23rd Mar 2023 07:56
(Alliance News) - Stocks in London were set to open lower on Thursday as market attention turned to the Bank of England's interest rate decision, due at midday, a day after the US Federal Reserve lifted US rates by 25 basis points.
The Fed raised interest rates by a quarter of a percentage point on Wednesday, resisting the urge to pause hikes in the face of banking sector turmoil.
The central bank's rate hike takes the federal funds rate range to 4.75% to 5.00%. The Federal Open Market Committee vote was unanimous.
It was an outcome that was largely expected, though tumultuous developments in the global banking sector meant the Fed may have been tempted to decide against a rate hike.
The Bank of England will announce its own rate decision at midday in London.
A similar quarter-percentage-point rate hike is largely expected, which would take the key UK bank rate to 4.25%, after figures from the Office for National Statistics on Wednesday showed an unexpected resurgence in the UK inflation rate.
In local corporate news, City brokers Cenkos Securities and finnCap have agreed to merge. Car dealer Inchcape posted a rise in profit in 2022 on the back of robust customer demand. Gas producer Energean swung to an annual profit.
Here is what you need to know at the London market open:
FTSE 100: called down 21.04 points, or 0.3%, at 7,545.80
Hang Seng: up 2.1% at 20,004.67
Nikkei 225: closed down 0.2% at 27,419.61
S&P/ASX 200: closed down 0.7% at 6,968.60
DJIA: closed down 530.49 points, 1.6%, at 32,030.11
S&P 500: closed down 1.7% at 3,936.97
Nasdaq Composite: closed down 1.6% at 11,669.96
EUR: higher at USD1.0921 (USD1.0702)
GBP: higher at USD1.2334 (USD1.2228)
USD: lower at JPY130.69 (JPY132.67)
Gold: higher at USD1,981.76 per ounce (USD1,948.59)
(Brent): flat at USD76.09 a barrel (USD76.04)
(changes since previous London equities close)
Thursday's key economic events still to come:
08:30 EDT Canada employment insurance
16:00 CET EU consumer confidence indicator
09:30 CET Switzerland National Bank monetary policy assessment
12:00 GMT UK Bank of England interest rate decision
08:30 EDT US Chicago Fed national activity index
08:30 EDT US unemployment insurance weekly claims report
10:00 EDT US new residential sales
16:30 EDT US federal discount window borrowings
16:30 EDT US foreign central bank holdings
The National Union of Rail, Maritime & Transport Workers has suspended strikes due to be held in the UK on March 30 and April 1. The move follows further discussions between the union and the Rail Delivery Group in a long-running dispute over pay, jobs and conditions. The union has already resolved its row with Network Rail in a similar dispute. A Rail Delivery Group spokesperson said: "We are now jointly focused on working constructively towards a settlement to this dispute, which will mean we can do what we have always wanted to do – give our people a pay rise and help secure the long-term future of the railway with rewarding careers for all those who work on it."
BROKER RATING CHANGES
Morgan Stanley cuts Informa to 'equal-weight' - price target 730 pence
JPMorgan raises Prudential price target to 1,850 (1,750) pence - 'overweight'
Berenberg cuts Kenmare Resources price target to 760 (780) pence - 'buy'
COMPANIES - FTSE 100
Educational publisher Pearson announced it completed the acquisition of Personnel Decisions Research Institutes, a workforce assessment services provider. The firm said the acquisition will further expand its portfolio and accelerate its strategy to "capture new market opportunities and grow its presence with large employers." PDRI will now operate under the brand name PDRI by Pearson and will join Pearson's Assessment & Qualifications division. The acquisition was originally announced in December for an enterprise value of USD190 million.
3i said its largest portfolio company, Benelux-based discount retailer Action, has seen a strong start to 2023 across all its geographies. In the first 11 weeks of 2023, net sales were up 37% against the same period a year prior at EUR2.09 billion. Like-for-like sales growth in this period was 25%. 3i said Action has added 23 stores in the year to date and is planning to make another dividend payment to shareholders in the last week of March.
COMPANIES - FTSE 250
Car dealership Inchcape said it delivered "another great set of results" for 2022, noting robust customer demand following a prolonged period of supply shortages, which drove growth in both revenue and profit. Pretax profit jumped to GBP399.7 million in 2022 from GBP181.3 million in 2021, while revenue from continuing operations climbed 18% to GBP8.13 billion from GBP6.90 billion. The firm proposed a final dividend of 21.3 pence, which would bring its full-year payout to 28.8p. In 2021, the total payout was 22.5p. Looking forward, Inchape said it expects that new vehicle supply will continue to improve throughout 2023, and support a normalisation of order books. It added that trading to date in 2023 was been in-line with its expectations.
Energean swung to an annual profit in 2022 and said it has made a positive start to the new year. The Mediterranean-focused gas exploration and production company swung to a pretax profit of USD107.0 million in 2022 from a loss of USD90.7 million the year prior. Revenue in the year jumped to USD737.1 million from GBP497.0 million. The company's average working interest production inched up 0.5% to 41,200 barrels of oil equivalent per day from 41,000. It explained that production in Israel was lower than forecast due to the project being in the commissioning phase in 2022. Energean said the first quarter of 2022 has seen a continuation of the positive trend of 2022, with production from Karish in-line with expectations. The company said that for the remainder of 2023 it will present the development concept for the Olympus area and increase the capacity of the Energean Power FPSO. Production guidance for 2023 is confirmed at 131,000 to 158,000 barrels of oil equivalent per day.
Insurance marketplace Lloyd's of London reported an "outstanding underwriting result" in 2022 but still swung to a pretax loss of GBP800 million from a profit of GBP2.3 billion in 2021. This was due to a net investment loss of GBP3.1 billion, swung from a GBP900 million profit. More positively, underwriting profit rose by 53% to GBP2.6 million from GBP1.7 billion on a 19% rise in gross written premiums to GBP46.7 billion from GBP39.2 billion. Combined ratio improved to 91.9% in 2022 from 93.5%. A ratio below 100% indicates an underwriting profit, so the lower the better. Looking to 2023, Lloyd's of London expects gross written premiums to rise to about GBP56 billion, with a combined ratio below 95%. "This is an outstanding underwriting result that follows several years of performance improvement, a comprehensive plan to digitalise our market, steady and sustained progress on our culture and purposeful action to help our industry and society manage the biggest challenges of our time," Chief Executive Officer John Neal said.
Cenkos Securities and finnCap have agreed on an all-share merger. The announcement confirmed a Sky News report earlier Thursday. Cenkos and finnCap shareholders each will own about half of the enlarged company. Cenkos shareholders will receive 3.19 finnCap shares for each Cenkos share, valued at 37.13 pence per share. Cenkos shareholders still will receive the 0.5 pence cash dividend declared earlier this month, plus a 3p interim dividend to be declared after June 30. The combined group is expected have more than 210 clients. It will be led by the existing chief executives of Cenkos and finnCap and by Cenkos Chair Lisa Gordon. The two companies said they expect to achieve significant cost savings from the combination and also see new revenue opportunities.
Gulf Keystone Petroleum said that higher oil price and production allowed it to generate "record" profitability in 2022. The Iraq-focused oil field operator posted a pretax profit of USD265.8 million in 2022, up from USD163.7 million in 2021. Revenue for the year totalled USD460.1 million, up from USD301.4 million the year prior, as the company's average realised price per barrel jumped 49% to USD74.1 from USD49.7 the year prior. Gross average production for 2022 totalled 44,202 barrels of oil per day, up from 43,440 bopd in 2021 and in-line with annual guidance.
By Heather Rydings, Alliance News senior economics reporter
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