20th May 2025 07:49
(Alliance News) - London's FTSE 100 is called to open higher on Tuesday, having perked up as Monday wore on, shaking off a tough start to the week after a US credit rating downgrade.
Stocks in New York followed a similar path on Monday, initially falling before fighting their way into the green as the session progressed.
"Calmer heads prevailed as Monday progressed with stocks & bonds paring early declines amid fading hysteria over the US ratings downgrade," Pepperstone analyst Michael Brown commented.
Tuesday's economic calendar is quiet, though there is some activity on the central banking front, with Bank of England Chief Economist due to speak.
China's central bank on Tuesday cut two key interest rates to historic lows, as Beijing battles to stimulate its economy amid see-saw trade tensions with the US.
The People's Bank of China said Tuesday that the one-year loan prime rate, the benchmark for the most advantageous rates lenders can offer to businesses and households, would be cut to 3.00% from 3.10%. The five-year LPR, the benchmark for mortgage loans, was cut to 3.50% from 3.60%.
Australia's central bank has cut its key interest rate for the second time this year. The Reserve Bank of Australia has lowered its cash rate target by 25 basis points to 3.85%, down from 4.10%.
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 0.4% at 8,733.51
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Hang Seng: up 1.5% at 23,682.40
Nikkei 225: flat at 37,492.62
S&P/ASX 200: up 0.6% at 8,343.30
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DJIA: closed up 137.33 points, 0.3%, at 42,792.07
S&P 500: closed up 0.1% at 5,963.60
Nasdaq Composite: closed up marginally at 19,215.46
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US 10-year Treasury yield: 4.46% (4.49%)
US 30-year Treasury yield: 4.92% (4.96%)
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EUR: flat at USD1.1255 (USD1.1254)
GBP: flat at USD1.33762 (USD1.3365)
USD: lower at JPY144.49 (JPY144.85)
GOLD: lower at USD3,210.64 per ounce (USD3,233.73)
(Brent): lower at USD65.31 a barrel (USD65.41)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
15:00 BST eurozone consumer confidence
09:00 BST UK Bank of England Chief Economist and Executive Director Huw Pill speaks
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Chancellor Rachel Reeves said the UK government is nearing a trade pact with six Gulf nations, including Qatar and Saudi Arabia, as its next major deal. She told the BBC the agreement would be the government's "next deal" as it looks to continue to boost post-Brexit trade ties. Reeves suggested economic growth would be strengthened through recent trade deals with the US, the EU and India. "Britain is in a better place than any other country in the world in terms of deals with those countries," she said. "The first deal and the best deal so far with the US, we've got the best deal with the EU for any country outside the EU, and we've got the best trade agreement with India." The chancellor also said the UK was "not looking to have trade negotiations with China". In early April, Foreign Secretary David Lammy said Labour was continuing discussions with the Gulf over its trade deal, which were started by the previous Conservative government. Reeves' comments come amid news of a new trade deal with Brussels struck on Monday. The prime minister hailed his deal with the bloc, set out at a summit in London, as a "win-win" for both parties, which would be the start of a "new era" in the UK-EU relationship.
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Top finance leaders from the G7 nations gather in Canada starting Tuesday, with concerns including war in Ukraine at the fore while the advanced economies grapple with fallout from US President Donald Trump's sweeping tariffs. In talks running through Thursday, leaders are set to discuss global economic conditions, with participants seeking a common position on Ukraine, while issues like non-market practices are also on the agenda. Ukrainian Finance Minister Sergii Marchenko also will be present at the meeting of Group of Seven finance ministers and central bank governors in Canada's western province of Alberta. The talks come amid an uncertain approach among the G7 democracies towards the war in Ukraine – after Russia's invasion in 2022 – since Trump returned to the presidency this year. Once broadly unified, the G7 – Britain, Canada, France, Germany, Italy, Japan and the US – has been rattled by Trump, who has reached out to Russia and slapped tariffs on both allies and competitors. Trump said Russia and Ukraine would start peace talks after he spoke with Russian President Vladimir Putin on Monday. A source briefed on US participation in the G7 meeting in Banff, Alberta said Washington is not inclined to "do a communique just for the sake of doing a communique." They said a consensus will have to align with Trump administration priorities.
