8th Nov 2024 08:11
(Alliance News) - The FTSE 100 is opened higher on Friday following rate cuts in the US and UK, with confidence that more will follow despite uncertainty after Trump's election.
On Thursday, the Bank of England's Monetary Policy Committee voted decisively by 8 to 1 to lower rates to 4.75%. Meanwhile the US Federal Reserve's Federal Open Market Committee voted unanimously to reduce the federal funds rate range by 25 basis points to 4.50%-4.75%.
"This being said, the BoE is right to adopt a less doveish outlook given that the UK's new budget – with extra spending to boost growth – will also boost inflation by half a percentage point according to the BoE," remarked Swissquote's Ipek Ozkardeskaya. "As such, [Governor Andrew] Bailey – who had turned aggressive on rate cuts – didn’t remain long at that party."
Meanwhile, Rightmove has released an optimistic trading update.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 6.95 points, 0.1%, at 8,147.69
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Hang Seng: down 0.8% at 20,789.06
Nikkei 225: closed up 0.3% at 39,500.37
S&P/ASX 200: closed up 0.8% at 8,295.10
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DJIA: closed down 0.59 points at 43,729.34
S&P 500: closed up 0.7% at 5,973.10
Nasdaq Composite: closed up 1.5% at 19,269.46
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EUR: down at USD1.0777 (USD1.0791)
GBP: down at USD1.2963 (USD1.2985)
USD: down at JPY152.65 (JPY153.11)
Gold: lower at USD2,687.62 per ounce (USD2,697.24)
(Brent): flat at USD74.94 a barrel (USD74.91)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
10:00 CET Italy industrial production
12:00 CET Italy retail sales
10:00 EST US Michigan consumer sentiment index
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China is expected to unveil a huge support package for the struggling economy Friday as officials wrap up a key meeting with an eye on the possibility of intensified trade tensions with US president-elect Donald Trump. Economists predict Beijing will approve hundreds of billions of dollars of help, with a focus on indebted local governments as well as cash for banks aimed at writing off non-performing loans. Policymakers were keeping tabs on the US vote as they gathered in the Chinese capital this week for a meeting of the country's top lawmaking body. Trump promised during his campaign of punishing tariffs on Chinese goods that threaten further grief for the world's second-largest economy, which is already grappling with a prolonged housing crisis and sluggish consumption. Observers say Beijing could seek to cushion that blow with a long-awaited "bazooka stimulus" for the economy – though caution details might still take time. The meeting, originally scheduled for late October, was likely pushed back to allow "policymakers a chance to address a possible Trump win", Lynn Song, chief economist for Greater China at ING, said.
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The UK government will seek to persuade President-elect Trump that harming the UK by hiking tariffs is not in his interest, the Foreign Secretary David Lammy has said amid fears of a looming trade war. Trump said he wants to increase tariffs on goods imported from around the world by 10%, rising to 60% on items from China. Lammy was asked if the UK would seek a special trade arrangement with the US so no extra tariffs are imposed on UK imports into the US. "We will seek to ensure and to get across to the US – and I believe that they would understand this – that hurting your closest allies cannot be in your medium or long-term interests, whatever the pursuit of public policy in relation to some of the problems posed by China," he told the BBC's Newscast podcast.
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Donald Trump on Thursday made his first cabinet appointment after his decisive election win, while signaling his intent to ditch the outgoing administration's policies by talking to Vladimir Putin. Trump's campaign manager Susie Wiles will serve as his White House chief of staff, the first woman to be named to the high-profile role and the Republican's first appointment to his incoming administration. Putin, the Russian president, hailed Trump as "courageous" and said he was "ready" to hold discussions with him. Billionaire Trump later told NBC News that he had not talked to Putin, the authoritarian leader whom he has repeatedly praised over the years, since his victory but "I think we'll speak." It marked a seismic shift from the icy silence that has existed between Biden and Putin since Russia invaded Ukraine in 2022, and underscored Trump's criticism of US support for Kyiv. The other frontrunners for a place in the Trump 2.0 administration reflect the disruptive shape it is likely to take. Robert F. Kennedy Jr., a leading figure in the anti-vaccine movement, reiterated that the Trump administration would recommend removing fluoride – a mineral US authorities say aids dental and skeletal health – from public water supplies. The world's richest man, Elon Musk, could also be in line for a job auditing government waste after the right-wing SpaceX, Tesla Inc and X head enthusiastically backed Trump.
