29th Nov 2024 07:51
(Alliance News) - Stocks in London are to open lower on Friday, ahead of an abbreviated trading day in New York following Thanksgiving, with eyes on eurozone inflation data.
With markets somewhat divided between whether the European Central Bank cuts by 25 or 50 basis points next month, a softer than expected reading later this morning could strengthen the case for the latter.
According to consensus cited by FXStreet, the rate of consumer price inflation in the single currency area is expected to have accelerated to 2.3% in November, from 2.0% in October.
Analysts at ING commented: "Germany's preliminary harmonised [consumer price index] inflation for November was unchanged from October at 2.4% year-on-year. Still, other German national measures increased, and make it less likely that the ECB will deliver 50bp rate cuts in December. There is further euro area inflation data out today, which will potentially shape this story further."
In early UK corporate news, TI Fluid accepted a takeover bid and Peel Hunt reported a swing to half-year profit despite UK budget uncertainty hanging over markets.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 0.2% at 8,265.62
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Hang Seng: up 0.2% at 19,402.03
Nikkei 225: down 0.4% at 38,208.03
S&P/ASX 200: down 0.1% at 8,436.20
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US financial markets closed for Thanksgiving.
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EUR: higher at USD1.0585 (USD1.0579)
GBP: higher at USD1.2732 (USD1.2687)
USD: lower at JPY149.77 (JPY150.71)
GOLD: up at USD2,659.46 per ounce (USD2,643.13)
(Brent): down at USD72.26 a barrel (USD72.79)
(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 GMT eurozone CPI
Ireland general election
US Financial markets close early after Thanksgiving.
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The number of UK house sales is expected to increase next year, with prices also edging up, according to a forecast. Zoopla expects the number of sales to rise 5% over 2025, increasing to 1.15 million. It said the sales market is already on track for 1.1 million completions during 2024 – 10% higher than in 2023. Postponed home moves, an ageing population, rising running costs and changing working patterns will continue to impact moving decisions, the website predicted. Zoopla said the number of sales being agreed in recent weeks is higher than a year ago, with buyer demand also having increased. Rising incomes have helped the market adjust to higher mortgage rates, the website said, paving the way for continued modest growth in house prices. Across the UK, property values are expected by Zoopla to increase by 2.5% on average during 2025, based on certain assumptions around mortgage rates.
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UK retail footfall eased in November amid stormy weather and low consumer confidence, figures showed, with the decline exacerbated by the later timing of Black Friday. According to British Retail Consortium-Sensormatic data, total UK footfall decreased by 4.5% in November year-on-year, down from a 1.1% decline in October. The survey covers the four weeks to November 23. Shopping centre footfall slumped 6.1% in November, down from a 1.6% decrease in October. Retail park footfall also decreased by 1.1%, swung from a 4.8% increase in October. High street footfall fell 3.7%, down slightly from a 3.6% fall in October. The later timing of Black Friday meant that it does not fall into this month's figures, but it is included in last year's data. Black Friday is the day after Thanksgiving, which was on Thursday. "Footfall took a disappointing tumble in November, as a later-than-usual Black Friday and low consumer confidence meant customers were hesitant to hit the shops. "Some northern cities also suffered particularly badly due to Storm Bert, which caused travel disruption towards the end of the month," BRC Chief Executive Helen Dickinson commented. Sensormatic analyst Andy Sumpter said tepid data "will have come as a blow for many retailers", as post-budget consumer confidence jitters may have caused customers to delay festive purchases. "Now, all eyes turn to December, where retailers hope to make up for lost ground and turn around their festive fortunes. This will rely not only on effective merchandising and shored-up inventory availability, but on building the compelling and immersive experiences that bring the seasonal magic to life in-store," Sumpter added.
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Louise Haigh has resigned as UK transport secretary after it emerged she pleaded guilty to a criminal offence related to incorrectly telling police that a work mobile phone was stolen in 2013. It is understood the incident was disclosed to Keir Starmer when she joined the shadow cabinet. In a letter to the prime minister, she said she is "totally committed to our political project" but believes "it will be best served by my supporting you from outside government. I am sorry to leave under these circumstances, but I take pride in what we have done. I will continue to fight every day for the people of Sheffield Heeley who I was first and foremost elected to represent and to ensure that the rest of our programme is delivered in full," she wrote. Starmer thanked Haigh for her work to deliver the government's transport agenda. On Thursday evening, Sky News and the Times newspaper reported that Haigh had admitted an offence in 2014 following the incident. She had reported to police the device was stolen when she was "mugged" in 2013. Haigh said she discovered "some time later" that the phone had not been taken. She said the matter was a "genuine mistake" from which she "did not make any gain", and that magistrates gave her the "lowest possible outcome".
