28th Jan 2025 08:58
(Alliance News) - London's FTSE 100 opened slightly higher on Tuesday, keeping its poise despite a sell-off of a host of US tech names at the start of the week.
The likes of Nvidia, which slumped 17% overnight, were hurt by the emergence of Chinese competition in the artificial intelligence space. The Nasdaq Composite shed 3.1% on Monday. Nasdaq futures are currently 0.3% higher, the index looking set to recover only a fraction of its slump.
The FTSE 100 index added 26.64 points, 0.3%, at 8,530.35. The FTSE 250 was up 78.90 points, 0.4%, at 20,448.40, and the AIM All-Share added 1.46 points, 0.2%, at 712.85.
The Cboe UK 100 was 0.3% higher at 855.10, the Cboe UK 250 rose 0.4% at 17,884.89, and the Cboe Small Companies was down 0.7% at 15,909.12.
In Frankfurt, the DAX 40 rose 0.1% in early trade, while the CAC 40 fell 0.1%.
SAP rose 0.5% in Frankfurt as the enterprise software firm expects higher 2025 profit than previously targeted. In Paris, the luxury goods sector returns to focus with LVMH due to report after the closing bell. The stock was down 0.5% in early trade.
Against the dollar, the pound fell to USD1.2435 early Tuesday, from USD1.2479 at the time of the London equities close on Monday. The euro declined to USD1.0431 from USD1.0505. Against the yen, the dollar surged to JPY155.68 from JPY154.16.
Donald Trump said Monday that the US will soon place tariffs on foreign-made semiconductor chips, pharmaceuticals and metals such as steel.
Speaking at a Republican congressional retreat in Miami, Trump said the levies could take place in the "very near future," so as to "return production of these essential goods to the US of America."
"If you want to stop paying the taxes or the tariffs, you have to build your plant right here in America," he added.
SPI Asset Management analyst Stephen Innes labelled US trade on Monday as "tech and tariff tantrums".
"Equity market futures are attempting to stabilize today, but the aftershocks of DeepSeek's impact on US tech valuations might linger. Given the close ties between AI growth and dollar dynamics—often seen as reciprocal drivers of capital flows—the dollar wasn't the immediate haven it typically is during equity downturns. Traders, anticipating the potential for capital outflows due to the tech shakeup, initially sold the dollar. However, the Treasury's strategy for phased-in tariffs, combined with President Trump's comments supporting these measures and more, seems to have solidified new support levels for the greenback," Innes added.
"This week's narrative has shifted from the usual macroeconomic and central bank influences to focusing on tech and tariffs rocking the market. However, this doesn't mean central bank activities should be ignored, particularly those of the Federal Reserve and the ECB. Despite the expected 25 basis point cut from the ECB and the Fed on pause, renewed tariff concerns could spark a widening guidance divergence in the EUR vs USD swap spreads, much to the dollar bulls' pleasure."
In the UK, Keir Starmer and Rachel Reeves will meet top executives from some of Britain's major businesses on Tuesday as they continue their quest for economic growth.
The meeting will see the prime minister and chancellor seek to persuade bosses from businesses including Tesco, BT Group, Unilever and Lloyds Banking Group that they are committed to helping the private sector thrive as they attempt to attract more investment to the UK.
It will also see the announcement of further changes to pension rules designed to increase the amount of money available for investment in the UK.
Ahead of the meeting, Starmer said: "To achieve the change our country needs requires nothing short of rewiring the economy.
"It needs creative reform, the removal of hurdles and unrelenting focus. Whether it's how public services are run, regulation or pension rules, my government will not accept the status quo."
In Hong Kong, the Hang Seng Index ended up 0.1% in an abbreviated trading day before the Chinese New Year holiday is observed. Markets there do not re-open until Monday. Financial markets in Shanghai were closed on Tuesday and do not re-open until next week Wednesday.
In London, Rentokil added 3.4% in early trade. It said it traded in line with expectations in 2024 and the pest and control and hygiene firm said its North America boss will step down.
Rentokil said organic revenue growth in the final three months of last year was 3.0%. North America organic revenue growth accelerated to 2.3% on-year in the fourth-quarter from 1.3% in the third.
The firm said its group adjusted operating margin, adjusted pretax profit before amortisation and its North America adjusted operating margin were all in line with prior guidance.
In September, it forecast a group adjusted operating profit margin is expected to be around 15.5%. Group adjusted profit before tax and amortisation is expected of around GBP700 million, it said at the time.
Rentokil said Brad Paulsen will step down as CEO of North America for an opportunity at a New York-listed building materials firm. Rentokil Chief Commercial Officer Alain Moffroid will take on the role of North America CEO.
RS Group fell 6.2%. It cautioned that its annual outturn will be at the lower end of market expectations, after a tricky third-quarter characterised by declining industrial production.
The industrial and electronics products distributor said revenue in the three months to December 31 fell 3% on-year, slipping 1% on a like-for-like basis.
"We continue to control costs tightly and therefore our prior gross margin and cost guidance remains unchanged. The softer than expected Q3 revenue performance and weak business confidence in EMEA will however likely result in full year profit before tax being around the bottom end of the consensus range," RS warned.
It puts consensus for adjusted operating profit in the GBP247 million from GBP274 million range.
Computacenter warned annual profit will be at the lower end of analysts forecasts, but hailed a "record" performance in the second half of last year.
Shares rose 4.0%.
It puts the analyst range for adjusted pretax profit at GBP253.6 million to GBP266.5 million. The lower end profit forecast takes into account strategic investments, lower interest income receipts following the earlier completion of the share buyback and the GBP7 million hit from a stronger sterling. It had completed a GBP200 million share buyback in October, "earlier than expected".
The technology services provider, which serves corporate and public sector firms, said a tricky 2024 market environment contrasted with a "strong comparative in 2023".
Total revenue in 2024, on a gross invoiced income basis, fell 2% from 2023, but edged up 0.5% at constant currency.
"While we are pleased with overall execution towards the end of the year, with Germany and North America delivering strong performances, parts of our larger current Technology Sourcing projects in the US and the UK have slipped into the early part of 2025. For the second half of 2024 adjusted operating profit is expected to be ahead of the equivalent period in 2023 in both constant currency and on a reported basis. This represents Computacenter's most profitable half year in its history and we ended the year with a record number of customers generating over GBP1 million of gross profit per annum," Computacenter added.
Halfords jumped 10% as the cycling and motor products retailer predicted annual profit ahead of consensus.
For the financial year which concludes in March, it expects underlying pretax profit between GBP32 million and GBP37 million.
This will be above the average sell-side expectation of GBP28.3 million, according to company-compiled consensus. Halfords said it also represents an "upgrade" to its profit expectations.
In the third-quarter of its financial year, like-for-like sales growth was "positive" in both Retail and Autocentres. It had been flat in the first half.
"Retail traded well over the peak trading period as our product and promotional proposition resonated well with customers, notably in Cycling," Halfords said, adding that Christmas gifting contributed to like-for-like sales growth of 13% in December.
It added: "Current trading has benefitted from the colder weather in more recent weeks with Motoring Product delivering LfL sales growth in January of 5.5%."
Brent oil was quoted at USD77.55 a barrel early Tuesday, rising from USD77.26 at the time of the London equities close on Monday. Gold dropped to USD2,735.86 an ounce from USD2,740.66.
By Eric Cunha, Alliance News news editor
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