28th Apr 2025 07:42
(Alliance News) - Stocks were called slightly higher on Monday in London, while in Europe the ifo reported some deceleration of job cuts in Germany - although it warned that ongoing uncertainty "could exacerbate the situation".
"The week starts with mixed feelings," commented Swissquote's Ipek Ozkardeskaya. "Market mood improved last week as US President Donald Trump eased pressure on Federal Reserve [Fed] Chair Jerome Powell, announced some progress with trading partners including Japan and India, and said that the triple-digit import taxes on Chinese products will probably be 'substantially' revised lower.
"And happily, we heard no major bombs from Trump or his administration over the weekend. It could hardly get better than this given the situation. So, the week starts with some optimism...But trade news remains concerning."
In corporate news, Deliveroo has suspended its buyback programme after confirming a takeover proposal from DoorDash last week.
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 6.0 points, 0.1%, at 8,421.25
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Hang Seng: up 0.2% at 22,015.70
Nikkei 225: up 0.5% at 35,877.58
S&P/ASX 200: up 0.4% at 7,997.10
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DJIA: closed up 20.10 points, 0.1%, at 40,113.50
S&P 500: closed up 0.7% at 5,525.21
Nasdaq Composite: closed up 1.3% at 17,382.94
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EUR: lower at USD1.1365 (USD1.1372)
GBP: flat at USD1.3312 (USD1.3313)
USD: lower at JPY143.66 (JPY143.88)
GOLD: higher at USD3,291.39 per ounce (USD3,279.17)
OIL (Brent): lower at USD65.98 a barrel (USD66.68)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
Canada federal election
South Africa Freedom Day. Financial markets closed.
09:00 CEST Spain unemployment
09:00 CEST Spain retail sales
10:30 EDT US Dallas Fed manufacturing index
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UK economic growth could slow sharply over the next two years as US tariffs weigh heavily on spending and investment, and uncertainty washes over households and businesses, new forecasts show. Recovery from a period of stagnant growth will be directly hampered by President Trump's plans, EY Item Club said in a new report. About 16% of UK goods exports go to the US, meaning the new tariff rate will directly impact UK growth by squashing demand for products, EY said. But the bigger hit is set to come from the indirect impact of the new policies on a weaker global economic backdrop and spiralling levels of uncertainty. This is predicted to weigh on consumers who remain in a "cautious mood" following the cost-of-living crisis, and will likely continue putting big spending decisions on hold. Businesses are also expected to limit the amount they are investing over the next two years as a result. EY said it was therefore now expecting UK gross domestic product to grow by 0.8% this year, down from the 1% growth projected in February. It also slashed its GDP forecast for 2026 from 1.6% to 0.9% as the longer-term effects filter through to the economy. Economic growth will then rebound to reach 1.5% in 2027, according to the projections. The UK is less exposed than other countries, but certain sectors, such as car manufacturing and pharmaceuticals, are particularly "vulnerable", according to EY's report. Anna Anthony, regional managing partner for EY UK & Ireland, said: "The services-led UK economy is projected to see continued growth this year and gradual interest rate cuts should slowly bolster business and household spending."
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The pace of job cuts in Germany decelerated a bit in April, data published by the ifo Employment Barometer showed Monday. The ifo Employment Barometer improved to 93.9 points in April from 92.8 points in March. Jobs are still being cut, with the number of employees not expected to increase in any industrial sector, ifo said. It added, however, that "IT service providers in particular are still looking for new employees." Further, ifo said that in construction, there is a mild trend toward "making do with fewer staff". "It is still too early to speak of a trend reversal on the labour market. We are seeing a sharp rise in uncertainty, which could exacerbate the situation again," said Klaus Wohlrabe, head of Surveys at ifo.
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Senior diplomats from BRICS countries will meet on Monday in Brazil to present a united front in the face of threats emerging from US President Donald Trump's aggressive trade policies. The meeting comes at a critical moment for the world economy after the International Monetary Fund this week slashed growth forecasts over the impact of the American leader's sweeping new tariffs. Diplomats from the trading bloc that includes current president Brazil, Russia, India, China and South Africa will meet for two days in Rio de Janeiro, as a precursor to a leaders summit in July. "The ministers are negotiating a declaration aimed at reaffirming the centrality and importance of the multilateral trading system," Brazil's BRICS representative Mauricio Lyrio told reporters Saturday. The group has expanded significantly since its inception in 2009 – and now includes Iran, Egypt and the United Arab Emirates. It makes up nearly half of the global population and 39% of global GDP. Trump since returning to the White House in January has hit dozens of countries with a blanket 10% tariff, but China faces levies of up to 145% on many products. Beijing has responded with duties of 125% on US goods. Trump has threatened to impose 100% tariffs on BRICS countries if they undercut the US dollar. Brazilian Foreign Minister Mauro Vieira will host the meeting that will be attended by Russia's Sergei Lavrov and China's Wang Yi among others.
