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LONDON BRIEFING: Stocks to get into the holiday spirit after NY rally

22nd Dec 2022 07:49

(Alliance News) - Stocks in London were called to open higher on Thursday, as spirits are lifted by a rally on Wall Street on Wednesday, followed by a strong showing by Asian equities markets.

"With bargain hunters finally stepping in, US and European futures are trading higher," said Naeem Aslam, chief market analyst at Avatrade.

New York staged a rally on Thursday, after strong consumer confidence data.

Consumer confidence in the US economy improved in December, bouncing more than expected as inflation expectations eased and gas prices cooled, survey data showed on Wednesday. The closely watched consumer confidence index rose more than analysts predicted to 108.3 points this month, markedly higher than the revised 101.4 figure in November, said think tank the Conference Board.

"The truth of the matter is that 2022 wasn't a fantastic year for the stock market in the United States as inflation reached its highest level in forty years, and the Federal Reserve raised interest rates at their most hawkish pace in recent history," Aslam reflected.

"Nevertheless, in spite of all that has happened, we have seen the economic indicators performing better than forecasts."

In the UK, new figures early Thursday showed the economy contracted by more than first thought between July and September, and growth has been weaker than estimated throughout much of the past year.

Ahead in the economic calendar on Thursday, the US will publish its weekly unemployment insurance claims at 1330 GMT.

In early corporate news, JPMorgan Indian Investment Trust said it underperformed its benchmark in its recent financial year, but remains optimistic in its long-term outlook.

WANdisco said annual revenue will significantly exceed market expectations after a USD12.7 million contract win.

Thursday will be the last full day of trading in London before Christmas, before an early finish at 1230 GMT on Friday.

Here is what you need to know ahead of the London market open:

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MARKETS

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FTSE 100: called up 23.7 points, 0.3%, at 7,521.02

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Hang Seng: up 2.4% at 19,621.36

Nikkei 225: closed up 0.5% at 26,507.87

S&P/ASX 200: closed up 0.5% at 7,152.50

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DJIA: closed up 526.74 points, or 1.6%, at 33,376.48

S&P 500: closed up 56.82 points, or 1.5%, at 3,878.44

Nasdaq Composite: closed up 162.26 points, or 1.5%, at 10,709.37

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EUR: higher at USD1.0649 (USD1.0612)

GBP: higher at USD1.2127 (USD1.2093)

USD: lower at JPY131.80 (JPY132.08)

GOLD: higher at USD1,816.21 per ounce (USD1,815.20)

OIL (Brent): higher at USD82.44 a barrel (USD81.68)

(changes since previous London equities close)

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ECONOMICS

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Thursday's key economic events still to come:

11:00 GMT Ireland wholesale price index

08:30 EST US CFNAI Chicago Fed national activity index

08:30 EST US unemployment insurance weekly claims report 

08:30 EST US weekly export sales

10:00 EST US leading indicators

16:30 EST US foreign central bank holdings

16:30 EST US federal discount window borrowings

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UK gross domestic product fell further than initially expected in the third quarter, according to the latest figures from the Office for National Statistics. The UK economy is now estimated to have shrunk 0.3% between July to September. This was downwardly revised from a previous estimate of a 0.2% decline. Annual real UK GDP was revised upwards to 7.6% growth in 2020 to 2021, from a previous estimate of 7.5%. "Despite an upward revision to annual growth in 2021, downward revisions across the quarters of 2022 mean that real GDP is now estimated to be 0.8% below its pre-coronavirus pandemic level, revised from the previous estimate of being 0.4% below," ONS said.

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New data showed UK house prices are around GBP17,500 higher on average than at the start of 2022, according to a property website. Zoopla said property values have increased by 7.2% across the year, but it added that there has been a sharp fall in demand since the summer. The average UK house price is GBP258,100. Weaker demand from higher mortgage rates, cost-of-living pressures and low consumer confidence is hitting price growth, the website said. Sellers are accepting bigger discounts to their asking prices to achieve sales, with 4% being knocked off prices typically. Zoopla's report said: "We expect discounts to widen further in 2023."

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BROKER RATING CHANGES

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Citigroup cuts LondonMetric property to 'neutral' (buy) - price target 166 (299) pence

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Berenberg cuts Chemring group price target to 380 (420) pence - 'buy'

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Jefferies cuts Gym Group price target to 220 (290) pence - 'buy'

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COMPANIES - FTSE 250

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JPMorgan Indian Investment Trust said net asset value at September 30 was 1,045.8 pence per share, rising from 983.7p a year before. NAV total return during the financial year to the end of September was 6.3%, underperforming its benchmark of MSCI India index, which recorded a NAV return of 8.8%. "The company's underperformance during the review period was primarily due to stock selection in two areas of the portfolio...mainly as a result of underweight exposure to utilities, along with an overweight in Information Technology, the sector hit hardest by the global sell-off," the investment firm explained. The trust maintains that the long-term prospects for the Indian market are "strong", despite global economic headwinds.

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discoverIE said it has acquired Magnasphere, a US-based company that designs and manufactures magnetic sensors and switches for industrial electronic purposes. It will pay out USD22 million on a debt-free, cash-free basis before expenses, funded from existing debt facilities. The acquisition will be immediately accretive to underlying earnings and underlying operating margin, the firm said. Vendor shareholder approvals are expected during the final quarter. "This acquisition of Magnasphere continues our strategy of building a differentiated, international, growth focused electronics group with strong operating margin," said discoverIE CEO Nick Jefferies.

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OTHER COMPANIES

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BHP Group said it had entered into a scheme implementation deed with Oz Minerals Ltd as it moved a step closer to conclude the AUD9.6 billion acquisition. The scheme implementation deed lays out terms and conditions of the proposed acquisition and its non-binding indicative proposal announced on November 18. Also BHP said the conditions of the scheme were required to be satisfied by August 31, 2023 unless extended by it and Oz. The transaction is subject to regulatory and shareholder approvals. The execution of the scheme implementation deed follows the completion of a four-week exclusive due diligence period this month, BHP said

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Transport technical services firm Journeo said it has agreed to buy UK rail passenger information equipment provider IGL Ltd for GBP8.7 million. To finance the acquisition, Journeo has raised around GBP7 million in a placing and subscription of 6.7 million shares at 105p each. It proposes a retail offer to existing shareholders via the Bookbuild platform to raise a further GBP350,000 at the same price. The fundraise is conditional on shareholder approval at a general meeting to take place on January 13.

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Data activation platform WANdisco said revenue for financial 2022 is likely to be "significantly" ahead of market expectations, and no less than USD19 million. This is due to the agreement for a USD12.7 million contract with an unnamed "global European-based automotive manufacturer". The contract is for 'internet of things' data to be migrated from the client's data centre to the cloud. As the deal is for a one-off job, WANdisco expects around 80% of the revenue to be recognised in the current financial year, with the rest to fall into next year. It also said bookings for the current year are expected "in excess of" USD116 million.

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By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

Copyright 2022 Alliance News Ltd. All Rights Reserved.

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