30th Jan 2025 07:51
(Alliance News) - London's FTSE 100 is called to open a touch higher on Thursday, ahead of a European Central Bank decision, and as investors digest a Federal Reserve pause.
The Federal Reserve Chair Jerome Powell on Wednesday said things are in a "really good place for policy and the economy," stressing there is no rush to make adjustments to policy.
The Federal Open Market Committee's as expected decision leaves the federal funds rate range at 4.25%-4.50%. The vote was unanimous.
Barclays analysts commented: "As widely expected, the FOMC held the funds rate steady and signalled that they are in a holding pattern, for now, as they monitor the evolution of the data and await news about policies and how they will play out. The pause will extend at least through the March FOMC meeting, in our view."
The ECB, meanwhile, is expected to enact a 25 basis point cut.
In early UK corporate news, Shell announced weaker quarterly profit but unveiled a new buyback. BT maintained guidance, while Mulberry announced a turnaround plan.
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 0.1% at 8,563.41
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Nikkei 225: up 0.3% at 39,513.97
S&P/ASX 200: up 0.6% at 8,493.70
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DJIA: closed down 136.83 points, 0.3%, at 44,713.52
S&P 500: closed down 0.5% at 6,039.31
Nasdaq Composite: closed down 0.5% at 19,630.39
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EUR: lower at USD1.0415 (USD1.0419)
GBP: flat at USD1.2437 (USD1.2435)
USD: lower at JPY154.53 (JPY155.08)
GOLD: higher at USD2,766.12 per ounce (USD2,752.18)
(Brent): lower at USD75.53 a barrel (USD77.21)
(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 GMT eurozone unemployment
10:00 GMT eurozone consumer confidence
10:00 GMT eurozone GDP
13:15 GMT eurozone interest rate decision
09:00 GMT Germany GDP
13:30 GMT US GDP
13:30 GMT US initial jobless claims
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The UK housing market has got off to its strongest start in three years, according to a property website. The volume of new sales agreed was up by 12%, when comparing the four weeks to January 24 2025 with the same period last year, Zoopla said. The number of homes for sale is also 10% higher than a year ago, according to its data. The website suggested some buyers are attempting to beat a stamp duty hike from April 1, which will see the "nil rate" band for first-time buyers reduce from GBP425,000 to GBP300,000. Stamp duty applies in England and Northern Ireland. The average UK house price was put at GBP267,700, having increased by GBP5,200 across last year, after a GBP2,400 decrease during 2023. Rising volumes of sales are supporting UK house price inflation. Zoopla said house prices across the UK were 2.0% higher on average in December 2024 than a year earlier, ranging from 7.7% in Northern Ireland to 1.0% in eastern England. But there are signs that the recent upturn in prices is starting to level out as mortgage rates drift higher and buyers have a wider choice of properties, the report said. Zoopla said house price inflation will be kept in check over 2025 but the current North/South divide in home price inflation is expected to continue over the year ahead. Richard Donnell, executive director at Zoopla said: "The first few weeks of each year tend to provide a clear indication of how the rest of the year is likely to unfold. "2025 has started well, better than 2024 and 2023 which bodes well for market activity over the rest of the year, supported by evidence of more people looking to move.
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A US passenger jet carrying 64 people crashed into Washington's Potomac River after colliding midair with a military helicopter on a nighttime training exercise Wednesday, prompting a desperate search for survivors in the dark, near-freezing water. The plane was approaching Reagan National Airport at around 2100 local time after flying from Wichita, Kansas, when the collision happened. American Airlines, whose subsidiary PSA Airlines operated the Bombardier regional jet, said "there were 60 passengers and four crew members on board the aircraft." A US Army official said the helicopter involved was a Black Hawk model carrying three soldiers – their status currently unknown. They had been on a "training flight," a separate military spokesperson said in a statement. Washington police said "there is no confirmed information on casualties at this time". However, a massive search and rescue operation was in progress, with divers visible in the glare of powerful lights as they plunged into the snow-lined Potomac to scour the wreckage of both aircraft.
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BROKER RATING CHANGES
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Berenberg cuts Adriatic Metals to 'hold' (buy) - price target 180 (220) pence
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Goldman raises Ceres Power to 'buy' (neutral) - price target 220 (246) pence
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COMPANIES - FTSE 100
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Oil major Shell said 2024 was "another year of strong financial performance" and it announced a new USD3.5 billion share buyback porogramme. Shell said fourth-quarter revenue declined 17% to USD66.81 billion from USD80.13 billion a year prior. pretax profit, however, shot up to USD4.21 billion from USD1.64 billion. For the whole of 2024, revenue faded 11% to USD289.03 billion from USD323.18 billion, while pretax profit fell 8.3% to USD29.92 billion from USD32.63 billion. In the final quarter, adjusted earnings were 39% lower at USD3.66 billion, shy of the Vara-cited consensus of USD4.10 billion. Annual adjusted earnings were down 16% at USD23.72 billion, also below the consensus of USD24.11 billion. Shell said the fourth-quarter outturn reflects "lower prices and margins, higher exploration write-offs" and the non-cash hit from expiring hedging contracts. "2024 was another year of strong financial performance across Shell. Despite the lower earnings this quarter, cash delivery remained solid and we generated free cash flow of USD40 billion across the year, higher than 2023, in a lower price environment," Chief Executive Officer Wael Sawan said. "Our continued focus on simplification helped to deliver over USD3 billion in structural cost reductions since 2022, meeting our target ahead of schedule, whilst also making significant progress against all our other financial targets." Shell upped its fourth-quarter dividend by 4.1% to USD0.3580 per share from USD0.3440. For the whole year, its dividend amounted to USD1.3900, an increase of 7.5% from USD1.2935. Shell added: "Total shareholder distributions in the quarter amounted to USD5.7 billion comprising repurchases of shares of USD3.6 billion and cash dividends paid to Shell PLC shareholders of USD2.1 billion." In addition, it announced a new USD3.5 billion share buyback set for completion before its first-quarter results.