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Voters head to the polls in Ireland this morning for a general election which will set the political landscape for the next five years. The three largest parties were virtually neck-and-neck heading into the vote, with one party leader describing the race as "too close to call". More than three million registered voters will pick their representatives across 43 constituencies, in a campaign that has focused on the country's housing crisis, the response to a dramatic increase in immigration, and economic management for the cost of living as well as potential future trade shocks. After the 2020 general election delivered an inconclusive result, Fine Gael and Fianna Fail agreed to set aside almost a century of animosity and share power. Sinn Fein won the popular vote in 2020 but a failure to run enough candidates meant it did not secure sufficient seats in the Dail to give it a realistic chance of forming a government. This time around, party leader Mary Lou McDonald fielded many more candidates in a vow not to repeat past mistakes. An exit poll at 2200 GMT will provide the first sense of what Ireland's next government may look like. The arithmetic to form a majority could prove tricky, though, with the country's several smaller parties – and many independents – potentially jockeying for a place in government.
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BROKER RATING CHANGES
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Jefferies raises Anglo American to 'buy' (hold) - price target 2,850 (2,500) pence
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JPMorgan raises InterContinental Hotels price target to 7,800 (6,600) pence - 'underweight'
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COMPANIES - FTSE 250
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TI Fluid Systems said it has accepted a GBP1.04 billion takeover by automotive components maker ABC Technologies. ABC, owned by affiliated funds of Apollo Global Management, will pay 200.0 pence in cash for each TI Fluid share, a 55% premium to the thermal management and fluid handling systems provider's share price of 129.5p on September 13. September 13 was the last trading day before TI Fluid entered an "offer period". ABC had announced on September 16 that it approached TI Fluid for a possible takeover offer. The deal gives TI Fluid a GBP1.83 billion enterprise value, including debt. "TI Fluid Systems is a market-leading business, renowned for its exceptional people, innovative products, blue-chip customer base, and long-term growth potential. The acquisition by ABC Technologies brings together two strategically complementary businesses, creating a unique opportunity to significantly accelerate TI Fluid Systems' strategic development," TI Fluid Chair Tim Cobbold said. "The combination will result in a larger, more diversified business with a broader range of products and customers, better positioned to navigate the current challenges facing the automotive industry and deliver sustainable long-term growth." In considering the offer, TI Fluid said it was mindful of "a weaker and more volatile short-term global light vehicle production environment" when considering the deal. "Should the current period of automotive sector disruption extend for a prolonged period, creating structural changes in the competitive environment for the TI Fluid Systems Group's customers, this is likely to affect the TI Fluid Systems Group's ability to deliver on its strategic priorities in ways which are difficult to predict in extent and timing," it said. TI last month said two other proposals worth 188p and 198p per share were rejected, but explained it was "minded to recommend" a 200p tilt, if one was forthcoming. ABC had until the close of play on Friday to announce a "firm intention to make an offer" for TI Fluid.
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OTHER COMPANIES
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Fortress Investment Group said its bid for Loungers has received the backing of another shareholder in the bar and cafe operator. Fortress said it has received a "letter of intent" from Canaccord Genuity Asset Management to support the acquisition. Fortress said it now has the backing of sharehoolders owning just under 42% of Loungers. Fortress will pay 310 pence in cash for each Loungers share, according to a deal announced Thursday, giving the firm a GBP338.3 million equity value. Fortress said it now has the backing of shareholders owning just under 42% of Loungers. Canaccord's letter of intent represented roughly 1.7% of Loungers shares.
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Peel Hunt swung to a half-year profit, as it hailed an "improved performance across all business areas". The broker noted a better period in the core equity capital markets business, and a rise in trading activity in the first four months of its financial year, before being hit by uncertainty due to the UK budget and US election. The broker said it achieved pretax profit of GBP1.2 million in the six months to September 30, swinging from a loss of GBP773,000 a year prior. Revenue rose 26% to GBP53.8 million from GBP42.7 million. The first half was aided by "a more positive macroeconomic backdrop". Investment Banking revenue surged 31% on-year to GBP22.6 million. "We saw improved performance in our core equity capital markets business, particularly in the first quarter of FY25, where we acted as joint global coordinator on a Main Market IPO and nominated adviser and sole bookrunner on an AIM IPO," it explained. Research & Distribution revenue rose 30% to GBP13.6 million, "despite continued outflows from UK equities". Execution Services was up 19% to GBP17.6 million. Peel explained: "Trading volumes increased across Execution Services in the first four months of FY25 but slowed towards the end of H1 given uncertainty around the outcomes of the UK budget, particularly concerns about the withdrawal of inheritance tax relief on AIM companies, and the US election." Peel said trading in the first few weeks of the second half has been "in line with management expectations". "Although we have a solid pipeline of corporate transactions, including M&A and IPOs, we expect a degree of uncertainty to persist in the short term and consequently some of these transactions are more likely to execute in our next financial year. Whilst sentiment in the UK has dipped following the budget and increased concerns around global trade are suppressing risk appetite, UK economic fundamentals and consensus forecasts for growth remain stable," it added.
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Botswana Diamonds said it has achieved an environmental authorisation at the Thorny River diamond project in South Africa. The authorisation from the Department of Mineral Resources & Energy is on one of two mining permit applications. "Following further community consultation, a mining permit should be granted within the next 6 weeks," Botswana Diamonds said. Chair John Teeling said: "We are delighted to see that this authorisation has come through and we anticipate that the mining permit will soon be granted. The Thorny River project is well placed to restart and expand mining operations when prices recover."
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By Eric Cunha, Alliance News news editor
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