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Federal Reserve Chair Jerome Powell said he will not step down if Donald Trump asks for his resignation. Quizzed whether he would resign if Donald Trump asked him, Powell simply said "no". Powell said it is "not permitted under the law" for the president to remove the Fed chair. There had been some speculation that Powell would resign before his term as chair is up in May 2026 if pressured to depart by Trump. Trump appointed Powell in 2017 but has been critical of the central bank chief. Powell said the election outcome would have no impact on near-term rate decisions given the substance of government policy was unknown. Powell kept the door open to cutting rates at the December meeting. He said he was not declaring victory on inflation but sees it coming down on a "bumpy path" to 2%.
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Ukrainian President Volodymyr Zelensky said it would be "unacceptable" for Europe to offer the Kremlin concessions to halt its invasion of Ukraine AFP reported on Thursday. It came after Moscow demanded the West enter direct talks on ending the war. Speaking to European leaders at a summit in Hungary, Zelensky blasted those who were pressuring him to give in to some of Putin's hardline demands. He further urged caution over US President-elect Trump's claim to be able to end the conflict within a matter of hours.
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BROKER RATING CHANGES
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Barclays raises National Grid price target to 1,145 (1,120) pence - 'overweight'
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Deutsche Bank research cuts Greggs to 'sell' (hold) - price target 2,400 (2,600) pence
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UBS cuts ASOS price target to 400 (440) pence - 'neutral'
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COMPANIES - FTSE 100
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For the four months ended October 31, Rightmove said it expects to meet market expectations for revenue and underlying operating profit for 2024. It anticipates full-year revenue of around GBP390 million, up 7.1% from GBP364.3 million in 2023, and an adjusted underlying operating margin of 70%. The revenue forecast is in line with Rightmove's previous guidance of between 7% and 9% growth. In 2025 Rightmove expects revenue growth to show "a modest acceleration". "This has been another period of strong progress for Rightmove, and it's pleasing to see our product development and sales delivery generating increased uptake from consumers and partners, said Chief Executive Officer Johan Svanstrom. "As a result, we remain confident in achieving meaningful strategic and financial growth in 2024."
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COMPANIES - FTSE 250
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Serco has been unsuccessful in rebidding the contract for the provision of onshore immigration detention facilities in Australia. "Our performance levels have been high on the current contract, and we submitted what we believed to be a compelling bid that would have delivered continued strong performance to the Australian government," Serco said. The contract ends on December 10. If the contract had been renewed, Serco believes it would have contributed around GBP165 million in revenue and GBP18 million in underlying operating profit for 2025. Serco also said tax changes announced in the UK government's Autumn budget will impact its business, estimating that changes to national insurance employer contributions will increase its direct labour costs by GBP20 million per year. The company's 2024 guidance remains unchanged.
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Workspace announced its sale of Rainbow Industrial Estate, a redevelopment site in Raynes Park, for a total of GBP20.3 million, GBP1.0 million below the March 2024 valuation at a net initial yield of about 3.5%.
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OTHER COMPANIES
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Avation has signed a 12-year lease agreement with Japanese airline for a new ATR 72-600 aircraft. It said this confirms the placement of the first of the series of ten ATR 72-600 aircraft ordered by Avation in May 2024, under its long-term purchase contract with ATR. The aircraft is scheduled to be delivered in October 2025, and Avation said the early placement is an illustration of the strong demand for the ATR 72 aircraft type for regional air travel.
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Sony announced a surge in interim profit and a healthy dividend increase. The Tokyo-based technology conglomerate said net profit jumped 37% in the six months to September 30, to JPY575.65 billion, around USD3.77 billion, from JPY419.10 billion a year ago. Net profit attributable to shareholders surged 37% to JPY570.13 billion from JPY417.65 billion. Sales and financial services revenue rose 2.2% to JPY5.917 trillion from JPY5.792 trillion. Sony's half-year dividend amounted to JPY50.00, up 25% from JPY40.00 a year ago. Looking ahead, Sony expects net profit to jump 31% to JPY671.40 billion for the current financial year ending March 31, while net profit attributable to shareholders is set to rise 20% to JPY501.91 billion. The company expects sales and financial services revenue to grow 11% to JPY5.540 trillion.
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By Emma Curzon, Alliance News reporter
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