20th Mar 2025 08:04
(Alliance News) - London stocks are called to open lower on Thursday, ahead of a Bank of England rate call, as investors digest the unchanged rate announced by the US Fed on Wednesday.
The Bank of England is due to announce its interest rate decision at 1200 GMT.
"Cable keeps bumping its head against the 1.30 offers before the Bank of England [BoE] decision due today. The BoE is expected to stay seated on its hands at today’s meeting, but the MPC landscape is quite not smooth: 7 members out of 9 will probably vote for no change, while two doves are expected to favour a 50bp cut," commented Swissquote analyst Ipek Ozkardeskaya.
"Investors are feeling dovish regarding the upcoming BoE meeting given that the British growth numbers have taken a hit from the governments’ tax raising plans while the rising gilt yields decreased the spending potential. And the weakening potential for government spending increases the BoE’s ability to support the economy with a more supportive monetary policy, and that could be positive for sterling. But yes, it’s a bit stretched. If sterling breaks the back of the 1.30 offers against the US dollar, it will be thanks to a stronger depreciation of the US dollar than conviction in sterling."
In Asia, meanwhile, stocks began to sink after rallying on Wednesday following China's decision to hold interest rates steady.
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 0.1% at 8,697.76
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Hang Seng: down 2.0% at 24,269.93
Nikkei 225: closed down 0.3% at 37,751.88
S&P/ASX 200: closed up 1.2% at 7,918.90
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DJIA: closed up 383.32 points, or 0.9%, at 41,964.63
S&P 500: closed up 60.63 points, or 1.1%, at 5,675.29
Nasdaq Composite: closed up 246.67 points, or 1.4%, at 17,750.79
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EUR: flat at USD1.0883 (USD1.0883)
GBP: down at USD1.2965 (USD1.2974)
USD: down at JPY148.61 (JPY149.87)
Gold: up at USD3,044.45 per ounce (USD3,036.51)
(Brent): up at USD71.09 a barrel (USD70.72)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
08:00 GMT eurozone European Central Bank president Christine Lagarde speaks
10:00 GMT eurozone construction output
12:00 GMT eurozone European Central Bank Governor Philip Lane speaks
12:00 GMT UK interest rate decision
12:00 GMT UK MPC meeting minutes
12:30 GMT US current account
12:30 GMT US initial jobless claims
12:30 GMT US Philadelphia Fed manufacturing index
14:00 GMT US existing home sales
14:00 GMT US Conference Board leading index
14:30 GMT US EIA natural gas stocks
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The US Federal Reserve left interest rates unchanged and still sees two cuts this year amid slowing growth and sticky inflation. The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 4.25-4.50%. The vote to hold rates was unanimous. In a statement, the FOMC said that economic activity has continued to expand at a solid pace, labour market conditions remain solid and inflation remains somewhat elevated. The FOMC said uncertainty around the economic outlook has increased, and future policy will depend on how the economic outlook evolves. "The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals," it added. The Fed's Summary of Economic Projections showed FOMC members expect two interest rate cuts in 2025, its view unchanged from December, with two further reductions in 2026. But officials lowered forecasts for gross domestic product to 1.7% in 2025 from 2.1% in December, and to 1.8% from 2.0% in 2026. Projections for core personal consumption expenditures inflation, the Fed's preferred inflation measure, have risen to 2.8% in 2025 from 2.5% in December. It is then seen falling to 2.2% in 2026 before hitting the Fed's 2.0% target in 2027. The Fed also plans to slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from USD25 billion to USD5 billion. Christopher Waller, who supported no change for the federal funds target range, preferred to continue the current pace of decline in securities holdings, the statement said.
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The People's Bank of China has decided to leave its key lending rates unchanged. The 1-year loan prime rate remains at 3.1%, in line with FXStreet-cited consensus, while the 5-year LPR remains at 3.6%. China's central bank last adjusted rates in October, when it lowered the 1-year LPR from 3.35% and the 5-year LPR from 3.85%. Kelvin Lam, senior China economist at Pantheon Macroeconomics, commented: "Recent economic activity data turned out better than the market had expected, with pockets of strength in retail sales and [fixed asset investment] growth, thanks to stimulus policies. Perhaps policymakers are thinking that this is not the optimal time to ease." The analyst added that Pantheon expects the next rate cut to occur no later than the third quarter of 2025.
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The UK jobless rate steadied at the beginning of 2025, while pay growth largely slowed, data from the Office for National Statistics showed on Thursday. For the three months to January 31, the UK unemployment rate was 4.4%, in line with FX Street-cited consensus and where it stood in the three months to December. "The estimated number of vacancies in the UK in December 2024 to February 2025 was 816,000. Vacancies are broadly unchanged on the quarter [with early estimates suggesting a small increase of just 1,000] and are still above pre-coronavirus pandemic levels," noted the ONS. Average annual growth for regular earnings excluding bonuses in the three months to January was 5.9%, unchanged from the three months to December. This was in line with consensus. Including bonuses, average yearly pay growth was 5.8%, shrinking from 6.1% in the three months to December and falling short of a 5.9% FX Street-cited consensus.
