Marco Rubio cancelled a meeting with EU foreign policy chief Kaja Kallas on Wednesday, after the former Estonian prime minister had already arrived in Washington. According to dpa's information, "scheduling issues" were given as the only explanation for the cancellation. No official information was provided and the US State Department, which did not initially respond to an enquiry from dpa. The EU was instrumental in preventing a Moscow-friendly resolution on the Ukraine war proposed by the US from passing at the UN General Assembly this week. Kallas also recently slammed US President Donald Trump's plans to end the war in Ukraine as a "dirty deal," criticising Washington's suggestion that Ukraine should abandon its ambitions to join NATO and accept that part of its territory will remain under Russian control permanently.
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South Korea's spy agency said on Wednesday that North Korea appears to have sent additional troops to Russia. The National Intelligence Service said in a brief statement it was trying to determine exactly how many more troops North Korea has deployed to Russia. The NIS also assessed that North Korean troops were redeployed at fronts in Russia's Kursk region in the first week of February, following a reported temporary withdrawal from the area. Ukrainian President Volodymyr Zelensky, in an address on February 7, confirmed a new Ukrainian offensive in Kursk and said North Korean troops were fighting alongside Russian forces there. South Korea, the US and their partners worry that Russia could reward North Korea by transferring high-tech weapons technologies that can sharply enhance its nuclear weapons programme. North Korea is expected to receive economic and other assistance from Russia as well.
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BROKER RATING CHANGES
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Deutsche Bank Research raises Barratt Redrow to 'buy' - price target 536 pence
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LBBW raises Rio Tinto to 'buy' (hold) - price target 5,600 (5,900) pence
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Berenberg starts Dr Martens with 'buy' - price target 102 pence
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COMPANIES - FTSE 100
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Rolls-Royce Holdings reported increased revenue but lower profit for 2024, with revenue increasing to GBP18.91 billion from GBP16.49 billion in 2023 while profit decreased to GBP2.23 billion from GBP2.43 billion. Basic earnings per share however rose to to 30.05 pence from 28.85p. Rolls-Royce also declared a 6.0p final dividend, having declared no payout for 2023. Going forward it upgraded its mid-term targets, now forecasting between GBP3.6 billion and GBP3.9 billion underlying operating profit, an operating margin between 15% and 17%, free cash flow of GBP4.2 billion to GBP4.5 billion, and an 18% to 21% return on capital based on a 2028 timeframe. Finally, the company announced a share buyback worth up to GBP1 billion, commencing today and expected to complete no later than December 31.
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Hiscox reported "record profits, building momentum in Retail, and step-up in capital return" in its 2024 report. Pretax profit increased 9.5% to USD685.4 million from USD625.9 million in 2023, with EPS rising to 183.2 cents 162.7 cents. Insurance contract written premium grew 3.7% to USD4.77 billion from USD4.60 billion, "driven by Retail premium growth of USD147.3 million". Hiscox increased the final dividend by 20% to 29.9 cents, to produce a full-year payout of 43.1 cents per share, up 15% from 37.5 cents. The company also announced a buyback worth a maximum of USD175 million, starting today with an initial tranche of USD87.5 million. It said it expected its positive momentum to continue building in 2025.
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COMPANIES - FTSE 250
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Man Group announced its 2024 results. Assets under management increased 1% to USD168.6 billion as at December 31, against USD167.5 billion at the same time in 2023. Core pretax profit rose 39% to USD473 million from USD340 million in 2023, while core net revenue increased 22% to USD1.46 billion from USD1.20 billion. Diluted EPS rose to 25.1 cents from 19.4 cents. "We see significant opportunities on the horizon in 2025," commented Chief Executive Officer Robyn Grew. "Stretched equity valuations and the risk of persistent inflation in the US suggest that allocators will increasingly seek uncorrelated investment strategies, while higher-for-longer interest rates are likely to support continued growth in credit markets."
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Greencoat UK Wind alongside its final results declared a total dividend of 10p per share for 2024, unchanged on-year and said it is targeting a 10.35p dividend for 2025. It also announced a new share buyback worth GBP100 million, to be conducted over the next 12 months. Its net asset value was 151.2p at Deember 31, down from 164.1p one year prior. "Equity markets have continued to be challenging throughout the year, with particular difficulties for investment trusts," Chair Lucinda Riches said. "Whilst interest rates have started to fall, longer term gilt rates have risen towards the end of year and outflows from the UK stock market have continued, resulting in a reduction in the share price during the year." Going forward, however, she noted the UK government's "commitment to achieve Net Zero by 2050 through acquiring operational wind farms", saying that Greencoat "is investing in a mature and growing market".
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OTHER COMPANIES
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Nvidia said the ramp-up of its Blackwell chip is in "full-gear", as it delivered fourth-quarter results and guidance ahead of expectations. The Santa Clara, California-based chip designer said Blackwell sales reached USD11 billion in the quarter, beating expectations of around USD9 billion. Chief Financial Officer Collette Kress said it was the "fastest product ramp-in our company's history, unprecedented in its speed and scale". The upbeat news on Blackwell addressed some market concerns as to how Nvidia could meet demand. Chief Executive Jensen Huang addressed another worry, Deepseek, predicting it will stoke more demand for computing and Nvidia's chips. In its fourth quarter ended January 26, Nvidia said net income rose 80% to USD22.09 billion from USD12.29 billion a year prior. Diluted earnings per share were USD0.89 compared to USD0.49, ahead of the USD0.84 LSEG consensus. Revenue was USD39.33 billion, up 78% from USD22.10 billion, ahead of the LSEG consensus for USD38.05 billion.
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CRH, a building materials solutions provider, reported its 2024 results and announced the continuation of its share buyback programme, having completed the latest phase and returned around USD300 million. The current buyback, starting today, is for aggregate maximum consideration of up to USD300 million and will end no later than May 2. CRH reported that total revenue for 2024 increased 2% on-year to USD35.6 billion while net income rose 15% to USD3.5 billion, with on-year growth in the fourth quarter also. Basic EPS for the year rose 16% to USD5.06. CRH said it approved dividends totalling USD1.40 per share in 2024, up 5% from USD1.33 for 2023, and declared a 37 cents quarterly dividend. Looking ahead, CRH commented: "We expect positive underlying demand across our key end-use markets in 2025, underpinned by significant public investment in critical infrastructure, combined with increased re-industrialisation activity in key non-residential segments."
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CMO Group announced its proposed voluntary cancellation of the admission of its ordinary shares from trading on AIM. The online building materials retailer said it "has undertaken a review of its strategic options" and settled on this as the best course of action. "Despite an extensive search the directors have concluded that there is no route to source the additional funds the group requires while the company remains on market," CMO said, noting that its "additional funding requirements...for near-term working capital requirements and to support medium-term growth towards the end of 2025" were "central" to its decision.
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By Emma Curzon, Alliance News reporter
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