12th Jun 2024 07:49
(Alliance News) - Stocks in London are called to open higher on Wednesday, as investors shake off news that the UK economy stalled in April.
The Federal Reserve is expected to maintain interest rates at the current level once again, and the focus Wednesday will be on what it reveals in its latest projections, with the prospect of a hat-trick of cuts this year all but over.
In early economic news, investors are digesting news that the UK economy stalled in April.
In company news, self-storage provider Safestore reported a higher interim profit.
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 0.4% at 8,183.60
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Hang Seng: down 1.1% at 17,969.69
Nikkei 225: closed down 0.7% at 38,876.71
S&P/ASX 200: closed down 0.5% at 7,715.50
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DJIA: closed down 120.62 points, 0.3%, at 38,747.42
S&P 500: closed up 0.3% at 5,375.32
Nasdaq Composite: closed up 0.9% at 17,343.55
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EUR: up at USD1.0743 (USD1.0727)
GBP: up at USD1.2745 (USD1.2722)
USD: flat at JPY157.26 (JPY157.26)
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GOLD: up at USD2,313.70 per ounce (USD2,312.47)
OIL (Brent): up at USD82.38 a barrel (USD81.74)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
14:45 CEST Germany current account
09:00 CEST Germany Deutsche Bundesbank executive board member Burkhard Balz speaks
16:05 CEST Germany Deutsche Bundesbank executive board member Sabine Mauderer speaks
21:00 CEST Germany Deutsche Bundesbank President Joachim Nagel speaks
08:30 EDT US CPI
10:30 EDT US EIA crude oil stocks
14:00 EDT US interest rate decision
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The UK economy stalled in April, in line with market expectations, according to data from the Office for National Statistics on Wednesday. UK gross domestic product was flat in April from March, in line with FXStreet-cited market consensus. In March from February, GDP had increased by 0.4%, according to revised data from the ONS. The ONS also said that industrial production fell by 0.9% on-month in April, worse than expectations of a 0.1% fall. Production had risen by 0.2% in March from February. On an annual basis, industrial production fell by 0.4% in April, having risen by 0.5% the month earlier. Also on Wednesday, ONS data showed that the UK trade deficit widened to GBP6.75 billion in April from GBP1.10 billion in March. The value of goods imports increased by 8.2% in April. The ONS said the increase was due to an increase in imports of machinery and transport equipment and fuels. Meanwhile, the value of goods exports was stable in April, with a fall in exports to the EU offset by a rise in exports to non-EU countries.
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Annual consumer price inflation picked up in Germany in May led by price increases by service providers and despite a decline in energy prices, the Federal Statistical Office confirmed on Wednesday. The consumer price index rose 2.4% year-on-year in May from 2.2% in April. "The inflation rate is slightly up again, mainly due to the continued increase in service prices", said Ruth Brand, president of the Federal Statistical Office. The prices of services rose 3.9% annually in May, accelerating from growth of 3.4% in April. Notably, energy product prices fell 1.1% annually in May, compared to a 1.2% contraction in April. Food prices edged up 0.6% annually, picking up in speed from a 0.5% increase in April. Prices of dairy products were down 5.1%, fresh vegetable prices fell 3.5%, while prices for edible fats and oils picked up 8.4%, with the price of olive oil jumping 49%. Fruit prices ticked up 2.9%, while meat and meat product prices rose 1.3%. On a monthly basis, consumer price inflation slowed to 0.1% in May from 0.5% in April. The harmonised CPI, allowing for EU-wide comparison, rose 2.8% annually, accelerating from 2.4% in April. On a monthly basis, it slowed to 0.2% from 0.6%.
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BROKER RATING CHANGES
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Peel Hunt reinitiates St James's Place with 'buy' - price target 750 pence
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COMPANIES - FTSE 100
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Legal & General announced a GBP200 million share buyback, in its "first step of plan to increase returns to shareholders." It explained that it plans to return more to shareholders over 2024 to 2027, through a combination of dividends and buybacks. The company eyes 2% dividend per share growth each year and "further similar buybacks." "Over the last 5 months we have rigorously reviewed our business, listening to investors, customers, partners and employees. This work has deepened my belief in our strong foundations and excellent potential," said CEO Antonio Simoes. "L&G is in prime position to respond to and benefit from major structural and societal changes. Changing demographics, climate transition, economic uncertainty and technology are driving demand for trusted, experienced investors that can manage risk through the cycle, originate productive assets, and deliver returns for savers."
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National Grid said it has got 91% acceptances for rights issue of shares. It noted that it has got acceptances for 987.4 million new shares, priced at 645p each. The company added that its underwriters Barclays and JP Morgan will find buyers for remaining shares.
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COMPANIES - FTSE 250
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Balanced Commercial Property Trust updated markets on its strategic review, which was first announced in April. At the time, the investor said it had begun a strategic probe, with the sale of the company a possibility, as it grappled with a "difficult near-term economic and property market backdrop". As part of its strategic review, BCPT said it would consider options such as selling the company's portfolio, returning capital to shareholders or an outright sale of the company. On Wednesday, the company said it has undertaken an "open consultation process" with shareholders, where "a range of views have been expressed on the future direction of the company." It noted that general feedback confirmed the "need for change." "The board is also pleased to have received interest from a number of credible third parties who are currently reviewing information in respect of the company and its portfolio that has been provided to them," BCPT said. "There can be no certainty at this stage that the final terms of any proposal that may be received would be sufficiently attractive to merit a board recommendation. The board continues to pursue actively such third party interest, alongside considering other options such as a managed wind down, as part of the strategic review."
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Safestore reported that in the six months ended April 30, revenue fell 0.8% to GBP109.2 million from GBP110.1 million a year earlier. Pretax profit climbed 68% to GBP173.7 million from GBP103.4 million. Safestore upped its interim dividend by 1.0% to 10.0p from 9.9p. "We have delivered robust operating performance in difficult market conditions and have continued to demonstrate the value of our strategy of focusing on REVPAF to optimise returns from our assets," CEO Frederic Vecchioli commented.
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OTHER COMPANIES
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RWS reported that revenue in the six months ended March 31 fell to GBP350.3 million from GBP366.3 million a year earlier. Pretax profit plummeted 40% to GBP17.3 million from GBP28.7 million. RWS upped its interim dividend to 2.45p from 2.40p. Looking ahead, RWS said "encouraging" trends and start to the second half support a full year performance in line with market expectations. "The group's first half results reflect good progress in a number of areas and demonstrate that we are well positioned for clients' increased appetite to harness AI to meet their language and content needs. Our successes with TrainAI and Evolve, which have continued into the early part of the second half, demonstrate that our AI-enabled solutions are resonating with clients at this pivotal moment for our industry," said CEO Ian El-Mokadem.
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By Sophie Rose, Alliance News senior reporter
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Related Shares:
St James's PlaceBalanced Commercial Property TrustRWS HoldingsSafestoreNational GridLegal & General