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LONDON BRIEFING: Stocks called down; UK inflation falls to 8.7%

24th May 2023 07:58

(Alliance News) - Stock prices in London were called to open lower on Wednesday morning, despite new data showing that UK inflation has eased to 8.7%.

The UK consumer prices index rose by 8.7% in April from a year before, with annual inflation slowing from 10.1% in March and from a recent peak of 11.1% in October 2022.

In the US, the White House said some progress was made in the latest round of talks with Republican negotiators to avert a catastrophic US debt default before a June 1 deadline.

"We are seeing movement", White House Press Secretary Karine Jean-Pierre told reporters Tuesday afternoon, adding: "Both sides have to understand that they're not going to get everything that they want."

However, Republican Representative Ralph Norman warned that House Speaker Kevin McCarthy had said the two sides were "not anywhere near close" to an agreement.

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 0.8% at 7,698.30

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Hang Seng: down 1.3% at 19,169.92

Nikkei 225: closed down 0.9% at 30,682.68

S&P/ASX 200: closed down 0.6% at 7,213.80

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DJIA: closed down 231.07 points, or 0.7%, to 33,055.51

S&P 500: closed down 47.05 points, 1.1%, 4,145.58

Nasdaq Composite: closed down 160.53 points, 1.3%, at 12,560.24

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EUR: up at USD1.0787 (USD1.0774)

GBP: up at USD1.2458 (USD1.2420)

USD: down at JPY138.48 (JPY138.52)

Gold: up at USD1,974.01 per ounce (USD1,965.99)

(Brent): up at USD77.53 a barrel (USD77.00)

(changes since previous London equities close)

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ECONOMICS

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Wednesday's key economic events still to come:

EU ECB non-monetary policy meeting

UK BoE Governor Andrew Bailey speaks at Net Zero Delivery Summit

UK BoE Governor Bailey speaks at Wall Street Journal CEO Council Summit

US Fed Governor Christopher Waller speaks at Santa Barbara South County Economic Summit

10:00 CEST Germany Ifo business climate index

11:00 IST Ireland labour force survey

09:30 BST UK house price index

11:00 BST UK CBI industrial trends survey

07:00 EDT US MBA mortgage applications survey

14:00 EDT US Federal Open Market Committee meeting minutes published

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The UK consumer prices index rose by 8.7% to April, with inflation slowing from from 10.1% in March and from a recent peak of 11.1% in October 2022. On a monthly basis, CPI rose by 1.2% in April, compared to a 2.5% rise a year prior. CPI including owner occupiers' housing costs rose 7.8% in the twelve months to April, slowing from 10.1% in March. Core CPI, excluding energy, food, alcohol and tobacco, rose by 6.8% in April on year, accelerating from 6.2% in March.

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Former UK prime minister Boris Johnson has been referred to the police by the Cabinet Office over further potential rule breaches during the pandemic. Information has been passed to two forces over alleged events at both Chequers and within Downing Street. It relates to entries in the former prime minister's official diary and came to light during a review of documents ahead of the Covid public inquiry. The Metropolitan Police and Thames Valley Police both said they were "currently assessing" information they had received about potential breaches of health regulations between June 2020 and May 2021.

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BROKER RATING CHANGES

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Morgan Stanley raises Deliveroo to 'overweight' (equal-weight) - price target 135 (115) pence

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Credit Suisse raises National Grid price target to 1,280 (1,250) pence - 'outperform'

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Goldman Sachs cuts Vodafone price target to 110 (120) pence - 'buy'

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COMPANIES - FTSE 100

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SSE said that revenue in the financial year that ended March 31 rose to GBP12.49 billion from GBP8.70 billion a year earlier. However it swung to a pretax loss of GBP205.6 million from a pretax profit of GBP3.48 billion a year ago. SSE explained that the loss was due to net GBP2.3 billion adverse fair value movement on derivatives. SSE proposed a final dividend of 67.7p, bringing the full year dividend to 96.7p, up versus 85.7p year-on-year.

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Severn Trent revenue climbs 11% to GBP2.17 billion from GBP1.94 billion. Pretax profit fell, however, by 39% to GBP167.9 million from GBP274.1 million. "Creating job opportunities, continuing significant regional investment, and financially supporting more customers than ever before is made possible by the strong results we have delivered this year," said CEO Liv Garfield. Severn Trent proposed a final dividend of 64.09p, up from 61.28p a year ago. This brings the total dividend to 106.82p, up from 102.14p.

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COMPANIES - FTSE 250

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LondonMetric agreed to buy CT Property Trust in an all-share deal worth GBP198.6 million. LondonMetric also reported net rental income in the financial year that ended March 31 rose to GBP144.1 million from GBP130.0 million a year earlier. It swung to a loss per share of 51.8p from an EPS of 78.8p. The company declared a dividend of 9.50p, up from 9.25p. CEO Andrew Jones said: "The last year has seen a weaker economic backdrop, elevated inflation and a significantly higher interest rate environment. Not surprisingly, this has led to a recalibration of real estate values and conditions that have undoubtedly impacted our approach to leverage and interest rate exposure." LondonMetric also said it has sold its DHL logistics warehouse in Solihull for GBP20.5 million. It noted that the sale is at a small premium to the March 31 book value.

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Chemring named James Mortensen as its new chief financial officer. He joins from Smiths Group, the FTSE 100 engineering company, where he has spent the past seven years. Mortensen will take over from Andrew Lewis, who announced his intention to retire in January. Lewis' notice period runs until January 22,2024. Chemring said it is working with Mortensen to agree a start date. "Considerable work has been done in recent years to strengthen Chemring's balance sheet and reposition itself. James's broad experience within the industrials sector will be of great benefit to the group as we balance near term performance with long term growth and value creation for all our stakeholders," said Chair Carl-Peter Forster.

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OTHER COMPANIES

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Riders for Deliveroo are set to confront bosses at the takeaway delivery specialist over pay and "insecure jobs" at the firm. Campaigners at ShareAction and the Independent Workers' Union of Great Britain have coordinated for riders to challenge Deliveroo's board at its annual general meeting on Wednesday. Riders have said they want to raise concerns over their pay levels and worries related to their "independent worker" status. It comes a month after the IWGB union launched a challenge at the Supreme Court in a bid to secure collective bargaining rights for the firm's couriers.

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Empiric Student Property said revenue occupancy for academic year 2023-24 now at 86% and continuing to track significantly ahead of prior year. Like-for-like growth in average weekly rents for academic year 2023-24 is now expected to exceed 7%. "The booking cycle for academic year 2023-24 continues to track significantly ahead of 2022-23, which was itself a record year for the company. We remain confident in achieving occupancy rates above 97% and pleasingly, delivering rental growth in excess of 7% like for like, ahead of earlier guidance," said CEO Duncan Garrood.

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By Sophie Rose, Alliance News reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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