4th Dec 2024 07:52
(Alliance News) - London's FTSE 100 is called to open lower at the start of a key day on the data front, while across the English Channel, eyes remain on the French government ahead of a crucial vote.
France's government on Wednesday faces no confidence votes that could spell the end of the short-lived administration of Prime Minister Michel Barnier, plunging the country into uncharted waters of political chaos.
The toppling of the Barnier government after just three months in office would present President Emmanuel Macron with an unenviable dilemma over how to go forwards and who to appoint in his place.
"The EURUSD takes the opportunity to catch its breath before another potentially hectic session – depending on what the French politicians decide to do with Barnier and his ambition to reduce the French budget deficit toward the EU targets. We may not see a major selloff in single currency if the French government is taken down, as that possibility must be fully priced in by now," Swissquote Analyst Ipek Ozkardeskaya commented.
Wednesday's economic calendar has the ADP US jobs report at 1315 GMT. It is expected to show private sector employment increased by 150,000 last month, according to FXStreet cited consensus, easing from 233,000 in October.
Elsewhere, there are services purchasing managers' index readings from the eurozone at 0900 GMT, the UK at 0930 and a pair from the US at 1445 and 1500.
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 0.4% at 8,326.11
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Hang Seng: flat at 19,754.63
Nikkei 225: up 0.1% at 39,276.39
S&P/ASX 200: down 0.4% at 8,462.60
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DJIA: closed down 76.47 points, 0.2%, at 44,705.53
S&P 500: closed up 2.73 points at 6,049.88
Nasdaq Composite: closed up 0.4% at 19,480.91
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EUR: flat at USD1.0514 (USD1.0513)
GBP: up at USD1.2683 (USD1.2660)
USD: up at JPY150.35 (JPY149.44)
GOLD: down at USD2,643.64 per ounce (USD2,644.88)
OIL (Brent): up at USD73.83 a barrel (USD73.67)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:00 GMT eurozone composite PMI
10:00 GMT eurozone PPI
13:30 GMT eurozone European Central Bank president Christine Lagarde speaks
15:30 GMT eurozone European Central Bank president Christine Lagarde speaks
08:55 GMT Germany composite PMI
11:00 GMT Ireland unemployment
09:30 GMT UK composite PMI
13:15 GMT US ADP unemployment
14:45 GMT US composite PMI
15:00 GMT US factory orders
15:00 GMT US ISM services PMI
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Rachel Reeves has again declined to repeat her promise not to raise taxes or borrowing in future budgets, but the UK chancellor insisted she would not have to top up her spending plans either. Appearing at the Great Northern Conference in Hull on Tuesday, Rachel Reeves again faced pressure to repeat her pledge, given to the Confederation of British Industry last month, that there would be no repeat of the GBP40 billion tax hikes she announced in her first budget. Reeves told the conference, sponsored by the Yorkshire Post newspaper, that public services would have to "live within their means" and that she would not be "coming back with another load of tax rises" or higher borrowing. Speaking to reporters later on Tuesday, she suggested the risk of unpredictable "shocks to the economy" meant she could not "write five years' worth of budgets in just five months". But she acknowledged that Labour's current spending plans would mean "difficult decisions" for public services in the spring of 2025. Reeves's appearance at the conference followed questions in the House of Commons where Conservative MPs also pressed her to repeat her promise on taxation.
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British Steel could be renationalised under plans reportedly being considered by the UK government amid uncertainty about the company's future. Ministers have been locked in talks with the company's Chinese owners, Jingye, over a potential rescue plan for its Scunthorpe plant. British Steel announced it would close its blast furnaces in Scunthorpe last year, replacing them with a less polluting electric arc furnace if it received "appropriate support" from the government. But reports in The Guardian and The Daily Telegraph suggested Business Secretary Jonathan Reynolds was now considering a range of options including taking the company back into public ownership for the first time since 1988. A government source told The Guardian that renationalisation was "the least attractive option" due to its significant cost, but said it would be "negligent not to look at it". Trade unions, however, were more supportive of the prospect of renationalisation.
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Ireland's service activity growth sped up markedly in November, purchasing managers' index readings published by S&P Global showed. The AIB Ireland services business activity index jumped to 58.3 points in November from 53.8 in October, indicating a healthy improvement in demand conditions, with the volume of new work received by service providers growing at the fastest rate since March. Growing further beyond the neutral 50-point mark, it indicates growth accelerated solidly in November. Further, the latest reading indicates the fastest rate of growth in services activity since April 2023, S&P Global highlighted. "Demand conditions improved and employment rose at a faster pace, but jobs growth remained weaker than the long-run survey average as the 12-month outlook was slightly less optimistic," S&P Global said. The AIB Ireland composite PMI output index, a combination of the services and manufacturing sectors, rose to 55.2 points in November from 52.6 in October. On Monday, S&P had said the manufacturing PMI fell to 49.9 points in November from 51.5 in October.
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Deputy Irish premier Micheal Martin has refused to say whether he will push against a rotating taoiseach as part of government formation talks. Martin, who was speaking at the British Irish Intergovernmental Conference in Dublin, said it was too early to discuss what the shape of the next government will look like. Three long days of counting in the general election finished late on Monday, when the final two seats were declared in the constituency of Cavan-Monaghan. Fianna Fail was the clear winner of the election, securing 48 of the Dail parliament's 174 seats. Sinn Fein took 39 and Fine Gael 38. Asked whether he would be open to enter a coalition with Fine Gael without the rotating taoiseach arrangement that was part of their last government deal, Fianna Fail leader Martin said: "From experience and having been involved in helping to form a number of coalition governments, it's not always helpful to do it via press conferences, and I don't mean that with any disrespect. So, I don't propose to do so on this occasion either. There will be a range of issues that will be discussed, policy being key, and obviously then the issues around the formation of government and the mechanics of government."
