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LONDON BRIEFING: Stocks called up thanks to New York rally

21st Mar 2024 07:52

(Alliance News) - Stocks in London are to open higher on Thursday, after a global equity market rally following the latest interest rate call from the US Federal Reserve.

On Wednesday, the Fed left interest rates unmoved, as expected, while its latest set of projections still suggest three cuts will be in the offing this year. The central bank's federal funds rate range was unmoved at 5.25%-5.50%.

"The Federal Reserve (Fed) meeting went better than many expected," said Ipek Ozkardeskaya at Swissquote Bank.

"There is no particular time regarding when the Fed will start giveaways, but we know that the recent uptick in inflation, the strong NFP figures, or the above-target growth don't seem to be a concern for most Fed members."

Eyes now turn to the Bank of England, which will announce its latest interest rate decision at 1200 GMT. Like the Fed, the BoE is expected to leave rates unchanged.

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 0.9% at 7,809.08

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Hang Seng: up 2.0% at 16,871.11

Nikkei 225: closed up 2.0% at 40,815.66

S&P/ASX 200: closed up 1.1% at 7,782.00

DJIA: closed up 401.37 points, 1.0%, at 39,512.13

S&P 500: closed up 46.11 points, 0.9%, at 5,224.62

Nasdaq Composite: closed up 202.62 points, 1.3%, to 16,369.41

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EUR: up at USD1.0933 (USD1.0856)

GBP: up at USD1.2788 (USD1.2717)

USD: down at JPY150.99 (JPY151.61)

Gold: up at USD2,208.01 per ounce (USD2,157.96)

(Brent): up at USD86.44 a barrel (USD85.93)

(changes since previous London equities close)

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ECONOMICS

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Thursday's key economic events still to come:

09:00 EDT Canada Bank of Canada Deputy Governor Toni Gravelle speaks

10:00 CET eurozone current account

10:00 CET eurozone flash composite PMI

09:15 CET France flash composite PMI

08:45 CET France business confidence

09:30 CET Germany flash composite PMI

07:00 GMT UK public sector net borrowing

09:30 GMT UK flash composite PMI

12:00 GMT UK interest rate decision

08:30 EDT US current account

08:30 EDT US initial jobless claims

08:30 EDT US Philadelphia Fed manufacturing survey

09:45 EDT US flash composite PMI

10:00 EDT US existing home sales

10:30 EDT US EIA natural gas stocks

12:00 EDT US Federal Reserve Vice Chair Michael Barr speaks

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The UK's public sector borrowing surplus decreased in February from the year before, according to the Office for National Statistics on Thursday. UK public sector net borrowing, excluding public sector banks, was GBP8.4 billion in February. This was GBP3.4 billion less than in February last year. Meanwhile, in the fiscal year to February, it was GBP106.8 billion. This is GBP4.6 billion less than the equivalent 11-month period of the prior year. It is also the lowest for four years in nominal terms. Public sector net debt was GBP2.659 trillion at the end of the month. This is GBP157.4 billion more than at the end of February 2023.

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Irish government ministers have rejected calls for an early election following Taoiseach Leo Varadkar's shock resignation as focus shifts to the race to succeed him. In an emotional address outside government buildings in Dublin on Wednesday, Varadkar announced he would step down as premier when a successor is confirmed. He also quit as leader of the Fine Gael party with immediate effect but made clear he does not intend to stand down as a TD for Dublin West in the Dail parliament. Varadkar said his tenure as Ireland's leader had been "the most fulfilling time" of his life but said he no longer felt he was the best person for the job. The announcement came after a turbulent number of weeks for the Fine Gael, Fianna Fail and Green Party three party coalition.

