13th Dec 2024 07:43
(Alliance News) - London's FTSE 100 is called to open higher on Friday, shaking off poor UK data, a sharp decline in Asian equities, and weaker trade in the US overnight.
The UK economy registered a surprise decline in October, sinking the pound, and providing a tailwind for a FTSE 100 stacked with international earners.
According to the Office for National Statistics, UK gross domestic product fell 0.1% in October from a month prior. In September, GDP had fallen at the same rate.
Growth of 0.1% was expected for October, however, according to consensus cited by FXStreet.
Quilter Investors analyst Lindsay James commented: "This morning's GDP figure presents the final snapshot of the UK economy before the Bank of England makes its last interest rate decision of 2024, and the picture is not all that pretty.
"It is looking increasingly likely that the Bank of England could stand alone in its decision at the December meeting to hold interest rates at their current level while the other central banks opt for cuts. The outlook for inflation in the UK remains uncertain, however with growth still weak whilst signs emerge that wage inflation will be meaningfully lower in the year ahead, the bank may make a return to cuts in the new year."
Asian stocks failed to get a boost from Chinese leaders announcing Thursday measures to turbo-charge the economy.
Top leaders at the annual Central Economic Work Conference, including Chinese President Xi Jinping, vowed to next year implement a "moderately loose" monetary policy, increase social financing and reduce interest rates "at the right time", according to state broadcaster CCTV.
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 8,321.06
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Hang Seng: down 1.9% at 20,014.06
Nikkei 225: down 1.0% at 39,470.44
S&P/ASX 200: down 0.4% at 8,296.00
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DJIA: closed down 234.44 points, 0.5%, at 43,914.12
S&P 500: closed down 0.5% at 6,051.25
Nasdaq Composite: closed down 0.7% at 19,902.84
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EUR: lower at USD1.0454 (USD1.0491)
GBP: lower at USD1.2619 (USD1.2698)
USD: higher at JPY152.87 (JPY152.22)
GOLD: higher at USD2,682.05 per ounce (USD2,681.37)
(Brent): higher at USD73.45 a barrel (USD72.61)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
13:30 GMT US export and import prices
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Consumer confidence remained suppressed in December amid the "continuing uncharitable view on the UK's general economic situation", a survey suggests. GfK's long-running consumer confidence index increased by one point to minus 17 in December as forecasts for personal finances moved into positive figures at one – three points higher than this time last year. However, expectations for the general economy over the next 12 months remained unchanged at minus 26 – one point worse than last December – suggesting "people don't know where we are going", GfK said. The major purchase index, an indicator of confidence in buying big ticket items, also remained unchanged at minus 16, although this is seven points higher than a year ago. Neil Bellamy, consumer insights director at GfK, said: "Consumer confidence is still far from strong but there is some room for optimism with views on personal finances over the next 12 months up two points versus November and creeping back into positive territory. "However, with the major purchase measure unchanged at minus 16 in December, consumers are still thinking twice about big-ticket purchases and whether they will bring Christmas cheer. "We will need to see robust improvements in these perceptions of the economy before we can start talking about sustained improvements in the consumer mood. "In a nutshell, it's the continuing uncharitable view on the UK's general economic situation that's suppressing consumer confidence."
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The UK prime minister said providing homes for people must be the "top priority" over nature and the environment as government reforms are set to allow more building on the green belt. A shake-up of planning rules means councils have been given mandatory targets to deliver a total of 370,000 homes a year in England. Keir Starmer said local plans to reach targets were the starting point, but that the government would "absolutely" push development through if the plans do not work. Starmer said he wanted to "get the balance right with nature and the environment" but that "a human being wanting to have a house" has to be top priority. The prime minister and his deputy Angela Rayner have pledged to build 1.5 million homes and take decisions on 150 major infrastructure projects this parliament. The updated national planning policy framework commits to a "brownfield first" strategy, with disused sites that have already been developed in the past prioritised for new building. The default answer when a developer seeks to build on brownfield sites will be "yes" but the government says these sites will not be enough for the number of homes needed. Councils will therefore also be ordered to review their greenbelt boundaries to meet targets by identifying lower quality "grey belt" land that could be built on.
