19th May 2023 07:56
(Alliance News) - Stocks in London were called higher on Friday, amid optimism of a resolution to the US debt ceiling impasse.
Top US Republican Kevin McCarthy said he saw "the path" to a breakthrough in talks to avert a looming debt default – suggesting a vote would be possible as early as next week.
In positive news for UK businesses, a survey suggests that consumer confidence in the year ahead is continuing to recover despite persistent cost-of-living pressures. GfK's consumer confidence index rose by three points in May to minus 27, the fourth monthly increase in a row from January's minus 45.
In early UK company news, engineering company Smiths Group upgraded guidance as strong revenue growth continued into its third quarter. Cider maker C&C announced a leadership reshuffle amid "significant" challenges. Hotter Shoes-owner Unbound Group put itself up for sale as it launched a strategic review.
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 26.5 points, 0.3%, at 7,768.8
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Hang Seng: down 1.1% at 19,515.84
Nikkei 225: closed up 0.8% at 30,808.35
S&P/ASX 200: closed up 0.6% at 7,279.50
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DJIA: closed up 115.14 points, 0.3%, at 33,535.91
S&P 500: closed up 0.9% at 4,198.05
Nasdaq Composite: closed up 1.5% at 12,688.84
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EUR: up at USD1.0769 (USD1.0764)
GBP: up at USD1.2403 (USD1.2399)
USD: down at JPY138.34 (JPY138.64)
Gold: up at USD1,962.16 per ounce (USD1,953.31)
Oil (Brent): up at USD76.42 a barrel (USD76.23)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
10:00 CEST EU ECB economic bulletin
10:45 BST UK BoE MPC member Jonathan Haskel speaks
11:00 EDT US Federal Reserve Governor Michelle Bowman speaks
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Producer prices in Germany rose by 4.1% in April from a year before, cooling from a downwardly revised rise of 6.7% for March, according to Destatis. From the previous month, prices edged up 0.3%, having fallen by 1.4% in March.
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The UK unveiled new sanctions against Russia's minerals sector, targeting imports of aluminium, diamonds, copper, and nickel in an effort to choke Moscow's ability to fund the war in Ukraine. "As today's sanctions announcements demonstrate, the G7 remains unified in the face of the threat from Russia and steadfast in our support for Ukraine," said Prime Minister Rishi Sunak on the margins of a G7 summit in Japan.
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The UK government unveiled a new GBP1 billion semiconductor strategy to invest in infrastructure, research and security as the UK tries to diversify its chip supply chain. The plan would "safeguard supply chains from disruption and protect tech against national security risks", the UK government's Department for Business, Energy & Industrial Strategy said in a statement. The investment over the next decade would include up to GBP200 million, or USD215 million, between now and 2025. The new 20-year strategy would "boost the UK's strengths and skills in design, R&D and compound semiconductors, while helping to grow domestic chip firms across the UK", the department added.
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BROKER RATING CHANGES
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RBC raises St James's Place to 'outperform' ('sector perform') - target 1,400 (1,390) pence
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COMPANIES - FTSE 100
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Smiths Group raised its annual guidance, as it reported "continued strong growth" in its third quarter. The engineering firm said that, in the nine months period to April 30, organic revenue growth was 13.4%. This was in keeping with the 13.5% seen over the first half. Consequently, Smiths raised guidance for its financial year to around 10% organic growth, from "at least" 8% provided previously - which had already been upgraded twice. It kept the guidance of "moderate" improvement in margin. "The third quarter performance was driven by both good volume and price growth, with strong demand in most of the group's end markets. We continue to invest in working capital to ensure we meet this strong customer demand," Smiths said.
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COMPANIES - FTSE 250
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Vanquis Banking said its executive chair, Patrick Snowball, will step down this year. Senior Independent Director Andrea Blance will lead the search for the new chair. Snowball remain in post until a successor is found, and to help facilitate the onboarding of the firm's new chief executive, Ian McLaughlin, who starts in July.
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Network International said it has agreed to extend the put up or shut up deadline for Brookfield Asset Management to make a firm takeover offer for the firm. Following the extension, Brookfield will now have until June 1 to make a firm offer for the Middle East and Africa-focused payments provider. In late April, Network International confirmed it had received a takeover offer from Brookfield Asset Management Ltd for 400p per share. This represented an 11% premium to the company closing price the year before the announcement.
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Drinks company C&C announced a leadership shake-up and said it encountered "significant challenges" in implementing a complex enterprise resource planning system upgrade for the Matthew Clark and Bibendum businesses in Great Britain. "The implementation process has taken longer and been significantly more challenging and disruptive than originally envisaged, with a consequent material impact on service and profitability within MCB," it warned. It expects a one-off hit of EUR25 million from the ERP disruption in financial 2024. C&C CEO David Forde has stepped down with immediate effect, but remains available for a handover period. CFO Patrick McMahon becomes CEO and will retain CFO responsibilities until a replacement is found. Chair Ralph Findlay becomes executive chair.
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OTHER COMPANIES
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Unbound Group launched a strategic review, including a formal sales process. Unbound is the parent company for a retail group selling a range of brands focused on the 55+ demographic, including Hotter Shoes. This is to explore its strategic options, and could include a full sale of the company. It warned that any underperformance against its trading expectations could worsen its cash position, and that a temporary working capital shortfall could arise in September and October this year. It continues to work with its advisers and banking partners to raise additional funds or refinance its current facilities. The firm also outlined various operational changes, including a temporary halt to its loss-making direct-to-consumer sales in the US and the EU, which brought in some 11% of revenue in financial 2023.
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Tharisa said its interim profit fell sharply as platinum group metals sales and price declined, despite positive chrome performance. The Cyprus-headquartered platinum miner posted a 42% drop in pretax profit to USD72.4 million for the six months that ended March 31 from USD124.3 million a year earlier. Revenue was down marginally to USD335.3 million from USD334.0 million. 6E PGM production was 16% lower at 77,000 ounces from 91,800 ounces. PGM sales fell by 11% to 76,800 ounces from 86,500 ounces. It fetched PGM basket price of USD2,216 an ounce, compared to USD2,592. However, chrome production inched up 1.4% to 787,900 tonnes from 776,700 tonnes. Tharisa kept its interim dividend at 3.0 US cents.
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By Elizabeth Winter, Alliance News senior markets reporter
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