30th Dec 2024 07:53
(Alliance News) - London's FTSE 100 is to open lower on Monday, with hawkish Federal Reserve rate expectations keeping a lid on equity market enthusiasm as the year draws to an end.
US stocks slid on Friday, and Asian equities registered an uninspiring session at the start of the week.
"Futures point at an unappetizing start for the last Monday of the year both in Europe and in the US, and the price moves could be exaggerated with low trading volumes," Swissquote analyst Ipek Ozkardeskaya commented.
It is the final full trading day of the year in London as markets close at 1230 GMT on Tuesday. The FTSE 100 is up just over 5% so far in 2024. In contrast, New York's S&P 500 has registered a more convincing 25% advance.
The S&P 500 gave back some progress on Friday, however.
"Last week ended on a positive note for the European stocks and negative note for the US stocks," Ozkardeskaya commented.
"We can't drive major conclusions in a holiday-shortened and thin-trading-volume week, but last week's price action looked pretty close to the narrative of rotation from tech to non-tech stocks that many investors expect to be the theme of next year."
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 0.4% at 8,119.18
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Hang Seng: down 0.1% at 20,069.45
Nikkei 225: down 1.0% at 39,894.54
S&P/ASX 200: down 0.3% at 8,235.00
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DJIA: closed down 333.59 points, 0.8%, at 42,992.21
S&P 500: closed down 1.1% at 5,970.84
Nasdaq Composite: closed down 1.5% at 19,722.03
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EUR: lower at USD1.0425 (USD1.0429)
GBP: lower at USD1.2576 (USD1.2588)
USD: higher at JPY157.83 (JPY157.50)
GOLD: slightly lower at USD2,618.76 per ounce (USD2,619.91)
(Brent): flat at USD73.63 a barrel (USD73.62)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
15:00 GMT US pending home sales
15:30 GMT US Dallas Fed manufacturing index
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The UK prime minister has called on Britain's regulators to do more to prioritise growth as he seeks to improve living standards by 2029. In letters sent last week, Keir Starmer, Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds said they wanted to see "concrete proposals" from regulators setting out how they could "go further" to "prioritise growth". They said: "Improving regulation in the UK – ensuring that it enables growth and does not unduly hold back investment – is an essential part of this government's growth mission. This is a shared endeavour in which we all have a stake, and therefore we would like your support in delivering it." Regulators including the Financial Conduct Authority, Ofgem, Ofwat and the Competition & Markets Authority are among the bodies reported to have received letters from the prime minister. The letters come after a tough economic start to Labour's term in office, with figures published just before Christmas showing there was no growth between July and September. Those figures continued a period of struggling economic growth, including a small recession at the end of 2023, although the economy did see slight growth at the start of the year.
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Finance bosses in the UK are optimistic about Labour's plans to cut regulation across the sector, according to a survey, with more than half saying they plan to hire faster in 2025. Polling by consultancy KPMG found seven in 10 financial services bosses think the policies will help attract foreign investment into the sector. Meanwhile, 55% of them said they plan to increase hiring in 2025, while 17% said they are planning a "significant" recruitment drive, the research found. Chancellor Rachel Reeves pledged in November to rip up financial red tape. She said in a Mansion House speech that regulatory changes after the 2008 economic crash have "gone too far". KPMG's head of financial services, Karim Haji, said the optimism is "encouraging". But he said "concerns" remain around the impact of the budget on the sector. The respondents with less confidence in the chancellor's plans pointed to increased tax for businesses outlined in the spending statement.
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Insolvencies and restructuring could rise further over the start of 2025 as firms face more increased cost pressures, industry experts in the UK have warned. Restructuring bosses have cautioned that impending cost rises linked to the autumn budget could particularly weigh on the retail, hospitality and care sectors. It comes after official figures pointed towards an uptick in insolvencies at the end of this year. Company insolvencies lifted by 13% in November compared with the previous month, although they were lower year-on-year, according to the Office for National Statistics. DIY and garden retailer Homebase was among firms to collapse into administration in November. Insolvency practitioners said they have witnessed an increase in inquiries in the run up to the new year. Nicky Fisher, immediate past president of R3, the UK's insolvency and restructuring trade body, and a partner at Herron Fisher, said: "Our members are telling us that inquiries from directors increased in November, as they looked to understand more about their insolvency or restructuring options and discuss their financial concerns ahead of January. "The December period will either be a lifeline or the tipping point for a number of businesses – especially those in the retail and hospitality sectors, who have had a challenging year of continued rising costs coupled with cautious customer spending."
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BROKER RATING CHANGES
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UBS cuts United Utilities price target to 1,195 (1,120) pence - 'buy'
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UBS cuts Pennon Group price target to 850 (915) pence - 'buy'
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OTHER COMPANIES
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Arecor Therapeutics said it has landed a licensing deal with "one of the world's largest" independent chemicals marketing firms. The deal is for Arecor's AT351 ready-to-dilute liquid drug offering. "This follows a successful formulation study collaboration between the two companies, under Arecor's technology partnering model, in which Arecor used its proprietary formulation technology platform, Arestat, to develop a differentiated, RTD liquid formulation of AT351," the biopharmaceutical firm said. Arecor is to receive an undisclosed upfront payment and stands to net development, regulatory and commercial milestone payments on royalties for global sales. "The licensee is granted an exclusive, worldwide license to AT351 and its associated intellectual property and will be responsible for all development, regulatory and commercialisation activities. The licensee will seek approval for the product under the US Food & Drug Administration's 505(b)(2) regulatory pathway, with filing expected within 3 years," Arecor added.
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Proton Motor Power Systems said it still plans to exit AIM but added it is mulling the possibility of the firm's operations continuing on a "significantly reduced cost basis". The producer of fuel cells and fuel cell electric hybrid systems said it will need to secure a settlement with its outstanding creditors in order to do this. "There are therefore no guarantees that it will be able to achieve this," Proton Motor said. "Notwithstanding this, it is still the intention of the board to seek a cancellation of the company's ordinary shares from trading on AIM as it does not believe it would be appropriate to maintain the AIM admission on the reduced cost base." The firm said it has enough in its coffers to "trade solvently" in the meantime, using funding received under debt facilities, cash generated from its operating and a tax credit expected to be received early in 2025.
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Jadestone Energy said it is on track to meet output guidance this year, and it hailed a boost to production from its Akatara asset in Indonesia. The firm, which has production and development assets in Australia, Malaysia, Indonesia, Thailand and Vietnam, expects to meet 2024 guidance, with an production outcome of around 18,500 barrels of oil equivalent per day. That would represent a "30% increase over 2023 and an annual record for Jadestone". "Group production has been growing throughout the year, and we have seen production in excess of 25,000 boe/d when Akatara has been delivering sales gas at contractual levels," it added. "Beyond Akatara, the performance of Jadestone's producing portfolio in 2024 has demonstrated the benefits of the company's diversification initiatives in recent years. We are now much more resilient as a result."
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Cybersecurity firm NARF Industries reported a decline in half-year earnings as it grappled with "temporary US government budget delays". NARF's pretax loss in the half-year to September 30 stretched to USD1.9 million from USD1.0 million a year earlier. Revenue amounted to USD1.2 million, a 62% slump from USD3.1 million. "The company experienced a decline in revenues, reflecting temporary US government budget delays and a strategic focus on accelerating the development and commercialisation of the innovative SocialCyber platform," it said.
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By Eric Cunha, Alliance News news editor
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