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BROKER RATING CHANGES
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RBC raises IAG price target to 350 (230) pence - 'outperform'
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RBC raises Jet2 price target to 2,100 (2,000) pence - 'outperform'
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COMPANIES - FTSE 250
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International Distributions Services-owned Royal Mail was slapped with a GBP10.5 million fine for a "poor delivery performance". UK watchdog Ofcom said it was the second sanction in just over a year for a Royal Mail which has failed to "significantly improve service levels". Ofcom said: "74.7% of First Class mail and 92.7% of Second Class delivered on time, well short of target 93% and 98.5%." Royal Mail was fined GBP5.6 million in November 2023 for its performance in the 2022-23 financial year. "Ofcom's rules require Royal Mail to deliver, in each financial year, 93% of First Class mail within one working day of collection and 98.5% of Second Class mail within three working days of collection. If Royal Mail misses its annual targets, we can consider evidence of any exceptional circumstances beyond the company's control - such as the Covid-19 pandemic - and whether it would have achieved its targets had those events not occurred," Ofcom added. "The company blamed its poor performance on its challenging financial position, and delays to the ballot on a deal that followed the previous year's industrial action. We do not consider either of these to be justifiable reasons for Royal Mail's failure to provide the levels of service expected of it. Ultimately, it is for the company to manage its financial position taking account of its obligations."
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Supermarket Income REIT said it has begun trading on the Johannesburg Stock Exchange. The real estate investment trust now has a secondary listing in Johannesburg after its admission on the JSE took effect on Friday morning. "At the company's annual results in September, we signalled our intention to proceed with a secondary listing on the JSE and we are pleased to be announcing the completion of that process today with SUPR's first day of trading on the JSE. A secondary listing will provide the company with a number of benefits including enhancing its profile with a broader investor base, further improving trading liquidity and the diversity of our shareholder register," Chair Nick Hewson said.
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OTHER COMPANIES
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Hutchmed China said it is to receive a USD10 million milestone payment from partner Takeda. Takeda received a national reimbursement recommendation for the Fruzaqla cancer treatment in Spain this month. It is the first national reimbursement recommendation in Europe for the drug. "We are delighted for both our partner, Takeda, and patients in Spain who will now be able to receive reimbursement for this innovative treatment. This is an important step forward in improving patient access across Europe more broadly," Hutchmed Chief Executive Officer Weiguo Su said. "It also underscores our ongoing collaboration with Takeda and reinforces our shared commitment to addressing the needs of patients with metastatic colorectal cancer."
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Portmeirion warned on annual revenue as it grapples with supply delays ahead of the key Christmas period. The designer of homeware products has been hurt by "supply chain disruption from Asia and recent shipping disruption into the US due to port strikes". In addition, it noted destocking in South Korea and "challenging and unpredictable" trading conditions in key markets. It now expects 2024 revenue of GBP90 million, "below market expectations". As a result, pretax profit of GBP1.0 million is expected. Revenue in 2023 totalled GBP102.7 million, and it suffered a pretax loss of GBP8.5 million. On a headline basis, excluding an impairment charge, it achieved pretax profit of GBP3.0 million in 2023. The firm added on Friday: "With the group's strong second half sales and profit weighting, Q4 is always a key trading period. Both the UK and US markets have been impacted by political and macroeconomic developments, which have been further compounded by ongoing supply chain and shipping disruption into the US delaying product deliveries in time for key holiday sales periods. This has led to, in some cases, order withdrawal and lower replenishment orders, coupled with increased costs. Whilst consumer demand and pull through in both regions were up across the key Thanksgiving / Black Friday holiday period, overall sales and replenishment across October and November 2024 were below the group's expectations."
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Tullow Oil late Thursday said it is in early stage talks over a possible takeover bid from Kosmos Energy. The Africa-focused oil & gas exploration and production company said it is in preliminary discussions with Kosmos over an all-share bid from Kosmos. Tullow said there can be "no certainty that any offer will be made". Kosmos, which has oil and gas assets in the Gulf of Mexico, Ghana and Equatorial Guinea, has until the close of play on January 9 to announce if it plans to make a firm takeover offer.
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By Eric Cunha, Alliance News news editor
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