15th Jan 2025 07:50
(Alliance News) - Stocks in London are set to open higher on Wednesday, following consumer and producer price inflation data from the UK, ahead of CPI data from the US.
Data published by the Office for National Statistics showed that consumer price inflation in the UK slowed by more than expected in December while the decline in producer prices slowed.
UK Chancellor Rachel Reeves previously faced questions in parliament after the cost of government borrowing increased and the value of the pound fell in recent days, putting her plans for the nation's finances at risk.
Pepperstone's Michael Brown said Tuesday was "another day where the fiscal backdrop remained in focus. Having initially advanced at the open...gilts ended back where they started, with long-end yields having risen marginally, finding renewed selling pressure after Chancellor Reeves's remarks in the Commons brought nothing by way of fresh information, and were taken as an invitation to just keep selling."
For Wednesday, he commented: "The aforementioned US CPI figures will, naturally, stand as the most significant release – headline inflation is seen at 2.9% YoY in December...while core prices should hold steady at 3.3% YoY.
"While the chances of a January Fed cut are already near-non-existent, bond bears are likely to need little invitation to embark on a renewed round of selling, given recent price action."
In corporate news, Hays issues a profit warning.
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 17.1 points, 0.2%, at 8,218.64
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Hang Seng: up 0.2% at 19,259.58
Nikkei 225: down 0.1% at 38,444.58
S&P/ASX 200: down 0.2% at 8,213.30
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DJIA: closed up 221.16 points, 0.5%, at 42,518.28
S&P 500: closed up 0.1% at 5,842.91
Nasdaq Composite: closed down 0.2% at 19,044.39
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EUR: almost flat at USD1.0301 (USD1.0295)
GBP: flat at USD1.2201 (USD1.2202)
USD: lower at JPY157.09 (JPY157.95)
GOLD: higher at USD2,682.39 per ounce (USD2,673.07)
OIL (Brent): lower at USD79.81 a barrel (USD79.84)
(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 industrial production
10:00 CET Germany GDP
11:00 GMT Ireland trade balance
09:00 CET Spain CPI
08:30 EST US CPI
08:30 EST US New York empire state manufacturing index
10:30 EST US EIA crude oil stocks
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Consumer price inflation in the UK slowed by more than expected in December while the decline in producer prices slowed, data published by the Office for National Statistics showed. The consumer price index rose 2.5% in December from a year before, slowing from a 2.6% annual increase in November. The FXStreet-cited market consensus had expected inflation to pick up to 2.7%. On a monthly basis, consumer prices rose 0.3% in December, sped up from 0.1% in November, but behind consensus of a 0.4% increase. Separately, the ONS reported that the decline in producer input prices slowed to 1.5% on-year in December from 2.1% in November, the latter revised from a previously reported 1.9% fall. The FXStreet-cited consensus had expected a sharper slowdown to 1.3% in December. On a monthly basis, producer input prices rose by 0.1% in December, compared to no change in November, but short of the market consensus of a 0.2% increase.
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Two-thirds of chief financial officers at 52 leading retailers said they would raise prices in response to the UK government's decision to hike employer national insurance contributions, a survey showed. The British Retail Consortium UK CFO survey found that 70% of respondents were "pessimistic" or "very pessimistic" about trading conditions for the next 12 months. Only 13% said they were "optimistic" or "very optimistic". The most commonly occurring concerns for CFOs were falling demand for goods and services, inflation and the increasing tax and regulatory burden. The survey found that 67% would raise prices to respond to the national insurance rise. The survey showed 56% said they would reduce the number of hours or overtime, 52% said they would cut head office headcount and 46% said they would reduce stores' headcount. In addition, 31% of the CFOs said the increased costs would lead to further automation.