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BROKER RATING CHANGES

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RBC raises IAG to 'outperform' (sector perform) - price target 220 (200) pence

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UBS cuts Entain to 'neutral' (buy) - price target 830 (1,355) pence

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HSBC starts Segro with 'buy' - price target 964 pence

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COMPANIES - FTSE 100

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M&G said that it 2023 its adjusted operating pretax profit surged to GBP797 million, up 28% from GB625 million a year ago. Net client flows surged to GBP1.1 billion, excluding Heritage, up from about GBP200 million. Its shareholder solvency II ratio improved to 203% from 199%. On the back of the results, M&G said it will pay out a total dividend of 19.7p per share, up from 19.6p a year ago. Looking ahead, M&G said is "well positioned" to navigate the current uncertain economic climate due to its diversified business model, international footprint, compelling products and services, investment capabilities and expertise.

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Next reported that revenue in the 52 weeks ended January 27 rose by 9.1% to GBP5.49 billion from GBP5.03 billion a year earlier. Pretax profit jumped 17% to GBP1.02 billion from GBP869 million. Next recommends a final dividend of 141p, bringing the total dividend to 207p, up from 206p. "In the context of the wider economic environment, the year to January 2024 was a very good year for Next and the business materially outperformed our initial expectations," commented Chair Michael Roney.

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COMPANIES - FTSE 250

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Direct Line reported that in 2023 it swung to pretax profit of GBP277.4 million from a GBP301.8 million loss in 2022. Gross written premium improved to GBP3.11 billion up 27% from GBP2.44 billion. On the back of the results, Direct Line declared a 4.0p total dividend for 2023, down from 7.6p in 2022. Looking ahead, Direct Line said it will reveal results of strategy review at capital markets day in July. It added that it plans to run-rate annualised cost savings of at least GBP100 million by the end 2025. "While the picture has improved, we need to do more to drive performance and we have identified immediate actions we can take in 2024 to create value, including substantially reducing our cost base, driving claims excellence and optimising pricing capabilities whilst returning us back to higher quotability levels," CEO Adam Winslow said.

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Virgin Money UK and Nationwide said they have agreed a takeover offer, with the terms being the same as announced earlier this month. Earlier in March, Nationwide said it had reached a "preliminary" agreement to buy Virgin Money UK for GBP2.9 billion in a deal that would create the second largest provider of mortgages and savings in the UK. The all-cash offer is worth 220 pence per Virgin Money share, comprising 218p cash plus a proposed 2p dividend to be paid by Virgin Money prior to completion. Virgin Money Chair David Bennett said: "The board of Virgin Money believes that this strategic transaction recognises the strengths and opportunities in our business. We're pleased to recommend the terms agreed with Nationwide, which deliver an attractive premium for our shareholders in cash and reflect the group's strong future prospects, combining two complementary businesses."

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OTHER COMPANIES

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Ryanair on Wednesday threatened to shut its base at Bordeaux if the southwestern French airport raises its fees, putting 120 jobs at risk according to a union. "The airport I think wants to double our cost, we're not willing to pay double the cost at Bordeaux," Michael O'Leary, head of the low-cost Irish airline, told AFP. "I think there's a real risk we might close the base in Bordeaux maybe at the end of the summer season," he said on the sidelines of an airline conference in Brussels. "We have three aircraft based there, we've got a very successful operation, lots of good employees. But if the response of the airport is 'pay us double the fees', the answer is no. We'll move the aircraft somewhere else." The airport said in a statement to AFP that it "regrets that Ryanair has informed its employees, without talking to Bordeaux airport, of the possibility of closing its base".

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Meta Platforms, Microsoft , X and online dating firm Match hit at Apple on Wednesday for overcharging on app purchases. The four companies filed a rare joint amicus brief in a California court in charge of applying a ruling that Apple must allow companies to link to alternative payment options outside the app store for iPhone users. That ruling was stemmed from a 2020 lawsuit by video gaming company Epic Games, which has been fighting Apple in courts across the globe for years over its strict app store policies. Apple takes a cut of as much as 30% on all financial transactions in its app shop, prompting complaints about an unfair "tax" on companies.

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By Sophie Rose, Alliance News senior reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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