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LONDON BRIEFING: Stocks to rise as US tech rally lifts spirits

22nd Aug 2023 07:47

(Alliance News) - Stocks in London are called higher on Tuesday, as sentiment improves following a strong performance of tech stocks in New York.

"As we look ahead to today's European open the strong finish in the US looks set to translate into a similarly positive start... However it's difficult to escape the feeling that stock markets are starting to look increasingly vulnerable," said CMC Markets' Michael Hewson.

In early economics news, UK government borrowing continued to climb in July, but didn't exceed the UK's annual economic output, and rose less than expected. However, it was the fifth highest level of borrowing seen in July.

In early UK company news, John Wood narrowed its interim loss, posting double-digit revenue growth.

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 20.0 points, 0.3%, at 7,277.82

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Hang Seng: up 1.5% at 17,878.79

Nikkei 225: closed up 0.9% at 31,856.71

S&P/ASX 200: closed up 0.1% at 7,121.60

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DJIA: closed down 36.97 points, 0.1%, at 34,463.69

S&P 500: closed up 0.7% at 4,399.77

Nasdaq Composite: closed up 1.6% at 13,497.59

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EUR: up at USD1.0906 (USD1.0887)

GBP: up at USD1.2771 (USD1.2732)

USD: down at JPY146.04 (JPY146.31)

Gold: up at USD1,895.54 per ounce (USD1,888.81)

Oil (Brent): down at USD84.27 a barrel (USD84.98)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

10:00 CEST EU balance of payments

11:00 IST Ireland WPI

11:00 BST UK CBI industrial trends survey

07:30 EDT US Fed Richmond President Thomas Barkin speaks

08:55 EDT US Johnson Redbook retail sales index

10:00 EDT US existing home sales

10:00 EDT US Richmond Fed business activity survey

14:30 EDT US Fed Chicago President Austan Goolsbee and Federal Reserve Governor Michelle Bowman speak

16:30 EDT US API weekly statistical bulletin

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UK public sector net borrowing continued to climb last month, but at a slower pace than forecast, according to the Office for National Statistics. Public sector net borrowing, excluding public sector banks, reached GBP4.3 billion in July. This was GBP3.4 billion more than July 2022. "Borrowing in July 2023 was the fifth highest in any July on record but is GBP1.7 billion less than the GBP6.0 billion forecast by the [Office for Budgetary Responsibility]," the ONS commented. At GBP2.579 trillion, the total debt pile was provisionally estimated to have been around 98.5% of the UK's annual gross domestic product in July. This was continuing at levels last seen in the early 1960s, the ONS noted. Back in July, ONS had said the UK government's debt pile had surpassed the country's economic output in June at 100.8% of annual GDP. It was the first time this had happened since 1961. However, June's figure was revised down 99.5%, given that the latest GDP estimates for the second quarter were GBP32.5 billion higher than previous estimates.

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BROKER RATING CHANGES

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Jefferies starts Boku with 'buy' - price target 177 pence

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JPMorgan raises CRH price target to 57 (54) EUR - 'overweight'

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COMPANIES - FTSE 100

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Late Monday, Entain announced the result of a tender offer to shareholders of STS Holdings, Poland's leading sports-betting operator. The gambling firm said its offer has been accepted by STS shareholders holding in total 155.6 million shares, or around 99% of STS's total share capital. Entain now intends to initiate compulsory acquisition proceedings in respect of the STS shares not tendered and commence the de-listing process from the Warsaw Stock Exchange. Back in June, Entain Holdings (CEE) Ltd, the firm's Central and Easter Europe operation, agreed, alongside its joint venture partner EMMA Capital, to acquire 100% of STS.

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COMPANIES - FTSE 250

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John Wood Group announced double-digit interim revenue growth, alongside the departure of its chief financial officer. In the first half of 2023, engineering and consulting business said revenue climbed 17% year-on-year GBP2.99 billion from GBP2.56 billion. Pretax loss narrowed to GBP26.0 million from GBP30.5 million. The firm expects revenue growth to continue, but at a slower rate, reaching around USD6 billion in 2023 overall. It expects adjusted earnings before interest, tax, depreciation and amortisation margin to be flat in the nearer term around 7%. ""As we look ahead, we are confident that our actions, the business model we have implemented and the market growth opportunities to which we have aligned, support the momentum we are building in our business," said CEO Ken Gilmartin. Additionally, the company said its finance chief, David Kemp, will retire from his role. The process to appoint his successor is underway.

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OTHER COMPANIES

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The UK Competitions & Markets Authority said it has finalised its decision to block the original terms of Microsoft's purchase of Activision Blizzard, after rejecting submissions by Microsoft to revisit its original decision. The CMA imposed a "final order", which prohibits the original deal on a worldwide basis. The competition watchdog said it has begun a new phase 1 probe into a new, restructured deal submitted by Microsoft for review.

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BHP Group said its annual earnings fell sharply, amid lower revenue and inflationary pressures. In the financial year ended June 30, the Melbourne-based diversified mining group said revenue fell 17% year-on-year to USD53.82 billion from USD65.10 billion. The decline was mostly due to "significantly" lower prices across iron ore, metallurgical coal, and copper. BHP said attributable profit from total operations plunged 58% to USD12.9 billion from USD30.90 billion. The prior year had included an exceptional gain of USD7.1 billion related to the net gain of the merger of BHP's Petroleum business with Woodside Energy which had completed during the year, BHP noted. In addition, financial 2023 took a USD1.7 billion hit from "the lagged effect of inflation". BHP announced a final dividend of 80 US cents, bringing the total payout for the financial year to 170 cents. This was down sharply from the 325 cents the year before.

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Australia's Woodside Energy shared a "record" set of interim results, but scaled back dividend payments as costs climbed. In the six months ended June 30, the Perth-based energy company said net profit rose 6.1% year-on-year to a record figure of USD1.74 billion from USD1.64 billion. Diluted earnings per share, however, dropped to 91.1 US cents from 144.0 cents. For the first half, it declared an interim dividend of 80 cents per share, which was down 27% from the 109 cents payout a year before. Operating revenue rose 27% to USD7.40 billion from USD5.81 billion, but cost of sales surged 73% to USD3.87 billion from USD2.24 billion. Woodside recognised additional volume from BHP Group Ltd's former petroleum assets, as well as from the Pluto-KGP Interconnector. This was offset by lower prices and planned turnaround activity, it said. Total production rose 66% annually to record levels of 99.1 million barrels of oil equivalent, from 54.9 million boe in the first half of 2022. Woodside left production guidance for 2023 unchanged.

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By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

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