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(Alliance News) - Stocks in London are expected to fall at Wednesday's open, in line with declines seen across global equities.
UK inflation was confirmed to have slowed sharply to 6.8% on an annual basis in July from 7.9% in June. This was thanks to lower gas and electricity prices. However, core inflation proved stubborn, coming in unchanged from the prior month.
In company news, Admiral reported growth in interim revenue and profit, despite challenging market conditions. Marshalls said it expects the challenges of the first half to continue, reporting a sharp drop in 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 down 18.1 points, 0.3%, at 7,371.54
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Hang Seng: down 1.4% at 18,330.55
Nikkei 225: closed down 1.5% at 31,766.82
S&P/ASX 200: closed down 1.5% at 7,195.20
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DJIA: closed down 361.24 points, 1.0%, at 34,946.39
S&P 500: closed down 1.2% at 4,437.86
Nasdaq Composite: closed down 1.1% at 13,631.05
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EUR: down at USD1.0914 (USD1.0926)
GBP: down at USD1.2729 (USD1.2733)
USD: up at JPY145.46 (JPY145.40)
Gold: down at USD1,904.61 per ounce (USD1,907.15)
Oil (Brent): down at USD84.57 a barrel (USD84.79)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CEST EU GDP
11:00 CEST EU flash employment change
11:00 CEST EU industrial production
09:30 BST UK house price index
09:30 BST UK forecasts for the economy statistical release
07:00 EDT US MBA Weekly mortgage applications survey
08:30 EDT US housing starts
09:15 EDT US industrial production
14:00 EDT US Federal Open Market Committee meeting minutes published
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Annually, consumer prices rose by 6.8% in July, cooling from a 7.9% jump in June. July's reading was in line with market forecasts, as cited by FXStreet. The ONS said that falling gas and electricity prices were the largest contributor to the falling annual rate. A cooling in food inflation also helped. "Hotels and passenger transport by air were the classes that provided the largest offsetting upward contributions to the change in the rate," the ONS noted. On a monthly basis, UK consumer prices fell 0.4%, compared to a 0.1% rise in June. Market expectations had been for a 0.5% fall. Core inflation - excluding energy, food, alcohol, and tobacco - was unchanged on an annual basis from June's reading of 6.9%. It had been expected to cool to 6.8%.
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Separately, the ONS reported that UK producer prices fell in July. Producer input prices fell 0.4% on a monthly basis in July, compared to the 1.3% fall in June. Market forecasts were for no change in July. Annually, producer input prices fell 3.3%, having fallen by a revised 2.9% in June. They had been expected to fall by 3.1% in July. June's annual figure was initially reported as a 2.7% fall.
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Next year's rise in English rail fares will be below inflation, the government has announced. The Department for Transport said the increase will not be as high as the rise in the retail prices index for the 12 months to July. The July RPI figure has traditionally been used to set the following year's increase in average train fares.
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BROKER RATING CHANGES
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RBC cuts Antofagasta to 'underperform' (sector perform) - price target 1,200 (1,500) pence
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Shore Capital starts Trainline with 'buy' - price target 320 pence
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Peel Hunt raises TT Electronics to 'buy' (add) - price target 240 (225) pence
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COMPANIES - FTSE 100
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Admiral Group reported a half-year of growth, despite "continued challenging market conditions". In the first half of 2023, insurance revenue climbed 14% to GBP1.61 billion from GBP1.41 billion a year before. Turnover rose 21% to GBP2.24 billion from GBP1.85 billion. Pretax profit increased to GBP233.9 million from GBP224.6 million. Despite the improved performance, Admiral cut its interim dividend to 51.0 pence per share from 60.0p the year before. "I am pleased to say that we remain strongly capitalised and, thanks to the hard work of my colleagues across all of our markets, we now serve even more customers, and are very well-positioned for a more encouraging outlook," said CEO Milena Mondini de Focatiis.
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COMPANIES - FTSE 250
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Marshalls reported a weaker interim performance, stemming from a material drop in volumes across its three segments in the first half, amid challenging market conditions. In the first half, the natural stone and concrete manufacturer said revenue edged up to GBP354.1 million from GBP348.4 million a year before, aided by the additional contribution from the acquisition of Marley in April 2022. However, pretax profit dropped sharply, falling 30% to GBP16.7 million from GBP23.9 million. While operating profit was only slightly lower at GBP26.8 million compared to GBP27.3 million, the firm's finance costs increased to GBP10.1 million from GBP3.4 million. It cut its interim dividend in half to 2.6p from 5.7p. Looking ahead, it expects the challenging trading environment to continue into the second half. It will therefore continue to focus on cost-cutting and controlling cash flows.
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OTHER COMPANIES
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Alba Mineral Resources updated on the dewatering and safety and access works at its primary target in Clogau-St David's gold mine in north Wales. While dewatering was initially successfully undertaken down to around six metres in depth, the workings reflooded due to "unseasonal and exceptionally heavy" rainfall during the dewatering period. "The company has requested from [Natural Resources Wales] an extension to the higher rate (100m3/day) abstraction rate, which the company is awaiting approvals to undertake," it said.
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By Elizabeth Winter, Alliance News senior markets reporter
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