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BT Group said it is on track to deliver on its financial outlook during the current year, and the telecommunications firm said its modernisation "continues at pace". Adjusted revenue in third quarter to December 31 declined 3.0% on-year to GBP5.18 billion from GBP5.34 billion. Nonetheless, adjusted earnings before interest, tax, depreciation and amortisation rose 3.7% to GBP2.10 billion from GBP2.03 billion. The Ebitda hike was "driven by strong cost transformation and one-off other operating income in the low tens of millions which more than offset adverse revenue". Reported pretax profit in third-quarter was 1% higher on-year at GBP427 million, BT said. Hurting its top line, BT reported "continued challenging non-UK trading conditions in our Global and Portfolio channels". It also said there was "weaker handset" trading in its Consumer arm, which includes the EE brand. CEO Allison Kirkby said: "Our ongoing modernisation continues at pace, delivering a further step-up in fibre build and take-up, customer satisfaction and Ebitda. Benefits from our cost transformation more than offset lower revenue outside the UK and weak handset sales. Openreach again performed strongly with the highest ever full fibre build, passing more than 1 million premises for the fourth consecutive quarter, and connecting a new record of nearly half a million customers. Consumer returned to service revenue growth and continued to expand its full fibre and 5G customer bases." BT backed its annual guidance. It expects an adjusted Ebitda of GBP8.2 billion, which would be a rise on the GBP8.1 billion achieved in financial 2024.
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COMPANIES - FTSE 250
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Budget carrier Wizz Air reported improved third-quarter revenue, but profit took a hit from an ongoing grounding of aircraft due to issues related to Pratt & Whitney's geared turbofan engines. Wizz Air said its pretax loss in the three months to December 31 stretched to EUR277.6 million from EUR118.4 million a year prior. Revenue increased 11% to EUR1.18 billion from EUR1.06 billion. Chief Executive Officer Jozsef Varadi said: "Wizz Air has continued to navigate the complexity imposed on its operations from the ongoing grounding of some 20% of its fleet, due to the well-documented GTF engine issue. This is reflected in our unit cost performance, with Q3 ex-fuel [cost per available seat kilometer] up 17% year-on-year, given the multiple inefficiencies these groundings generate across a number of our cost lines. Disappointingly the benefits of the stronger demand environment did not flow through to our reported profit level due to these cost headwinds and a significant EUR160 million negative FX charge recognised in Q3." Wizz Air said there is no change to its GTF engine removal forecasts. An average of 40 aircraft are to be grounded in financial 2026. "However, this may change depending on the current engine selection negotiations to select the engine for 177 A321NEOs," Wizz added. Varadi said "underlying demand remains positive" early in the final quarter, though he noted Easter will fall into the next financial year. "Trading through the remainder of the current fiscal year remains a focus for Wizz's management team, from maximizing daily revenues to seeking further short and longer-term cost savings. As we look ahead to F26, we believe that we are at an important inflection point for the business as we transition to a sustained period of growth for the rest of the decade. This is a return to Wizz's DNA and the basis for long-term value creation for shareholders," the CEO added.
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Serco struck a USD327 million cash deal to buy Northrop Grumman's mission training and satellite ground network communications software business, increasing its presence in the US defence sector. The outsourcer said the MT&S business "will build additional scale for Serco in North America". It will grow its North America business to beyond USD2 billion of revenue and USD200 million of profit. "We have approximately doubled revenue and more than trebled profit in Serco's North America business in recent years through a successful combination of organic growth and strategic acquisitions. MT&S provides an excellent opportunity to continue that success," CEO Mark Irwin said. The deal will be funded in cash, "with sufficient capacity available through existing cash and debt facilities". The acquisition is expected to be completed in the middle of 2025.
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OTHER COMPANIES
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Mulberry said its festive trade was "satisfactory", and the handbag maker appointed a new finance chief and announced a "brand refresh". Mulberry, which late in 2024 managed to shrug off a takeover tilt from shareholder Frasers Group, set out a new strategy dubbed "back to the Mulberry spirit". It looks to "restore Mulberry to profitability through simplification, brand realignment and enhanced customer connection". It will look to refocus on the UK market, boost growth in the US and realign in Asia. In Asia, it will look to reduce its "emphasis" on China. The brand rejig will see Mulberry "reposition the company to celebrate British lifestyle". Mulberry will also look to boost up its direct-to-consumer operations. In the 13 weeks to December 28, which included the all-important Christmas trading stretch, revenue declined 18% on-year. It was a "satisfactory" outturn and in line with board expectations. It was hurt by a "continuing challenging macro-economic environment". Chief Executive Officer Andrea Baldo said: "Our new strategy sets out our commitment to turnaround this business and return to sustainable profitability. We need to get back to where we came from and return to the spirit of Mulberry. First created by Roger Saul over 50 years ago, it is this Britishness, cultural relevance, creativity and responsible craftsmanship that is so loved by our customers. These strengths, along with our unique price position, sets us apart from the market." Mulberry announced Billie O'Connor as chief financial officer, with effect February 17. "Billie qualified in 2007 and has spent her career working in the consumer and retail sectors, most recently as the CFO and CIO of Milk & More, a subsidiary of the Muller Group, which she joined to drive a turnaround and eventual sale. Prior to this, Billie held a variety of finance roles at Selfridges Group, Marks & Spencer, Walgreens Boots Alliance and Esporta Group," Mulberry said. Earlier this month, it had announced Charles Anderson will leave the board on January 31.
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By Eric Cunha, Alliance News news editor
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