19th Nov 2024 07:59
(Alliance News) - Stocks were called higher on Tuesday, as large UK retailers put pressure on Chancellor Rachel Reeves over the budget and new data reveals a gloomy picture for last year's new business landscape.
The UK government is also facing calls from farmers and opposition parties to scrap its changes to agricultural inheritance tax ahead of protests in Westminster.
Over the US, SPI's Stephen Innes said, "rumours [are] flying about President-elect Donald Trump's Treasury Secretary pick" with former Federal Reserve governor and current vocal Fed critic Kevin Warsh reportedly in the running.
"With his deep experience and contrarian stance, Warsh has positioned himself as both a critic and a potential alternative voice for monetary policy...Should Trump tap Warsh for a prominent role, whether as Treasury Secretary or Powell's eventual replacement, it could signal a significant shift in the Fed's trajectory and approach to inflation management," Innes wrote.
However, he added: "Warsh, a staunch advocate of free trade and a strong dollar represents a globalist perspective that often clashes with Trump's America-first ethos and tariff-heavy trade policies."
In corporate news, Genuit expects full-year profit towards the lower end of its forecast range. Meanwhile Imperial Brands has increased its annual dividend despite decreased revenue and profit.
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 29.5 points, 0.4% at 8,138.82
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Hang Seng: up 0.4% at 19,653,44
Nikkei 225: up 0.5% at 38,414.43
S&P/ASX 200: up 0.9% at 8,374.00
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DJIA: closed down 55.39 points, 0.1%, at 43,389.60
S&P 500: closed up 0.4% to 5,893.62
Nasdaq Composite: closed up 0.6% at 18,792.43
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EUR: up at USD1.0586 (USD1.0572)
GBP: up at USD1.2674 (USD1.2649)
USD: down at JPY154.60 (JPY155.01)
Gold: up at USD2,620.60 per ounce (USD2,610.04)
(Brent): down at USD72.96 a barrel (USD73.08)
(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 CET eurozone current account
10:00 CET eurozone European Central Bank executive board member Frank Elderson speaks
11:00 CET eurozone CPI
08:30 EST US building permits
08:55 EST US Redbook index
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Japan and the UK have agreed to hold regular high-level talks on economic security, Tokyo said after the two countries' leaders met on the sidelines of the G20 summit. The move comes ahead of the second White House stint for Donald Trump, who has promised to levy massive tariffs on China and to raise import duties for others. The US and its Group of Seven allies, including Japan and Britain, have warned of a "disturbing rise in incidents of economic coercion" in a veiled reference to China. Japan's Prime Minister Shigeru Ishiba and his UK counterpart Keir Starmer held a bilateral meeting on Monday in Rio de Janeiro. Both are members of the G20 – the world's biggest economies, including the US, China and Russia. Ishiba and Starmer agreed to launch the so-called "economic 2+2" talks between their foreign and economic ministers "to further advance bilateral cooperation, in the field of economy including trade and economic security."
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The UK is set to relaunch trade talks with India, Downing Street has announced. It was confirmed that discussions will reopen at the start of next year, following a bilateral meeting between Keir Starmer and Indian Prime Minister Narendra Modi at the G20 summit. According to an official readout of the meeting in Rio de Janeiro, both Starmer and Modi agreed to work towards an "ambitious UK-India Comprehensive Strategic Partnership to take the relationship to new heights in trade and investment, security and defence, technology, climate, health and education." Following the meeting between Starmer and Modi on Monday the PM has said that a deal between India and the UK would help support jobs in the UK, with a trading relationship with India worth GBP42 billion in the 12 months to June 2024, according to Downing Street.
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A group of Britain's largest retailers has warned jobs will be lost and prices will rise due to the national insurance rise announced in October's budget. More than 70 businesses including Tesco, Asda and Sainsbury's voiced their concerns in an open letter to Chancellor Rachel Reeves, saying the changes mean price hikes are a "certainty". Reeves revealed a GBP25.7 billion change to employers' national insurance contributions in last month's budget, which would increase the rate of the tax and the threshold at which firms must pay. Now, businesses are claiming the combined raft of packages announced in the budget could cost the industry more than GBP7 billion each year. The letter reads: "We appreciate government's focus on improving the fiscal situation and investing in public services...But, the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty." The group recommended potential changes including phasing the introduction of the National Insurance lower earnings threshold, delaying timelines for packing levy implementations and revisiting business rates proposals announced in the budget.
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New business openings across the UK hit their lowest rate in more than a decade last year, official figures show. Data from the Office for National Statistics shows 316,000 new businesses were created in 2023, down 6.2% from 337,000 the year before. This means the rate of new businesses opening hit its lowest level since 2010, at 11% of all active firms. This was a fall from 11.5% a year earlier. Anna Leach, chief economist at the Institute of Directors, blamed poor financial conditions after the pandemic, a "relatively weak" growth environment and skill shortages. "Recent budget decisions unfortunately undermine the UK's business environment, disincentivising employment and reducing investment through the impact of higher taxes on business costs," Leach added. "Meanwhile, higher public spending is expected to raise the cost of finance in the UK. If the government wants to get higher growth, it'll need a vibrant business sector to deliver it." Despite this, there were slightly more business openings than closures, with the death rate dropping to 10.8%. This was a reversal from 2022, which was the first year in more than a decade where there were more deaths than births.
