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(Alliance News) - Stocks in London are set to open higher on Thursday as market focus turns to inflation and whether it is cooling enough to justify a pause in September from the European Central Bank and the US Federal Reserve.
A flash inflation print for the EU at 1000 BST and the US personal consumption expenditures index - one of the Fed's preferred inflationary gauges - will be released at 1330 BST.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said a bad surprise on the topside for the US data could "wash out" the past days' optimism regarding the future of the Fed policy.
"So, fingers crossed, we really need the US inflation to fall, and to stay low," she said.
In Asia, China's biggest developer Country Garden faces a crunch vote on extending debt repayment terms that could determine whether it defaults, plunging the country's property market deeper into turmoil.
The firm has racked up debts of more than USD150 billion and this week reported a record CNY48.9 billion - around USD6.7 billion - loss for the first six months of the year.
Creditors have until 2200 CST, or 1500 BST, to decide on a proposal to postpone this payment, according to Bloomberg.
In early UK corporate news, DIY retailer Grafton reported a decline in half-year pretax profit but remained confident in its full-year outlook, while hotel and resort operator PPHE Hotel Group reported a strong performance in the first half of 2023, boasting "record" interim revenue and a return to pretax profit.
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 15.13 points, or 0.2%, at 7,488.80
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Hang Seng: down 0.4% at 18,404.91
Nikkei 225: closed up 0.9% at 32,619.34
S&P/ASX 200: closed up 0.1% at 7,305.30
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DJIA: closed up 37.57 points, or 0.1%, at 34,890.24
S&P 500: closed up 0.4% at 4,514.87
Nasdaq Composite: closed up 0.5% at 14,019.31
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EUR: lower at USD1.0914 (USD1.0931)
GBP: lower at USD1.2713 (USD1.2732)
USD: higher at JPY145.99 (JPY145.75)
Gold: lower at USD1,943.72 per ounce (USD1,945.03)
(Brent): higher at USD85.10 a barrel (USD84.70)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
UK BoE Chief Economist Huw Pill speaks at South African Reserve Bank Biennial Conference
11:00 CEST EU flash CPI
11:00 CEST EU unemployment
13:30 CEST EU ECB meeting minutes
09:55 CEST Germany labour market statistics
09:55 CEST Germany unemployment
07:30 EDT US Challenger job-cut report
08:30 EDT US personal income and outlays
08:30 EDT US unemployment insurance weekly claims report
09:45 EDT US ISM-Chicago business survey
16:30 EDT US federal discount window borrowings
16:30 EDT US foreign central bank holdings
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UK Prime Minister Rishi Sunak will reportedly appoint a new defence secretary later on Thursday, replacing Ben Wallace. Wallace announced last month he would resign from the senior Cabinet role at the next reshuffle, bringing to an end his four years in the job. After weeks of speculation over who might replace Wallace, the BBC and multiple newspapers are reporting the prime minister will on Thursday appoint a new defence secretary. Armed Forces Minister James Heappey and Chief Secretary to the Treasury John Glen have both been linked with the role. The Daily Telegraph also suggested former defence secretary Liam Fox is a possibility.
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Tech firm Baidu launched China's first public artificial intelligence chatbot, with Ernie trained to censor highly sensitive topics for the ruling Communist Party such as the Tiananmen crackdown. Beijing issued new regulations this month for China's AI developers that maintain the government's tight control on information while allowing them to stay in the race with the likes of Microsoft and ChatGPT maker OpenAI. Baidu led several companies in rolling out AI chatbots on Thursday: SenseTime opened its service for registration, and two other firms – Baichuan Intelligent Technology and Zhipu AI – said their bots were online and open to the public. "We are thrilled to share that Ernie Bot is now fully open to the general public starting August 31," Baidu said in a statement on Thursday. "In addition to Ernie Bot, Baidu is set to launch a suite of new AI-native apps that allow users to fully experience the four core abilities of generative AI: understanding, generation, reasoning, and memory." The chatbot was first released in March but its availability was limited.