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BROKER RATING CHANGES
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HSBC cuts Bunzl to 'hold' - price target 3,625 pence
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Barclays raises Spirax to 'overweight' - price target 8,350 pence
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COMPANIES - FTSE 100
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Miner Rio Tinto released 2025 production and capital expenditure as it set out an aim to invest "for a stronger, more diversified and growing portfolio". Rio Tinto hosts an investor seminar in London on Wednesday. "We are executing our strategy of delivering a stronger, more diversified, and growing business, underpinned by our belief in the demand for materials which are essential for the global energy transition. With improved performance we can afford both growth and our decarbonisation, and continue our dividend policy and practice while preserving a strong balance sheet," Chief Executive Jakob Stausholm said. During the event, "executives will detail progress made in 2024 and outline their ambition for a period of sustained growth over three time horizons until 2033". Rio has an expected compound annual growth rate of around 3% across that stretch. Iron ore, aluminium and copper will be at the heart of "shaping Rio Tinto's portfolio for the future", it said, as will lithium. For 2025, Rio Tinto expects Pilbara iron ore shipments between 323 to 338 million tonnes, in line with what it expects for 2024. Miner copper output between 780,000 and 850,000 tonnes is predicted, compared to its 660,000-720,000 forecast range for 2024. Aluminium production between 57 and 59 million tonnes is predicted for 2025. For 2024, its outlook stands at 53 to 56 million. It predicts capital expenditure of around USD11.0 billion for next year, a step up from USD9.5 billion in 2024. Also on Wednesday, the miner said it has signed a deal for joint-venture at the Winu copper-gold project, located in Western Australia. It is set to team with Sumitomo Metal Mining, who will pay Rio USD399 million for a 30% equity share of the project.
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Centrica said it has extended the span of four nuclear power stations alongside partner EDF. Heysham 1 and Hartlepool are now expected to generate electricity until March 2027, one year later than previously expected. Heysham 2 and Torness have been extended by two years to March 2030. "These extensions are expected to add around 9 terawatt-hours to the company's electricity generation volumes between 2026 and 2030," the British Gas owner added. "The extensions will support the UK's baseload power generation for years to come, support the UK's net zero ambitions and help maintain grid stability at a time when cleaner, but more intermittent, renewable generation is being added to the energy mix." Heysham 1 and Heysham 2 are located near Lancaster, England. Hartlepool is on the north east coast of England. Torness is a nuclear power station on the east coast of Scotland.
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COMPANIES - FTSE 250
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ME Group said it expects "another year of record profit", in line with board expectations. Pretax profit of no less than GBP73 million is expected for the year to October 31, up over 10%. Adjusted Earnings before interest, tax, depreciation and amortisation are to rise around 5% to GBP112 million, the instant-service equipment operator said. Revenue of GBP308 million is predicted, up around 3%. ME Group has laundry, photobooth, printing kiosks and vending machines offerings. "Wash.ME Revolution laundry operations were the key growth driver," it said. Net revenue there rose 19%. It added: "The group's photobooth operations were stable and performed as expected." Photobooth revenue edged up 0.4%. "The group continued to rollout its next-generation photobooths mainly in France. While the rate of deployment of these machines was slightly slower than expected, partly due to some technical issues, the group continued to make progress with its rollout programme," it added.
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Vehicle rental and fleet management firm Zigup said it has "confidence in full year expectations", but reported a half-year earnings decline. Revenue in the half-year to October 31 fell 0.8% to GBP903.6 million from GBP911.3 million a year earlier. Pretax profit slumped 42% to GBP56.2 million from GBP97.4 million. Underlying revenue, however, rose 5.6% to GBP775.0 million from GBP733.8 million. The measure excludes vehicle sales. "Our strategy continues to deliver, and we are well placed with our broadening position in the essential market for mobility services. We are pleased to report underlying growth in revenues, and the delivery of PBT in line with expectations, while reflecting normalising disposal profits as previously stated," CEO Martin Ward said. The company added: "Recent vehicle supply contracts have provided good visibility for calendar 2025 fleet growth, and expected increases in infrastructure spending are also positive for our UK rental customer base over the medium term. Spain continues to enjoy record demand. While the normalisation seen in residual values will see disposal profits moderate as expected, our confidence in the business, and for our outlook, is unchanged and remains in line with market expectations."
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OTHER COMPANIES
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Extracts and ingredients provider Treatt reported improved annual earnings and lifted its payout. Pretax profit in the year to September 30 improved 36% to GBP18.5 million from GBP13.5 million. Revenue rose 3.8% to GBP153.1 million from GBP147.4 million. "We made great progress, with growth in both sales and profit, boosted by a really strong revenue performance in the second half, up 13%. And I am particularly pleased that we have brought net debt right down thanks to our strong cash generation, with further momentum to be cash positive in the new financial year," CEO David Shannon said. "This performance not only reflects good conversion of the order book and the strong cost discipline that's now embedded across the group, but also normalising demand trends and the benefits of investment. We have invested for growth, expanding our commercial teams, bringing them closer to customers, and are close to opening our new Shanghai innovation centre, in line with our strategic focus in the region." Treatt lifted its final dividend by 6.4% to 5.81 pence from 5.46p. Its total dividend is 5.0% higher at 8.41p from 8.01p.
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By Eric Cunha, Alliance News news editor
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