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(Alliance News) - Stocks in London are set to open flat on Wednesday, with investors awaiting US data which will inform expectations of the path of interest rates in the world's largest economy.
The main focus will be on the latest economic growth figures on Wednesday, with monthly personal consumption expenditures - which contains a key inflation metric - to follow on Thursday. The PCE reading is closely followed by the Federal Reserve when making decisions on interest rates.
"Good news [on US economic growth] has the potential to be bad news for market sentiment, provided that strong growth and higher inflation would push the Federal Reserve rate cut expectations further down the road. Pricing today suggests that the market expects a 75 basis point cut from the Fed this year – matching what the Fed members plotted on their latest dot plot in December," noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
In the meantime, investors will be reflecting on Tuesday's US data, which revealed a sharper-than-expected drop in consumer confidence, and disappointing orders for durable goods.
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 2.5 points at 7,680.52
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Hang Seng: down 1.5% at 16,540.59
Nikkei 225: closed down 0.1% at 39,208.03
S&P/ASX 200: closed marginally lower at 7,660.40
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DJIA: closed down 96.82 points, 0.3%, at 38,972.41
S&P 500: closed up 0.2% at 5,078.18
Nasdaq Composite: closed up 0.4% at 16,035.30
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EUR: down at USD1.0824 (USD1.0854)
GBP: down at USD1.2655 (USD1.2693)
USD: up at JPY150.67 (JPY150.41)
Gold: down at USD2,029.28 per ounce (USD2,033.79)
Oil (Brent): up at USD83.20 a barrel (USD82.25)
(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 CET eurozone consumer confidence
11:00 CET eurozone consumer inflation expectations
11:00 GMT Ireland retail sales
07:00 EST US MBA mortgage applications
08:30 EST US GDP
08:30 EST US quarterly personal consumption expenditures
08:30 EST US trade balance
08:30 EST US wholesale inventories
10:30 EST US EIA Crude oil stocks
12:45 EST US New York Fed President John Williams speaks
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Indian conglomerate Tata has confirmed Bridgwater in Somerset as the site of its new GBP4 billion battery factory which will bring about 4,000 jobs to the region. Tata's battery business Agratas said that it had bought land at the Gravity Smart Campus off the M5 just outside the town. Tata confirmed in July last year that it had chosen to build its next so-called gigafactory in the UK. It secured about GBP500 million in UK Government subsidies to do so. It did not confirm where it was planning on constructing the facility, but Bridgwater had been widely tipped as the most likely. The site used to be home to a factory which produced high explosives for military use and which closed in 2008.
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BROKER RATING CHANGES
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Berenberg raises InterContinental Hotels target to 7,400 (6,000) pence - 'hold'
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COMPANIES - FTSE 100
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Consumer goods firm Reckitt Benckiser said revenue in 2023 increased 1.1% to GBP14.61 billion from GBP14.45 billion a year before, missing company-compiled consensus estimates of GBP14.75 billion. Pretax profit dropped 22% to GBP2.40 billion from GBP3.07 billion, amid a GBP810 million goodwill impairment and other higher operating expenses. "2023 was a year of progress for Reckitt. We delivered a good trading performance in Health and Hygiene. Nutrition began rebasing and held market leadership in the US. Our innovation platforms proved that they can deliver meaningful growth through premiumisation, household penetration and category creation," said CEO Kris Licht. Reckitt said the total dividend for 2023 increased to 192.5p from 183.3p. In 2024, it guides for like-for-like net revenue growth of 2% to 4%, with mid-single-digit growth for its Health and Hygiene portfolios. It expects adjusted operating profit to outpace net revenue growth.
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Segro said it placed 109.8 million news shares at a price of 820 pence each - a 4.9% discount to its closing price of 861.8p on Tuesday. It said retail and other investors subscribed for another 829,268 shares at the same price. Segro noted strong demand from existing investors and potential new holders, prompting it to increase the size of the fundraise from GBP800 million to GBP900 million. "We appreciate the support from our investor base for this equity placing and the confidence it demonstrates in our business. In addition to the profitable growth opportunities within our development pipeline, we expect further exciting opportunities to emerge in the coming months which this additional capital will help us to deliver," said Chief Executive David Sleath. Late Tuesday, Segro announced the GBP800 million fundraise as the property investor looks to capitalise on "potential acquisition opportunities".
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COMPANIES - FTSE 250
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Aston Martin Lagonda Global reported an increase in annual revenue, and a narrowed loss. In 2023, revenue climbed 18% to GBP1.63 billion from GBP1.38 billion a year before. Its pretax loss narrowed to GBP239.8 million from GBP495.0 million. "In 2023, Aston Martin delivered significant strategic milestones and further financial progress, driven by continued strong demand for our ultra-luxury, high-performance products. The rich mix of sales, driven by our ongoing commitment to product innovation, supported growth in average selling prices to record levels," said Executive Chair Lawrence Stroll. The luxury carmaker said it remained on track to substantially achieve its 2024/2025 targets, seeing "continued strong demand" for its products, as well as noting some "exciting" new next-generation launches planned for 2024. The firm also left its medium-term outlook unchanged.
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OTHER COMPANIES
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Halfords cut its annual profit forecast, after seeing "further material weakening" in three of its four core markets. This has resulted in a "significant" drop in like-for-like revenue growth in its Retail business. It now expects underlying profit before tax for the 52-week period to March 29 to be between GBP35 to GBP40 million, a downgrade from its guidance of GBP48 to GBP53 million last month. Halfords explained Cycling and Retail Motoring were hit by "weak customer confidence and unusually mild and very wet weather", which hit footfall and sales of categories such as winter and car cleaning products. "Our [profit] forecast assumes the same challenging market conditions continue for the rest of Q4, including through our peak Easter cycling period in March. We have continued to take decisive action on cost, but in the short period between now and the end of the financial year this will not be sufficient to offset the significant market deterioration we have seen," the retailer said.
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By Elizabeth Winter, Alliance News deputy news editor
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