18th Dec 2024 08:00
(Alliance News) - The FTSE 100 was called to open higher on Wednesday, as investors prepare for various interest rate decisions this week including from the UK and Japan.
Japan's trade balance has reached a reduced deficit of JPY117.6 billion, higher than expectations for a deficit of JPY688.9 billion, while exports grew 3.8% in November on-year, beating expectations of a 2.8% increase by economists polled by Reuters.
Meanwhile, imports fell by 3.8%, coming in far below expectations of a 1% expansion.
"In a nutshell, Japan's export performance was a bit of a mixed bag in November, with stronger exports to China and Hong Kong, but weaker shipments to ASEAN, US and the EU," commented Pantheon Analyst Kelvin Lam, adding: "Uncertainty over global demand in 2025 will likely weigh on Japan's exports performance in the next few quarters. On monetary policy, market economists are split as to whether BoJ will hike this week.
"But we think inflation and wage growth looks conducive for policy normalisation; the BoJ is therefore likely to hike interest rate by 0.25bp to 0.5% on 19th December, if not January."
In corporate news, Kingfisher sells its Romanian business for EUR70 million.
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 19.7 points, 0.2% at 8,214.90
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Hang Seng: up 0.9% at 19,878.23
Nikkei 225: down 0.5% at 39,167.19
S&P/ASX 200: down 0.1% at 8,309.40
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DJIA: closed down 267.58 points, 0.6%, at 43,449.90
S&P 500: closed down 0.4% at 6,050.61
Nasdaq Composite: closed down 0.3% at 20,109.06
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EUR: marginally higher at USD1.0501 (USD1.0498)
GBP: lower at USD1.2690 (USD1.2707)
USD: flat at JPY153.56 (JPY153.57)
Gold: higher at USD2,643.94 per ounce (USD2,637.16)
(Brent): higher at USD73.50 a barrel (USD72.70)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CET eurozone construction output
11:00 CET eurozone CPI
10:00 CET eurozone European Central Bank Governor Philip Lane speaks
08:30 EST US building permits
08:30 EST US current account
10:30 EST US EIA crude oil stocks
14:00 EST US interest rate decision
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Congressional leaders have unveiled a stopgap spending bill that will keep the US federal government funded until March 14. It will also provide more than USD100 billion (GBP78 billion) in emergency aid to help states and local communities recover from Hurricanes Helene and Milton and other natural disasters. The measure would prevent a partial government shutdown set to begin after midnight on Friday. It would kick final decisions on this budget year's spending levels to a new Republican-led Congress and President-elect Donald Trump. Passage of the measure is one of the final actions members will consider this week before adjourning for the holidays and making way for the next Congress. It is the second short-term funding measure as they struggled to pass the dozen annual appropriations bills before the new fiscal year began October 1, as they typically do. The bill will provide USD100.4 billion in disaster relief, with an additional USD10 billion dollars in economic assistance for farmers struggling with low commodity prices and high input costs.
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The future of America's natural gas export boom was thrown into doubt after a federal government report found that unbridled expansion would drive up costs for Americans and undermine climate goals, the Financial Times reported. A long-awaited Department of Energy study released on Wednesday found that the rapid growth of the country’s liquefied natural gas sector might not be in the national interest, setting the stage for sweeping legal challenges that would hinder expansion just as Donald Trump takes office with a pledge to boost exports in pursuit of US energy dominance. "The main takeaway is that a business-as-usual approach is neither sustainable nor advisable," Secretary of Energy Jennifer Granholm said.
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South Korea's President Yoon Suk Yeol failed to appear before law enforcement authorities on Wednesday for questioning over his attempt to impose martial law. A joint investigation team, consisting of the police, the Corruption Investigation Office for High-ranking Officials, and the defence ministry's investigation unit, sought Yoon's presence for questioning, the Yonhap news agency reported. Attempts to deliver the summons to Yoon failed this week after his office refused to accept it or sent the mail back, the agency reported. The court has scheduled the start of the impeachment proceedings for December 27. It is unclear whether Yoon will appear in person at the hearing.
