9th May 2023 08:00
(Alliance News) - Stocks in London are expected to open higher on Tuesday, as financial markets reopen after the long weekend and after a mixed day of trading over in Asia.
Financial markets in the UK were closed on Monday for the coronation of King Charles III.
UK house prices edged slightly lower in April from March, a report on Tuesday showed, with almost no annual growth last month.
In early corporate news, JD Sports is in talks for an acquisition in France. UBS said it plans a "phased" Credit Suisse tie-up and set out its new leadership team.
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 0.2% at 7,797.00
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Hang Seng: down 1.7% at 19,945.41
Nikkei 225: closed up 1.0% at 29,242.82
S&P/ASX 200: closed down 0.2% at 7,264.10
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DJIA: closed down 55.69 points, 0.2%, at 33,618.69
S&P 500: closed up 1.87 points at 4,138.12
Nasdaq Composite: closed up 21.50 points, 0.2%, at 12,256.92
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EUR: down at USD1.0992 (USD1.1016)
GBP: down at USD1.2614 (USD1.2628)
USD: unchanged at JPY134.89 (JPY134.88)
Gold: up at USD2,026.66 per ounce (USD2,013.19)
(Brent): up at USD76.31 a barrel (USD74.94)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
11:00 BST Ireland industrial production
11:30 EDT US Fed New York President John Williams speaks at Economic Club of New York
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Average UK house prices fell by 0.3% month-on-month in April, following a 0.8% rise in March, according to mortgage lender Halifax. The typical UK property now costs GBP286,896, compared to GBP287,891 a month earlier. The annual rate of house price growth slowed to 0.1%, versus 1.6% in March. Halifax noted that house prices in the south of England were under the greatest pressure. "House price movements over recent months have largely mirrored the short-term volatility seen in borrowing costs. The sharp fall in prices we saw at the end of last year after September’s ‘mini-budget’ preceded something of a rebound in the first quarter of this year as economic conditions improved," said Halifax Mortgages Director Kim Kinnaird.
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UK opposition leader Keir Starmer will warn his shadow cabinet the "hardest part lies ahead" as he welcomes signs that voters are returning to Labour after leaving over Brexit and Jeremy Corbyn. The Labour leader will tell his top team on Tuesday they must demonstrate how Labour would create a "big reforming government" rather than relying on the Conservatives' unpopularity. But he will acknowledge there is "a lot of scepticism" about politics and tell them they must show they have plans that offer "not just reassurance, but the hope the country needs". In the coming weeks, Labour will unveil missions on education reform, clean power and making the NHS fit for the future as it seeks to bolster support. Labour gained 635 councillors across England in last week's local elections, as the Conservatives lost 960 seats under UK Prime Minister Rishi Sunak's leadership.
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US President Joe Biden will convene a high-stakes meeting with Republican leaders on Tuesday in hopes of breaking an impasse over the US debt limit – with repercussions that could extend to next year's presidential election. The White House gathering involves Biden, House Speaker Kevin McCarthy and Senate Republican leader Mitch McConnell, setting in motion the deciding round of a power struggle that also threatens massive consequences for the world's largest economy. The lifting of the national debt ceiling, which allows the government to pay for spending already incurred, is often routine. But raising the borrowing limit, currently at USD31.4 trillion, has been a contentious issue for the past several years, with congressional Republicans pushing for spending curbs and a smaller budget deficit in exchange for lifting the ceiling.
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BROKER RATING CHANGES
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RBC raises Intertek to 'sector perform' (underperform) - price target 3,900 (3,700) pence
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Berenberg cuts Shell price target to 2,850 (3,000) pence - 'buy'
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Jefferies raises Unilever price target to 5,000 (4,650) pence - 'buy'
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COMPANIES - FTSE 100
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JD Sports Fashion said it is in exclusive talks to buy Groupe Courir in France from Equistone Partners Europe at an enterprise value of EUR520 million, including EUR195 million in assumed net debt. Courir is sports footwear and apparel retailer with 313 stores across six European countries.
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Fresnillo said it believes a new Mexican mining law will have no material impact on its current operations or advance exploration projects. The London-based precious metals group operating in Mexico added that it will continue to review any potential aspects of the new law which may merit legal analysis. "Fresnillo notes that the new legislation places greater emphasis on environmental and social obligations. Consistent with its purpose to contribute to the wellbeing of people through the sustainable mining of silver and gold, Fresnillo will continue to comply with environmental and social best practices and obligations in the places where it operates," it said.
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DCC said its Chief Executive Officer Donal Murphy will step back from his day-to-day responsibilities for the next few weeks to address a medical condition. His day-to-day responsibilities will be assumed by Chief Financial Officer Kevin Lucey, the Dublin-based sales, marketing, and support services company. said. Murphy expects to make a full return to work before DCC's annual general meeting in July.
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COMPANIES - FTSE 250
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Victrex reported that revenue in the six months that ended March 31 rose to GBP162.2 million from GBP160.1 million. However, the polymer solutions company's pretax profit fell to GBP39.1 million from GBP43.6 million. The company explained that pretax profit fell on lower volumes, cost inflation and targeted investment. Sales volumes fell by 14% to 1,941 tonnes from 2,264 tonnes. Victrex declared an interim dividend of 13.42p per share, unchanged year-on-year. "Our first half performance was driven by strong pricing, an improved sales mix and currency, with revenue up 1%, despite a softer macro-economic environment, resulting in weaker volumes, compared to a record FY 2022," said CEO Jakob Sigurdsson.
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Diversified Energy said that it has traded in line with expectations during the quarter ended March 31. The gas and oil production company said it has achieved first quarter net income of USD400 million, including a USD365 million gain. Further, it reported adjusted earnings before interest, tax, depreciation and amortisation of USD150 million. Diversified Energy declared a first quarter dividend of 4.375 US cents per share, up 3% from 4.250 cents year-on-year. CEO Rusty Hutson said: "We remain focused on generating free cash flow to provide dividends and service our amortising debt while evaluating accretive growth opportunities that provide enhanced scale and synergies. We have built a sizable and resilient company, and believe our intrinsic value per share significantly exceeds our current share price, offering a compelling value proposition for our current and future shareholders."
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OTHER COMPANIES
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UBS Group said it will conduct a "phased" integration with Credit Suisse, with the two brands operating separately for the near-future. UBS said Credit Suisse's chief executive will join the enlarged firm's executive board once the deal is sealed. The company also will have a new finance chief. Todd Tuckner, currently the head of business performance & risk management for the UBS Global Wealth Management arm, replaces Sarah Youngwood. UBS in March agreed to acquire compatriot Credit Suisse for USD3.25 billion in a deal hastily brokered by Swiss financial authorities. UBS expects legal close of the Credit Suisse buyout in "the next few weeks".
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Bank of Ireland began a share buyback for up to EUR125 million. The Dublin-based lender had announced the share buyback in March, which was subject to regulatory approval which has now been obtained. The purpose of the programme is to reduce the company's share capital and will end no later than June 30. The shares will be repurchased on Euronext Dublin and will be cancelled.
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By Sophie Rose, Alliance News reporter
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