16th Sep 2024 07:48
(Alliance News) - London's FTSE 100 is set to open a touch lower at the start of the week, with poorly-received data out of China hurting the mood ahead of the week's major central bank decisions.
Retail sales and industrial production data out of China over the weekend underperformed expectations, adding to worries that the world's second-largest economy will fall short of a 5% growth goal for this year.
A central banking bonanza kicks off this week with a Federal Reserve decision on Wednesday, before the Bank of England on Thursday and the Bank of Japan on Friday.
"We are heading into a busy week with major central bank decisions. The Federal Reserve, the Bank of England and the Bank of Japan will announce their latest policy verdicts this week. The Brits and the Japanese are expected to remain seated on their hands and the Fed will certainly lower its rates this week. But by how much – is the million-dollar question," Swissquote analyst Ipek Ozkardeskaya commented.
"A Fed rate cut is fully priced in, but investors can't agree on the size of the cut that the Fed should deliver this week. Some – including myself – think that a 25bp cut would be appropriate to start cutting rates as inflation is cooling – but core inflation came in slightly higher than expected last week on a monthly basis... But wagers for a 50bp cut are rising into Wednesday's decision, as some investors think that the Fed should've cut rates already in July and that it may have fallen behind the curve by not doing so."
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called down 0.1% at 8,262.09
----------
Hang Seng: up 0.1% at 17,379.14
S&P/ASX 200: up 0.3% at 8,121.60
----------
DJIA: closed up 297.01 points, 0.7%, at 41,393.78
S&P 500: closed up 0.5% at 5,626.02
Nasdaq Composite: closed up 0.7% at 17,683.98
----------
EUR: higher at USD1.1104 (USD1.1084)
GBP: higher at USD1.3159 (USD1.3137)
USD: lower at JPY140.11 (JPY140.53)
GOLD: higher at USD2,587.71 per ounce (USD2,578.76)
(Brent): lower at USD71.85 a barrel (USD72.58)
(changes since previous London equities close)
----------
ECONOMICS
----------
Monday's key economic events still to come:
10:00 BST eurozone trade balance
10:00 BST eurozone labour cost index
10:00 BST Ireland trade balance
----------
UK Prime Minister Keir Starmer and US President Joe Biden delayed a decision to let Ukraine fire long-range Western-supplied missiles into Russia, a plan that sparked dire threats from Moscow of a war with Nato. Starmer told reporters at the White House that he had a "wide-ranging discussion about strategy" with Biden but that it "wasn't a meeting about a particular capability." Before the meeting officials had said Starmer would press Biden to back his plan to send British Storm Shadow missiles to Ukraine to hit deeper inside Russia as allies become increasingly concerned about the battlefield situation.
----------
UK Prime Minister Starmer has said he is "very serious" about an EU reset and that he wants to be "ambitious about what we can achieve". Since taking office, the prime minister has held talks in Paris and Berlin in a sign of his desire to seek closer relations with key figures in the EU. An agreement on youth mobility has been suggested by Brussels and could be a key demand in any negotiations but Starmer reiterated that there were "no plans" for such a scheme. Questioned on whether he was serious about an EU reset following criticism from Brussels on the youth mobility scheme, the PM said: "I'm very serious about it."
----------
UK house prices rose in September with the traditional autumn rebound in activity starting early, a report showed. According to Rightmove's House Price Index, average new seller asking prices rose by 0.8% in September to GBP370,759. September usually sees a monthly rise in prices, but this year's increase is double the long-term average, with prices supported by increased activity levels, the online property portal stated.
----------
Three in five manufacturers believe the change in government will lead to better UK economic growth in the next year, new research suggests. Only 6% of more than 300 companies surveyed by Make UK and BDO said they expected economic growth to decline. Make UK said it has upgraded its forecast for the economy overall in 2025 from 0.8% to 1.8%. Fhaheen Khan, senior economist at Make UK, said: "This quarter presents a tale of two halves with output turning negative and recruitment taking a dip, yet investment remains positive and business confidence continues to climb."