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BROKER RATING CHANGES
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Barclays cuts Kingfisher to 'underweight' (equal-weight) - price target 280 (275) pence
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Berenberg initiates accesso Technology with 'buy' - price target 775 pence
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COMPANIES - FTSE 100
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Vodafone Group reported an annual loss on hefty impairment charges, but it said it achieved annual guidance and will launch a new share buyback. The telecommunications provider swung to a pretax loss of EUR1.48 billion for the year to March 31, from a profit of EUR1.62 billion. Revenue increased 2.0% to EUR37.45 billion from EUR36.72 billion. Hurting its bottom-line, it reported non-cash impairments totalling around EUR4.5 billion for Germany and Russia. Adjusted earnings before interest, tax, depreciation, and amortisation after leases fell 0.8% to EUR10.93 billion, but landed in lien with guidance, Vodafone said. Service revenue, which makes up the bulk of its top-line, advanced 2.8% to EUR30.76 billion. "Since I set out my plans to transform Vodafone two years ago, Vodafone has changed. We have reshaped Europe, we are seeing the positive impact of our drive for customer satisfaction in all our markets - most noticeably in the UK and Germany - and we have delivered strong operational improvements across the business. Clearly there is much more to do, but this period of transition has repositioned Vodafone for multi-year growth," Chief Executive Officer Margherita Della Valle said. "Looking ahead, we expect to see broad-based momentum across Europe and Africa, and for Germany to return to top-line growth during this year. This is reflected in our guidance for profit and cash flow growth for the year ahead." Vodafone dividend, which has been rebased, totalled 4.5 cents per share for the financial year. This is down from 9.0 cents a year prior. Its final dividend amounted to 2.25 cents, down from 4.5 cents. The firm announced a new EUR2.0 billion share buyback, which will begin with an initial tranche of EUR500 million. For the new year, it expects an adjusted Ebitda after leases between EUR11.0 billion and EUR11.3 billion.
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Engineering firm Smiths Group said growth picked up in its third-quarter, and it now expects a full-year outcome at the top end of its guidance. Smiths said revenue rose 11% on-year on an organic in the third-quarter to May 3. It means growth for the nine-month period is 9.6%. "Reflecting this strong performance and momentum in the order book, the group now expects to be towards the top end of its 6-8% organic revenue growth guidance range and continues to expect margin expansion of 40-60 basis points for FY2025," Smiths added. "Third quarter performance reflected further growth across all businesses, with particularly strong organic revenue growth in Smiths Detection and Smiths Interconnect, a continuation of the trends seen in the first half. Momentum improved from the second quarter at both John Crane and Flex-Tek." Smiths expects the impact of tariffs to be "limited". It generates around 45% of its sales in the US. The firm added: "The group is progressing the separation processes of Smiths Interconnect and Smiths Detection and remains on track for an announcement of a sale of Smiths Interconnect by the end of calendar year 2025, followed by the separation of Smiths Detection by way of a UK demerger or sale." It is to report annual results on September 23.
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Diploma raised its annual outlook, on the back of a "strong" first-half. The supplier of specialised technical products and services said pretax profit in the half-year to March 31 surged 57% to GBP122.3 million from GBP77.8 million a year earlier. Revenue climbed 14% to GBP728.5 million from GBP638.3 million, with organic revenue picking up to 9% from 5% a year prior. "The results are very strong. They demonstrate our sustainable quality compounding with excellent earnings growth at fantastic returns on capital. We have a differentiated business model with a well-diversified portfolio of high-quality businesses, allowing us to deliver compounding growth in good times and bad," CEO Johnny Thomson said. "Despite the uncertain environment I feel confident in our ability to deliver on our upgraded guidance this year. And I'm really excited about our longer-term prospects too." Diploma now expects full-year organic revenue growth of 8%, its guidance lifted from 6%, and an operation margin of around 22%, the outlook upped from roughly 21%. Diploma raised its interim dividend by 5.2% to 18.2p per share from 17.3p.
