5th Dec 2022 07:43
(Alliance News) - Stocks in London were called flat on Monday, ahead of a busy day for PMI prints.
Monday's economic calendar has a slew of services purchasing managers' index readings, including from the eurozone at 0900 GMT, the UK at 0930 GMT and the US at 1445 GMT. There are also EU retail trade figures at 1000 GMT.
In early corporate news, Vodafone announced the departure of its chief executive, and Glencore reached a USD180 million settlement related to alleged corruption in the Democratic Republic of Congo.
In its latest forecast, Confederation of British Industry economists said they expect that from the highest to the lowest point in the recession, UK gross domestic product will drop by 0.7%.
The CBI estimates that GDP will drop by 0.4% in 2023, then return to growth the following year when it rises 1.6%.
It is a considerably more positive forecast than that produced by the Bank of England just a month ago, when the central bank predicted a drop of 1.5% in 2023 and a further fall of 1% in 2024.
The CBI said that the BoE was working on the assumption that the interest base rate would be higher than its economists have forecast. However, the CBI's forecast remained grim reading as it showed the UK lagging behind many of its international peers.
The dollar weakened over the weekend, despite a hotter-than-expected jobs report on Friday.
Total nonfarm payroll employment in the US increased by 263,000 last month, lower than the revised rise of 284,000 in October, but beating market consensus for 200,000 net new jobs, as cited by FXStreet.
"The inability of the US dollar, or for that matter US yields in the face of this upside surprise, does suggest that the US dollar may well have peaked, and that the die may well be cast as to where the greenback goes next in terms of further weakness," said CMC Markets' Michael Hewson.
"This is likely to be good news for stock markets in the short term, as is the news over the weekend that more cities in China are relaxing Covid rules despite rising infections."
In Shanghai, authorities will scrap some testing requirements as China continues to loosen its strict zero-Covid policy following recent protests across the nation.
Multiple cities have started to roll back some restrictions after public resentment at harsh and prolonged containment measures reached a boiling point last weekend, when spontaneous protests broke out in multiple Chinese cities.
Here is what you need to know ahead of the London market open:
FTSE 100: called marginally lower, down 2.8 points at 7,553.43
Hang Seng: up 4.2% at 19,460.24
Nikkei 225: closed up 0.2% at 27,820.40
S&P/ASX 200: closed up 0.3% at 7,325.60
DJIA: closed up 34.87 points, 0.1%, at 34,429.88
S&P 500: closed down 0.1% at 4,071.70
Nasdaq Composite: closed down 0.2% at 11,461.50
EUR: higher at USD1.0571 (USD1.0478)
GBP: higher at USD1.2327 (USD1.2240)
USD: lower at JPY134.67 (JPY135.41)
Gold: higher at USD1,803.07 per ounce (USD1,788.36)
Oil (Brent): down at USD85.85 a barrel (USD86.65)
(changes since previous London equities close)
Monday's key economic events still to come:
10:00 CET EU services purchasing managers' index
11:00 CET EU retail trade
09:55 CET Germany services PMI
09:30 GMT UK services PMI
09:45 EST US services PMI
10:00 EST US employment trends index
11:00 EST US services PMI
Growth stalled in Ireland's services sector, according to the latest AIB Ireland services PMI, which fell to 50.8 points in November from 53.2 in October. Falling closer towards the 50-point no-change mark, it shows growth has slowed. "As has been the pattern in recent months, the index was again weighed down by a very weak performance by the Transport/Tourism/Leisure sector, which registered a reading of just 40.2 for business activity. The overall services index, though, remains in expansion territory at above 50, unlike elsewhere," noted Oliver Mangan, AIB chief economist. The composite PMI - a weighted average of manufacturing and services indices - fell into contraction, with a reading of 48.8 points in November, down from 52.1 in October.
BROKER RATING CHANGES
Jefferies cuts Watkin Jones to 'hold' (buy) - price target 111 (225) pence
Jefferies cuts Persimmon to 'hold' (buy) - price target 1,436 (1,485) pence
Jefferies raises Bellway to 'buy' (hold) - price target 2,458 (1,928) pence
COMPANIES - FTSE 100
Vodafone said Chief Executive Nick Read will step down on December 31 after 20 years at the telecommunications firm. Chief Financial Officer Margherita Della Valle will step up as an interim CEO, in addition to continuing her role as CFO. The board has begun a process to find a replacement CEO.
Glencore said it has reached an agreement with the Democratic Republic of Congo covering "all present and future claims arising from alleged acts of corruption" by the mining firm in the country. This covers the period between 2007 and 2018. Glencore International AG will pay the DRC USD180 million, on behalf of its Congolese-associated companies. "This includes activities in certain group businesses that have been the subject of various investigations by, amongst others, the US Department of Justice and the DRC's National Financial Intelligence Unit and Ministry of Justice," the miner said.
National Grid said it has satisfied all the conditions for the sale of a 60% equity stake in its UK gas transmission and metering business to a consortium comprised of Macquarie Asset Management and British Columbia Investment Management. It expects the GBP2.2 billion transaction to complete on or around January 31 next year. The UK Competition & Markets Authority decided not to refer the transaction to a phase 2 investigation last month.
COMPANIES - FTSE 250
National Express named James Stamp as its new chief financial officer with immediate effect. Stamp has served as interim CFO since the beginning of November, and been with the bus operator since 2017. "James' experience with the business, and the breadth of roles he has held within the company, give him a deep insight into our global operations and Evolve strategy," said Chief Executive Ignacio Garat.
TR Property Investment Trust said its net asset value per share at September 30 plunged 35% to 319.37 pence from 492.43p back at the end of March. "This has been a dramatically poor period of performance for property shares and the company was no exception...Nevertheless, our investments are focused on balance sheet strength and the security of income, much of which is index-linked, so I am pleased to report a 6.6% increase in the interim dividend," said Chair David Watson. The firm declared an interim dividend of 5.65p, compared to 5.30p a year ago.
Avon Protection has agreed to sell the assets of its Lexington, Kentucky-based facility in the US to CoorsTek "for a modest cash consideration". The facility is focused on manufacturing ceramic plates used for body armour and aircraft armour. "As announced earlier this year, the armour business is in the process of being wound down in the current financial year," the safety protection equipment firm said. Avon expects the transaction to complete in the second half of next year, once it fulfils its final contractual obligations with its customers.
AG Barr has acquired Boost Drinks Holdings, a branded drinks business, for GBP20 million on a debt-free, cash-free basis, funded from its cash reserves. AG Barr expects the acquisition to accretive to earnings per share in the first full year of ownership, but noted it will dilute the group's operating margin in the short term. The soft drink manufacturer said the acquisition is in line with its strategy to build its portfolio in "high growth and functional areas". In 2021, Boost reported pretax profit of GBP1.9 million, and revenue of GBP42.1 million.
By Elizabeth Winter; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.