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(Alliance News) - Stocks in London were set to open higher on Monday, as investors wait for postponed discussions on the US debt ceiling to resume.
On Sunday, President Joe Biden said he remains "optimistic" about finding an agreement with his Republican opponents to raise the US debt limit and avoid a default, which his administration warned would cause "catastrophic" consequences.
Congressional Republicans are demanding budget cuts in exchange for lifting the US borrowing limit, while the White House has insisted for months that the nation's credit should not be up for negotiation.
Alarm bells are meanwhile ringing over the possibility of a first-ever US default, with uncertainty over the actual date the government would stop being able to pay its bills.
"The debt ceiling suspense will likely continue until the last minute, keeping investors cautious, looking for safety in long-term US sovereign bonds and gold," commented Ipek Ozkardeskaya, Swissquote Bank senior analyst.
In early UK company news, British American Tobacco promoted its finance director to chief executive. Apollo Management has decided against making a takeover offer for John Wood Group.
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 33.0 points, 0.4%, at 7,787.62
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Hang Seng: up 2.0% at 20,012.56
Nikkei 225: closed up 0.8% at 29,626.34
S&P/ASX 200: closed up 0.1% at 7,267.10
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DJIA: closed flat at 33,300.62
S&P 500: closed down 0.2% at 4,124.08
Nasdaq Composite: closed down 0.4% at 12,284.74
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EUR: up at USD1.0869 (USD1.0857)
GBP: up at USD1.2475 (USD1.2465)
USD: up at JPY136.18 (JPY135.39)
Gold: up at USD2,016.57 per ounce (USD2,010.46)
(Brent): down at USD73.91 a barrel (USD74.87)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 CEST EU industrial production
08:00 CEST Germany wholesale prices
11:00 BST Ireland goods exports and imports
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UK Trade Secretary Kemi Badenoch is flying to Switzerland for talks aimed at modernising the UK's trade agreement with the country as the government continues its attempts to forge post-Brexit economic ties outside the EU. Badenoch will meet her counterpart, Federal Councillor Guy Parmelin, in the capital Bern to discuss what a "services-based" deal might look like. The UK government hopes to update its current agreement, which is effectively a rollover deal from when Britain was an EU member, to make it easier to export services – financial, legal and architectural, among others.
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BROKER RATING CHANGES
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Citigroup raises Flutter Entertainment to 'buy' - price target 19,000 pence
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JPMorgan cuts Asos price target to 610 (1,000) pence - 'neutral'
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COMPANIES - FTSE 100
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British American Tobacco said Finance Director Tadeu Marroco will take over as its new chief executive, replacing Jack Bowles who is stepping down with immediate effect. Marroco has been with the firm since 1992. "In considering succession, the board recognised Tadeu's outstanding track record of developing teams that deliver on our transformation alongside a consistent focus on strong execution and financial performance," BAT Chair Luc Jobin said. BAT said Director of Digital & Information Javed Iqbal will be interim finance director until a permanent successor is found.
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Fresnillo said operations at the Herradura mine were temporarily halted by an illegal stoppage from a "very small group" of unionised workers at its wholly-owned subsidiary, Minera Penmont. "The stoppage, which prevented site access for other workers, was not approved by the union, nor supported by the vast majority of unionised workers at Herradura, with whom Penmont has a very constructive and long-term relationship," the mining company said. The stoppage has since ended, Fresnillo said, and all production activities recommenced. The incident is not expected to materially affect overall production, and Fresnillo left full-year production guidance unchanged.
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COMPANIES - FTSE 250
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Apollo Management Holdings confirmed it does not intend to make a takeover offer for John Wood Group. In April, the energy sector-focused engineering and consulting business said it would engage with Apollo to see if a firm takeover offer could be made on the same terms as its previous proposal. In early April, Apollo had proposed a potential offer of 240 pence per share in cash - a 59% premium to Wood's share price at the time.
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Electronics retailer Currys raised annual profit guidance for its financial year that ended April 29. It now expects adjusted pretax profit to be between GBP110 million and GBP120 million, compared to previous guidance of around GBP104 million. It also expects net debt at year-end to be around GBP100 million, compared to the previous guidance of between GBP100 million and GBP150 million. Over the recent year, Currys said, like-for-like group sales were 7% down on the previous year in both the UK & Ireland and in the International division, where Nordics were particularly weak.
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Diploma raised its annual guidance, after a strong half-year. In the six months that ended March 31, the specialised technical products and services company said revenue jumped 30% year-on-year to GBP582.8 million from GBP448.5 million, lifting pretax profit by 50% to GBP78.7 million from GBP52.3 million. Diploma now expects annual organic revenue growth of around 7% for the full year, with another 7% to come from acquisitions, net of disposals. It expects operating margin to be 19% - the top end of its previously guided range.
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OTHER COMPANIES
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WANdisco said it plans to launch an equity fundraise towards the end of June, targeting a USD30 million sum to build its balance sheet, as it works to resume its shares trading on AIM. At the end of April, it had a net cash balance of USD8.1 million with no debt facilities. This will be sufficient working capital until the middle of July this year, the firm believes. The fundraise forms part of its "deep transformation recovery program" under its new leadership. Earlier this month, WANdisco announced it will cut global headcount by around 30%. Its shares remain suspended amid a fraud investigation concerning one of its employees, who had significantly inflated sales figures.
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By Elizabeth Winter, Alliance News senior markets reporter
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