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COMPANIES - FTSE 250
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Baker Greggs reported a rise in sales so far in 2025, and it left its outlook unchanged. Total sales in the first 20 weeks of the year rose 7.4% annually to GBP784 million. Like-for-like sales were 2.9% higher, with an "improved performance in the last 11 weeks supported by better trading conditions". "The improved LFL sales performance has been delivered in what remains a challenging market context, and during a period that compares with our strongest performance in 2024. Our investment programme is on track and there has been no change to the outlook for cost inflation, which we expect to be around 6% on a LFL basis. Our plans for managing the inflationary headwinds are progressing well and, whilst early in the financial year, the board's expectations for the full year outcome remain unchanged," Greggs added. Greggs in its annual results predicted "another year of progress in 2025".
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Cranswick reported a growth in annual profit and said the start of the new year has been in line with expectations. The food producer's pretax profit in the 52 weeks to March 29 rose 15% to GBP181.6 million from GBP158.4 million a year prior. Revenue climbed 4.8% to GBP2.72 billion from GBP2.60 billion. It was a record revenue outcome. "We are accelerating the pace at which we invest to drive strong returns. This year we spent a record GBP138 million across our business to add capacity, expand capability and drive further efficiencies through automation and scale," CEO Adam Couch said. "I am delighted to announce the acquisition of Blakemans, a well‐invested, leading food service sausage manufacturer. Blakemans is highly complementary to our existing added-value Gourmet business. We look forward to welcoming the entire Blakemans team to Cranswick and to working with them to develop the business further." It sealed the GBP32 million buy of food service sausage manufacturer Blakemans last week. Cranswick raised its final dividend by 13% to 76.0p per share. Its total dividend was upped 12% to 101.0p. The company added: "The start to the current financial year has been in line with the board's expectations."
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OTHER COMPANIES
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Comptoir, the operator of Lebanese and Middle Eastern inspired restaurants, reported growth in annual revenue but said the "hospitality sector remains stressed". Its pretax loss in the year to December 29 stretched to GBP1.9 million from GBP1.6 million. Revenue, however, rose 10% to GBP34.6 million from GBP31.5 million. Administrative expenses rose 14% to GBP14.7 million, while distribution expenses grew 11% to GBP14.0 million. The firm said: "2024 saw the group finish with LFL sales growth of 2.0%, which was heavily driven by strong trading in the second half of the year. Winning back covers is an absolute priority for the new board and will be one of the key strategic focuses for the whole business during 2025." It added: "The hospitality sector remains stressed from a variety of external economic factors which continue to make this a very challenging environment to operate. Nevertheless, there are brands which continue to succeed against this backdrop, and we need to ensure that Comptoir also navigates its way through to further success. Q1 2025 trading performance has been in line with management expectations."
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Ryanair announced the launch of a "follow-on" EUR750 million share buyback. In annual results on Monday, it had said it "remains committed to shareholder returns" and approved a buyback, "which will likely run over the next 6 to 12 months". The budget carrier said Tuesday the buyback begins today and concludes no later than May 19 next year.
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Nvidia's Chief Executive Jensen Huang on Monday said US export restrictions on its chips cost his company around USD15 billion in lost sales, on top of USD5.5 billion in previously reported inventory write-downs. Speaking on the "Stratechery" podcast, Huang warned that the restrictions would not stop China from developing artificial intelligence, AI, but instead would lead to the creation of its own AI ecosystem that could eventually rival the US. The US government, under both President Donald Trump and his predecessor Joe Biden, has been curbing the export of some semiconductor chips and equipment to China, citing national security. Nvidia had responded by offering a scaled-down version of its high-end chips, the H20, for the Chinese market but those also fell under new export restrictions introduced in mid-April. In April, the chipmaker said it now expected up to USD5.5 billion in write-downs related to its H20 products.
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By Eric Cunha, Alliance News news editor
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