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Ukraine has agreed to a US proposal for a temporary pause in attacks on energy infrastructure in the three-year war launched by Russia, Ukrainian President Volodymyr Zelensky said on X following a phone call with President Trump. "One of the first steps toward fully ending the war could be ending strikes on energy and other civilian infrastructure," Zelensky said in a statement in English after the one-hour conversation. "I supported this step, and Ukraine confirmed that we are ready to implement it," he added. It comes after Russian President Vladimir Putin agreed to the proposal during a call with Trump on Tuesday. It was initially unclear when the limited ceasefire would begin. If implemented, it would be the first limitation on the fighting since Putin ordered the full-scale invasion of Ukraine on February 24, 2022. During the call with Zelensky, Trump also proposed that the US could take ownership of Ukraine's nuclear power plants as a security guarantee. Prior to the conversation, Zelensky had called on the US to monitor the pause in attacks.
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BROKER RATING CHANGES
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Goldman Sachs raises M&G price target to 240 (235) pence - 'buy'
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UBS cuts SSP Group price target to 165 (180) pence - 'neutral'
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JPMorgan starts International Paper with 'overweight' - price target 59 USD
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COMPANIES - FTSE 100
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Prudential reported strong annual profit growth, boosted by higher insurance revenue with robust performance across key Asian markets, prompting an increased dividend. The London-based insurance firm & asset manager said pretax profit increased 41% to USD2.95 billion in full-year 2024 from USD2.10 billion a year prior. Basic earnings per share after tax were 84.1 US cents, up 35% from 62.1c. Insurance revenue increased 11% to USD10.36 billion from USD9.37 billion as insurance service expense rose 9.1% to USD7.76 billion from USD7.11 billion. Prudential announced a second interim dividend of 16.29c per share, up 15% from 14.21c. This increases the total dividend for the year by 13% to 23.13c from 20.47c. Specifically, insurance business profit grew 5.6% to USD3.42 billion from USD3.24 billion. Meanwhile, asset management profit rose 8.6% to USD304 million from USD280 million. In 2025, Prudential said it expects to grow new business profit, adjusted operating profit EPS, and operating free surplus generated from in-force insurance and the asset management business by more than 10%.
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COMPANIES - FTSE 250
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Shaftesbury Capital plots the sale of a 25% non-controlling stake in the Covent Garden estate to Norges Bank Investment Management for a total of GBP570 million. Norges Bank is a Norwegian sovereign wealth fund. The deal values the property as a whole at GBP2.7 billion, in line with its December 31 independent property valuation. Shaftesbury will still retain a 75% ownership and management control over the London property, 74% of which is represented by retail and food & beverage units, and the remaining 26% is office and residential space. Shaftesbury Capital CEO Ian Hawwksworth says: "Through partnering with private capital, this transaction leverages our operating expertise and assets, enhancing growth and expansion opportunities across our portfolio whilst strengthening our financial position and providing significant optionality to the group." There is no certainty that any deal with be completed, Shaftesbury warns.
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Rathbones Chief Executive Officer Paul Stockton will retire on September 30, after six years in the role and sixteen years at the company. He will be succeeded at the investment and wealth management firm by Jonathan Sorrell, who will join the board as CEO designate on July 1. Stockton will remain available for handover support until December 31. Sorrell joins Rathbones from Capstone Investment Advisors, where he has served as president since 2020. Prior to this, Sorrell was CFO and President of FTSE 250-listed active investment management firm Man Group.
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OTHER COMPANIES
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Home improvement retailer Wickes said pretax profit fell 44% in the year that ended December 28, slumping to GBP23.2 million from GBP41.1 million the year before. Revenue declined 1.0% to GBP1.54 billion from GBP1.55 billion, but the firm maintained its total dividend at 10.9 pence per share. "2024 was a year of strong progress for Wickes as our balanced business model and brand strength saw us continue to deliver for customers and take further market share," said CEO David Wood. "We grew volumes and share throughout the year in Retail as customers bought more of our products for their home improvement projects, however big or small. In Design and Installation, we have been encouraged by a return to growth in ordered sales in Q4 following the actions we took to enhance our customer offer and experience." Wickes announced a new share buyback for up to GBP20 million, following its completion of a GBP25 million buyback during the year. The firm expects its 2025 dividend to be maintained at 10.9p per share again, and notes that trading in the first eleven weeks of 202 have been in line with expectations. Wickes will release a spring trading update in mid-May.
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By Emily Parsons, Alliance News reporter
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