----------
BROKER RATING CHANGES
----------
UBS raises Sainsbury's price target to 321 (295) pence - 'buy'
----------
Jefferies raises Coats Group price target to 120 (105) pence - 'buy'
----------
COMPANIES - FTSE 100
----------
Phoenix Group said it is confident of meeting its cash generation target for 2024. The retirement savings and income firm said total income in the first half of 2024 more than doubled to GBP12.33 billion from GBP5.80 billion a year prior. Its pretax loss, however, stretched to GBP669 million from GBP372 million. Net finance expenses totalled GBP2.17 billion, rising sharply from GBP562 million. Adjusted operating profit, however, increased 15% to GBP360 million from GBP313 million. Phoenix lifted its interim dividend by 2.5% to 26.65 pence per share from 26.0p. Total cash generation in the half-year amounted to GBP950 million, a rise from GBP898 million a year prior. "We are confident of delivering at the top-end of our GBP1.4-1.5 billion target range in 2024," Phoenix Group added.
----------
COMPANIES - FTSE 250
----------
TI Fluid Systems rejected a takeover approach from automotive components maker ABC Technologies. Noting "recent press speculation", ABC, which makes plastics and lightweighting products for the automotive industry, said two takeover tilts were rejected by TI Fluid. A 165 pence per share offer for the designer and manufacturer of thermal management and fluid handling systems was fielded in August, before another of 176p earlier in September. The bids valued TI Fluid's issued share capital at around GBP816.1 million and GBP870.5 million. The 176p bid was a 35% premium to TI Fluid's share price on August 21, the day before ABC's first approach. "Although the possible offer was also rejected by the board of TI Fluid Systems, ABC Technologies remains interested in a possible transaction and is therefore considering its position. There can be no certainty that an offer will be made, nor as to the terms on which any offer might be made, even if the pre-conditions are satisfied or waived," ABC added. TI Fluid said it is "confident in the strategy and prospects of the company". ABC is majority-owned by investment funds managed by Apollo Management.
----------
Gambling software firm Playtech expects full-year earnings to top the market view, with its B2B division performing strongly. It expects 2024 adjusted earnings before interest, tax, depreciation and amortisation to be "slightly ahead of current consensus expectations". "The first half of 2024 saw Playtech's B2B division perform well, driven by a combination of revenue growth in the Americas and a focus on tighter cost control," Playtech said. "Good strategic progress continues to be made in the US and Canada, which delivered very strong growth, albeit from a small base. We also saw a growing contribution from Colombia." In B2C, it said it is seeing underlying growth in wagers against a tough comparative, though the firm has been hurt by "customer-friendly sporting results in Italy". Playtech said talks with Paddy Power owner Flutter Entertainment over the possible sale of the FTSE 250 listing's Snaitech business are continuing. In addition, Playtech announced a deal with partner Caliplay on Monday. As part of the pact, Playtech will hold just under a 31% stake in Caliente Interactive, which will be the new holding company of Caliplay. It will be able to receive dividends from Caliente Interactive and have the right to appoint a director to its board. "In addition, Caliplay has resumed paying the Playtech Group its software and services fees with more than EUR150 million (amounting to more than 80%) of the unpaid fees due from Caliplay to the group having now been received," Playtech added.
----------
OTHER COMPANIES
----------
Keywords Studios reported a "solid" first half despite an uncertain environment in the video game industry. The service provider to the video game sector said revenue in the six months to June 30 rose 6.6% to EUR440.4 million from EUR413.3 million a year prior. It swung to a pretax loss of EUR25.3 million, however, from profit of EUR25.1 million. "Keywords delivered solid growth in the first half despite the current mixed market backdrop. This has resulted in lower activity levels across the industry, as clients recalibrated their operations and game portfolios, and meant that our organic growth was lower than originally anticipated, as flagged in July," Chief Executive Officer Bertrand Bodson said. "We continued to make good progress against our strategy, enhancing our leading position in the market whilst expanding the use of technology within our business and on behalf of clients. We have begun to see the results of actions we have taken on costs and expect to see a pick-up in activity levels as we move into 2025." Keywords did not declare an interim dividend, in light of its ongoing takeover by EQT. It backed the GBP2.1 billion bid in July. Shares are expected to be cancelled next month.
----------
Construction firm Galliford Try left its annual outlook unchanged, but delayed its annual results with its auditor needing more time. BDO requested "more time to complete its audit quality control standard procedures", Galliford said. Galliford had been expected to release annual results for the year ended June 30 on September 19. In July, the firm predicted revenue and pretax profit before exceptional items to be above the upper end of analyst forecasts at the time. It had put the analyst forecast range for revenue at GBP1.44 billion to GBP1.64 billion, and the profit range at GBP26.7 million and GBP29.2 million. At best, that would represent an 18% revenue rise from GBP1.39 billion, and a pretax profit before exceptional items rise of 42% from GBP20.6 million. It said Monday it expects results to be in line with the outlook given in July.
----------
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.