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President Xi Jinping said China must "overcome" the challenges of developing core artificial intelligence technologies, including high-end chips, state media reported Saturday. China aims to dominate the AI sector, a goal complicated by the trade standoff with Washington. The world's two leading economies are locked in an escalating tit-for-tat trade battle triggered by US levies on Chinese goods that have reached 145% on many products. Beijing has responded with new 125% duties on imports from the US. In this context, Xi called for "continuing to strengthen basic research, focusing our efforts on overcoming challenges in key technologies such as advanced chips and core software, and building an autonomous AI system," according to Xinhua news agency. Xi made the remarks during a quarterly meeting of the Politburo, the inner circle of China's top leaders. Chinese startup DeepSeek shook up the AI world in January with its R1 chatbot, matching the performance of its US competitors at a lower cost. But Xi acknowledged Friday that the Chinese industry still had "gaps". It was "essential" to "promote self-reliance" in the field, he added. Political support was essential to achieve this, Xi stressed, citing in particular "a combination of policies such as intellectual property rights, taxation, public procurement, and the opening up of infrastructure".
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Worldwide military expenditure saw its steepest rise in 2024 since the end of the Cold War, reaching USD2.7 trillion as wars and rising tensions drove up spending. Military spending rose worldwide with particularly large increases in Europe and the Middle East, according to a new report by the Stockholm International Peace Research Institute. In real terms, spending rose by 9.4% globally compared to 2023, with 2024 marking the 10th year of consecutive spending increases. More than 100 countries, including all of the 15 largest spenders, increased their military budgets last year, the report said. The main contributor to the rise in expenditure was the European region, including Russia, where spending rose by 17% to USD693 billion. The world's largest spender, the US, increased expenditure by 5.7%, reaching USD997 billion. That alone accounts for 37% of worldwide spending and 66% of the military spending among Nato countries. Total military spending by the 32 members of the US-led alliance rose to USD1.5 trillion as all members increased their spending. The world's second-largest spender, China, increased its military budget by 7.0% to an estimated USD314 billion, "marking three decades of consecutive growth".
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BROKER RATING CHANGES
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RBC starts Chemring Group with 'outperform' - price target 500 pence
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JPMorgan cuts Man Group to 'neutral' (overweight) - price target 167 (242) pence
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Deutsche Bank Research starts Sirius Real Estate with 'buy' - price target 110 pence
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COMPANIES - FTSE 100
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National Grid has filed a joint proposal with the New York Public Service Commission for its Upstate New York electric and natural gas distribution business Niagara Mohawk Power Corp, the utilities company reported. It said the proposed settlement is for a three-year rate plan that runs from May 2025 through to March 2028, and that it expects a final decision in the next few months. National Grid's plan includes a 9.5% return on equity and capital investment funding of USD1.43 billion in electricity and USD351 million in gas in the first rate year. "The proposed settlement will fund programmes necessary to maintain and improve reliability, integrate renewables and replace gas pipelines, promoting economic growth and advancing New York's renewable energy and emissions reduction goals," National Grid said.
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COMPANIES - FTSE 250
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Deliveroo announced that it has suspended its GBP100 million buyback programme with immediate effect. This follows its announcement on Friday that it had received an indicative proposal from DoorDash Inc regarding a possible cash offer. The London-based food delivery company said its San Francisco-based counterpart had made an indicative proposal on April 5 for a cash offer of 180 pence per Deliveroo share. Deliveroo said that it would be "minded to recommend such an offer to Deliveroo shareholders, subject to the agreement of the other terms" if a firm offer was made. Deliveroo said it had decided to engage with DoorDash regarding the offer and had provided access to due diligence.
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NB Private Equity Partners released its 2024 earnings report. The company has a net asset value per share of USD27.53 or GBP21.98 as of December 31, and delivered a 1.5% NAV total return in the year "driven by an increase in private valuations, [but] offset by quoted holdings and FX". This was compared with the 19.2% return from the MSCI World index and 9.5% from the FTSE All-Share. "Despite a more challenging environment for private equity exits, NBPE delivered solid realisations in 2024, generating USD179 million in proceeds – equivalent to 14% of the portfolio's opening fair value," commented Peter Von Lehe, managing director & head of investment solutions & strategy at Neuberger Berman. "NBPE ended the year in a strong financial position with USD283 million of available liquidity and an investment level of 102%, which is at the lower end of the long-term target investment level range of 100-110%."
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OTHER COMPANIES
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AOTI said it delivered growth in 2024 "across all business segments, with the higher margin Medicaid sector growing faster than originally expected". The wound healing-focused medical technology group reported revenue of USD58.4 million for the year, up 33% from USD43.9 million in 2023. Adjusted Ebitda more than quadrupled to USD8.1 million from USD1.7 million. The firm's pretax loss narrowed to USD945,000 from USD7.7 million. "AOTI has had a steady start to 2025, and in anticipation of some disruption across the government-funded US healthcare system, the board is taking a cautious approach and expects revenue growth for FY2025 to be 27%-30%," the company said looking forward. "The board does not currently foresee any material impact on the financial performance of the business from the recently introduced tariff position in the US."
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By Emma Curzon, Alliance News reporter
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