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Rachel Reeves insisted the turbulence in the financial markets underlined the need to go "further and faster" in search of economic growth. The UK chancellor faced questions in the Commons after the cost of government borrowing increased and the value of the pound fell in recent days, putting her plans for the nation's finances at risk. Reeves told MPs: "We have seen global economic uncertainty play out in the last week. But leadership is not about ducking these challenges, it is about rising to them. "The economic headwinds that we face are a reminder that we should – indeed, we must – go further and faster in our plan to kickstart economic growth." The chancellor was addressing the Commons following her return to the UK from a trip to China which was criticised by opposition MPs. She said agreements reached in Beijing and Shanghai, where she held discussions on trade and investment, would be worth GBP600 million to the UK over the next five years.
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BROKER RATING CHANGES
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Deutsche Bank Research raises Persimmon to 'buy' (hold)
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Bank of America raises Shaftesbury to 'neutral' (underperform) - price target 135 (150) pence
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Barclays raises Ryanair price target to 22 (21) EUR - 'overweight'
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COMPANIES - FTSE 100
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Shell said CNOOC & Shell Petrochemicals, a joint venture between Shell Nanhai and CNOOC Petrochemicals Investment, has taken a final investment decision to expand its petrochemical complex in Daya Bay in Huizhou, south China. The expansion is expected to be completed in 2028. Shell provided no financial details of the investment. The expansion will include a third ethylene cracker with a planned capacity of 1.6 million tonnes per year of ethylene. The investment also includes a new facility that will produce 320,000 tonnes per year of "high-quality" performance specialty chemicals, such as polycarbonates and carbonate solvents. "The new facilities, primarily aimed at meeting domestic demand in China, will produce a range of chemicals that are widely used in the agriculture, industrial, construction, healthcare and consumer goods sectors," Shell said.
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Pfizer is selling 700 million shares in Haleon at 357 pence each for GBP2.5 billion, more than halving its remaining stake, according to a statement from JPMorgan Securities. Weybridge-based Haleon is a consumer healthcare products manufacturer which owns brands such as Sensodyne toothpaste, Panadol and Advil painkillers, and Centrum vitamins. According to JPMorgan, Pfizer, the New York pharmaceutical and biotechnology firm, is offloading 7.7% of Haleon's share capital, via an accelerated book-building process to institutional investors. This process will determine the price at which the shares are sold. JPMorgan and Morgan Stanley are acting as joint global coordinators and joint bookrunners. The sale will reduce Pfizer's interest in Haleon to around 7.3% from 15.0%.
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COMPANIES - FTSE 250
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Recruitment firm Hays in a trading statement said net fees fell 15% on-year in the second quarter, and by 12% on a like for like basis. Net fees dropped by 17% for Germany, 14% for the UK & Ireland, 17% for Australia & New Zealand, and 12% for the Rest of World. They were down 10% on-year but "sequentially stable" for Temp & Contracting staff and 21% for Permanent. For the first half, Hays expects GBP25 million in pre-items operating profit compared with consensus of GBP27 million. Additionally, it warned that it is too soon to determine whether the Permanent staff net fee fall is due to deferrals or to a sustained slowdown.
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Vistry said it expects around GBP250 million in adjusted pretax profit for 2024, down from 2023's GBP419.1 million but in line with the revised consensus it announced last month. However it expects adjusted revenue to have increased to GBP4.4 billion from GBP4.0 billion, and that total completions have risen by approximately 7% to around 17,200 from 16,118. Also it has a "strong pipeline of attractive new land and development opportunities" going forward with 16,500 mixed tenure units secured during the period, up from 15,288, and a "strong" forward sales position totalling GBP4.4 billion.
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OTHER COMPANIES
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Fuller, Smith & Turner said its like for like sales in the 41 weeks to January 11 increased 5.9% annually, and reported "excellent" trading over the crucial Christmas and New Year's period with LFL sales up 10% on-year. Also, it said it has so far repurchased 5.7 million of the 6.5 million 'A' shares it intends to buy back. Going forward, the pub and hotel firm said it is confident it can meet market expectations for the full year, and is "taking appropriate actions to manage the impact" of planned increases in employers' national insurance contributions and the national living wage.
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By Emma Curzon, Alliance News reporter
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