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Trump sued an Iowa newspaper and a polling firm behind a published incorrect prediction that Kamala Harris would win in Iowa, charging them with election interference. The move is being seen as the latest warning shot to media organisations and journalists of what might be coming under a second Trump presidency. It follows the surprise settlement by a major news organisation, ABC News, over the weekend, which agreed to pay USD15 million to settle a defamation lawsuit against the broadcaster and moderator George Stephanopoulos. In the Iowa lawsuit, filed on Monday, Trump accused the paper, its parent company Gannett and the respected pollster Ann Selzer and her firm of "brazen election interference" that he said was "intentional," the US media reported. Selzer's survey, which showed Harris ahead of Trump in a conservative state and was released a few days before the vote, surprised many and caused a stir. A spokeswoman for Gannett, told CNN: "We stand by our reporting on this matter and believe this lawsuit is unfounded."
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Sending Syrian refugees back to their country of origin could have negative effects on the German economy, widen the skills gap and be troubling for industries where labour shortages are prevalent, an analysis published on Wednesday claimed. There are some 80,000 Syrians employed in so-called shortage occupations and in climate-relevant jobs, a study by the employer-affiliated German Economic Institute in Cologne showed. In the automotive engineering sector, more than 4,000 were recently working technicians in a field in which almost seven out of 10 positions cannot be filled with qualified professionals, the IW said. Germany also employs some 5,300 Syrian doctors, whose return the study said would exacerbate the skills shortage and lead to supply bottlenecks.
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BROKER RATING CHANGES
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Jefferies raises International Consolidated Airlines price target to 350 (270) pence - 'buy'
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Jefferies raises Wizz Air price target to 1070 (1020) pence - 'underperform'
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Barclays reinitiates Tullow Oil with 'overweight' - price target 55 pence
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COMPANIES - FTSE 100
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Kingfisher announced the sale of its Brico Depot Romania business to Altex Romania for an enterprise value of EUR70 million, around GBP58 million. The sale comprises the entire Brico Depot Romania business, including its network of 31 stores in 24 cities, distribution operations, and head office in Bucharest. Kingfisher expects to complete the sale "during the first half of FY 2025/26, subject to regulatory approval".
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National Grid has published the RIIO-T3 business plan for its National Grid Electricity Transmission business, covering the period from April 2026 to March 2031. It said the plan includes "an unprecedented level of investment" of up to GBP35 billion, of which over GBP11 billion will go towards maintaining and upgrading its existing networks, alongside construction works for the first three of its Accelerated Strategic Transmission Investment projects. It will also invest around GBP24 billion, including around GBP15 billion to increase its network capacity. "The NGET plan includes the financial framework that we believe is needed to provide an attractive and investable proposition that can compete with the international demands for capital. We have clearly set out why we believe a real 6.3% (at 60% gearing, CPIH stripped) allowed cost of equity is the right level to deliver this in RIIO-T3," the company said.
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COMPANIES - FTSE 250
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IntegraFin in its annual report said that headwinds from the past year "are showing signs of abating" but uncertainty remains, and that it expects FY25 admin costs to rise by 9%. It said full-year revenue rose 7.1% to GBP144.9 million from GBP134.9 million, and pretax profit rose 10% to GBP68.9 million from GBP62.6 million. The total dividend for the year rose 2% to 10.4 pence from 10.2p, with IntegraFin declaring a second interim dividend of 7.2p. "Despite the level of uncertainty, the opportunities within the UK adviser platform sector remain strong," IntegraFin added.
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OTHER COMPANIES
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Saba Capital Management has requisitioned general meetings for seven UK investment trusts, some of which are FTSE 250-listed, calling on them to replace their boards. The trusts are Baillie Gifford US Growth Trust, CQS Natural Resources Growth & Income, Edinburgh Worldwide Investment Trust, European Smaller Cos Trust, Henderson Opportunities Trust, Keystone Positive Change Investment Trust and Herald Investment Trust. Saba said it holds between 19% and 29% stakes in each trust, but that the firms' current boards have failed to hold managers accountable.
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By Emma Curzon, Alliance News reporter
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