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The UK government is facing calls from farmers and opposition parties to scrap its changes to agricultural inheritance tax ahead of protests in Westminster. The National Farmers' Union is holding a mass lobby of MPs with 1,800 of its members to urge backbenchers to stand up to the government's plans to impose inheritance tax on farms worth more than GBP1 million. And thousands more are expected to join a separate rally in Whitehall as they protest against last month's budget, which also sped up the phase out of EU-era subsidies as funding is switched to nature-friendly farming schemes. Farmers have reacted with anger and dismay to the inheritance tax changes for farming businesses, which limit the existing 100% relief for farms to only the first GBP1 million of combined agricultural and business property. For anything above that, landowners will pay a 20% tax rate, rather than the standard 40% rate of inheritance tax applied to other land and property. Speaking to broadcasters at the G20 summit in Brazil on Monday, Keir Starmer insisted "the vast majority of farms" will not be affected by the reforms.
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Allies of President-elect Donald Trump's have criticised President Joe Biden's decision to let Ukraine use US-supplied long-range missiles for attacks inside Russia. "It's another step up the escalation ladder and nobody knows where this is going," Mike Waltz, Trump's choice to be national security adviser, told Fox News. Trump himself has not spoken publicly on Biden's change of heart regarding the long-range missiles.
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The US has pledged to continue providing significant military assistance to Ukraine, with UN Ambassador Linda Thomas-Greenfield confirming the commitment before the UN Security Council in New York. DPA reported that the US will continue to supply Ukraine with artillery, air defence, armoured vehicles and other needed capabilities and munitions. "When this war ends, a sovereign, independent, democratic Ukraine will be in control of its internationally recognised territory, and continue on the path to joining Euro-Atlantic institutions, like NATO," Thomas-Greenfield added. Further announcements of additional security assistance are due in the coming days.
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G20 leaders met in Rio de Janeiro on Monday for talks on climate change, ongoing wars in Ukraine, Gaza and Lebanon, and more. Hopes were high that leaders would restart stalled UN climate talks but in their final declaration they merely recognised the need for "substantially scaling up climate finance from billions to trillions from all sources." The G20 leaders added that they welcomed "all relevant and constructive initiatives that support a comprehensive, just, and durable peace" in Ukraine. They called for a ceasefire in Gaza and Lebanon, and endorsed the idea of cooperating to make sure "ultra-high-net-worth individuals are effectively taxed", AFP reported.
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BROKER RATING CHANGES
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RBC starts Tesco with 'sector perform' - price target 375 pence
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JPMorgan cuts Genuit price target to 500 (535) pence - 'neutral'
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JPMorgan cuts Young & Cos Brewery price target to 1,240 (1,300) pence - 'neutral'
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COMPANIES - FTSE 100
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Imperial Brands reported decreased full-year profit and revenue but raised its full-year dividend. The multinational tobacco company said revenue decreased 0.2% on-year to GBP32.41 billion in the financial year ended September 30, while pretax profit decreased to GBP3.03 billion from GBP3.11 billion. However Imperial increased the full-year dividend by 4.5% to 153.42 pence per share. Looking ahead it expects low single -digit tobacco and NGP revenue growth for financial 2025; low single-digit constant currency growth in first half adjusted operating profit; and to deliver five-year capital returns of GBP10 billion.
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COMPANIES - FTSE 250
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Edinburgh Investment Trust in its half-year report said its net asset value with debt at fair value was 830.39p at September 30, up 6.5% from 779.97p at March 31. NAV total return was 8.3%, beating the FTSE All-Share's 6.1%. The interim dividend edged higher on-year to 6.9p from 6.7p. It said its investment returns remain among the best in its sector, and that it is confident of making further strides forward in the years ahead.
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In a trading update, Genuit said revenue in the first ten months of the year was down 6.4% to GBP471.7 million, from GBP504.2 million a year ago. The water, climate and ventilation product provider said it expects full-year profit in line with the lower end of the analyst forecast range of GBP92 to GBP94 million. Additionally Genuit said it anticipates subdued market conditions going into 2025, and is planning GBP5 million in cost mitigations.
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OTHER COMPANIES
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Nexxen International said it will launch a new share buyback worth up to USD50 million. The advertising technology platform provider said the buyback will start on Tuesday and be completed by February 14. "The company's board of directors believes repurchasing the company's shares at what it believes reflects discounted valuation levels represents a strong investment opportunity that can generate long-term value for its shareholders," Nexxen said.
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GB Group said first-half revenue rose 3.4% on-year to GBP136.9 million, and the firm swung to pretax profit of GBP5.6 million from a GBP57.3 million loss. GB reiterated its full-year outlook, saying it expects mid-single digit revenue growth. Chief Executive Officer Dev Dhiman says: "We are retaining customers and doing more with them, and our new customer acquisition continues to be strong. Combined with the continued benefit of our group-wide cost and simplification initiatives executed in the prior year, we have delivered a good first half outcome."
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By Emma Curzon, Alliance News reporter
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