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BROKER RATING CHANGES
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JPMorgan cuts Prudential price target to 1,630 (1,700) pence - 'overweight'
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Jefferies cuts CMC Markets 'underperform' (hold) - price target 80 (190) pence
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Jefferies raises 888 Holdings price target to 175 (145) pence - 'buy'
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COMPANIES - FTSE 100
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FTSE Russell confirmed on Wednesday that Marks & Spencer, Diploma, Dechra Pharmaceuticals and Hikma Pharmaceuticals will all be added to the FTSE 100 from the market open on Monday, September 18, after completing its quarterly review. Persimmon, Johnson Matthey, Hiscox and abrdn, meanwhile, will be removed from London's flagship index. The quarterly FTSE index review is based on changes to market capitalisation and sees FTSE 250-listed stocks that are the 90th biggest or larger in the main market move up, and FTSE 100 companies that are 111th biggest or smaller move down, keeping the indices balanced. Wednesday's changes means retailer M&S is set to return to the FTSE 100 after a four-year absence and also means housebuilder Persimmon will see its roughly 10-year spell among London's blue-chips come to an end.
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COMPANIES - FTSE 250
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Building materials distributor and DIY retailer Grafton reported a decline in half-year pretax profit but remained confident that its full-year adjusted operating profit will be in line with analyst expectations of GBP202.6 million. In the six months ended June 30, the company reported a pretax profit of GBP93.6 million, down from GBP132.4 million the previous year. The fall in profit came as Grafton recorded just GBP1.1 million in property profits in the half compared to GBP18.5 million the year prior, and as its finance expenses climbed to GBP12.5 million from GBP9.8 million. More positively, revenue ticked up to GBP1.19 billion from GBP1.15 billion. The company also announced its intention to start a new share buyback programme for up to GBP50.0 million. Grafton explained the purpose of the buyback is to reduce its share capital. The news comes as the company completes a buyback that began on May 12 for a total of GBP50.0 million.
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IT provider Kainos said its customers continue to maintain their investment in digital projects, despite an uncertain environment, meaning trading in the first half of its financial year has been "good". Consequently, the company expects its results for the year ending March 31 to be in line with current consensus forecasts, which it places within a range of GBP418.2 million to GBP434.2 million for revenue and a range of GBP72.6 million to GBP78.1 million for adjusted pretax tax profit.
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OTHER COMPANIES
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Hotel and resort operator PPHE Hotel Group reported a strong performance in the first half of 2023, boasting "record" interim revenue and a return to pretax profit. In the six months ended June 30, PPHE swung to a pretax profit of GBP2.0 million from a loss of GBP26.1 million the year prior. This came as the company reported "record" revenue of GBP180.0 million, up 59% from GBP113.2 million the previous year and up 16% from GBP155.3 million in the same half of 2019. PPHE said its revenue per available room increased to GBP110.3 from GBP67.8 the year prior. RevPAR was also above pre-pandemic levels of GBP93.4 in the first half of 2019. PPHE said it now entering its strongest half of the year and said it is confident in its long-term growth. It reiterated its expectations for the full-year, expecting revenue of GBP400 million and earnings before interest, tax, depreciation and amortisation of GBP120 million.
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Software developer Alfa Financial Software reported double-digit percentage growth in both revenue and profit in the first half of 2023. The company reported a pretax profit of GBP16.6 million in the half, up 20% from GBP13.8 million the previous year. Revenue from continuing operations totalled GBP52.9 million, up 21% from GBP43.9 million. Alfa also declared a special dividend of 4.0 pence per share, up 14% from 3.5p the year prior. Despite the robust first-half performance, Alfa left its full-year expectations unchanged as it is conscious of the "uncertain" economic outlook.
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UBS revealed a USD29 billion impairment of goodwill from its forced acquisition Credit Suisse, equal to its entire remaining net profit for the second quarter of the year. UBS reported net profit attributable to shareholders of USD28.88 billion for the three months that ended June 30, multiplied from USD2.11 billion a year before, despite booking USD28.93 billion in negative goodwill for troubled Credit Suisse. UBS also took net credit loss expenses of USD740 million, up from just USD7 million a year before. Pretax profit for the recent quarter was about the same, at USD29.24 billion, up from USD2.62 billion a year before. Revenue rose by 7.0% to USD9.54 billion from USD8.92 billion.
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By Heather Rydings, Alliance News senior economics reporter
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