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(Alliance News) - Stocks in London are expected to edge lower on Monday, as investors are shift their attention to this week's economic data.
The latest series of US data will inform expectations of the timing of potential interest rate cuts. According to CME's FedWatch tool, the market now expects the Federal Reserve to enact its first rate cut in June. At the beginning of the year, the first 25 basis point cut was widely expected in March.
"Due this week, the latest US [gross domestic product] update – due Wednesday - is expected to confirm a 3.3% growth in Q4, with significantly lower price index. And on Thursday, the [personal consumption expenditures] data are expected to confirm relatively soft figures – softer than the [consumer price index], most probably thanks to the different weights that the index attributes to different categories of goods and services," said Swissquote Bank senior analyst Ipek Ozkardeskaya.
"In all cases, a strong growth could revive the goldilocks optimism if inflation numbers continue to trend lower. For the market rally to continue, we just need strong growth and soft inflation data from the US."
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 10.8 points, 0.1%, at 7,695.48
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Hang Seng: down 0.6% at 16,629.64
Nikkei 225: closed up 0.4% at 39,233.71
S&P/ASX 200: closed up 0.1% at 7,652.80
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DJIA: closed up 62.42 points, 0.2%, at 39,131.53
S&P 500: closed up 1.77 points to 5,088.80
Nasdaq Composite: closed down 0.3% to 15,996.82
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EUR: up at USD1.0825 (USD1.0818)
GBP: flat at USD1.2667 (USD1.2667)
USD: flat at JPY150.40 (JPY150.44)
Gold: down slightly at USD2,032.92 per ounce (USD2,033.76)
Oil (Brent): down at USD81.40 a barrel (USD82.16)
(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 GMT Ireland construction output
08:00 EST US building permits
10:00 EST US new home sales
10:30 EST US Dallas Fed manufacturing index
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More than half of UK export businesses have been affected by disruption to shipping in critical trade routes along the Red Sea, according to a survey by an influential business group. The British Chambers of Commerce warned that pressure on businesses will start to build if the problems persist. Some 53% of manufacturers and business-to-consumer service firms, which includes retailers and wholesalers, said they have been affected by turmoil in the Red Sea. The companies surveyed reported facing increased costs, with some seeing the cost of hiring containers soaring by 300% since the disruption. Others mentioned logistical delays adding up to three or four weeks to delivery times. The businesses said this was creating knock-on effects such as cashflow difficulties and a shortage of components on production lines.
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BROKER RATING CHANGES
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Jefferies raises ITM Power to 'buy' (hold) - price target 80 (105) pence
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COMPANIES - FTSE 100
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The UK competition watchdog said it has found "fundamental concerns" within the UK housebuilding market, and has launched an investigation into eight housebuilders. The Competition & Markets Authority published its final report on the housebuilding market, "finding that the complex and unpredictable planning system, together with the limitations of speculative private development, is responsible for the persistent under delivery of new homes". The CMA also noted concerns over estate management charges, as well as the quality of some new housing. CMA Chief Executive Sarah Cardell noted the need for "significant intervention" within housebuilding to ensure the quality of homes. The regulator has also opened a new investigation into "suspected sharing of commercially sensitive information" among housebuilders, which could be influencing the build-out of sites and new home prices. The CMA said it is investigating Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry. "While this issue is not one of the main drivers of the problems we've highlighted in our report, it is important we tackle anti-competitive behaviour if we find it," Cardell said.
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Distribution and services company Bunzl said revenue in 2023 edged down 2.0% year-on-year to GBP11.80 billion from GBP12.04 billion, though remained "significantly ahead" of 2019. "The base business was impacted by volume loss in our North America foodservice redistribution business due to deflationary pressure increasing price competition, post-pandemic normalisation trends, and a reduced level of inflation benefit," Bunzl explained. However, despite the weaker topline performance, pretax profit rose 10% to GBP698.6 million from GBP634.6 million, as operating margin increased to 7.4% from 8.0%. Recommending a final dividend of 50.1 pence, the total dividend for 2023 increased by 8.9% to 68.3p from 2022's 62.7p. "Bunzl's consistent, compounding model drives both growth and resilience, and the progress we have made in recent years, combined with the strength of our financial position, means that we have a stronger platform than ever to drive market share, consolidate fragmented markets and continue to extend our successful track record for creating long term sustainable value," said CEO Frank van Zanten. Separately, Bunzl announced the acquisition of a 80% stake in catering equipment and consumables distributor Nisbets for GBP339 million. It also noted its first acquisition in Finland, agreeing to buy Pamark, a distributor of products in cleaning & hygiene, healthcare, foodservice and safety categories.
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COMPANIES - FTSE 250
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Property development and investment company Hammerson announced the sale of Union Square shopping centre in Aberdeen for GBP111 million in cash. The transaction is expected to complete during the first quarter, and will mark the conclusion of the firm's GBP500 million non-core disposal programme. The consideration represents an 8% discount to the book value of the asset at the end of December, and a net initial yield of 11%. "The proceeds of this disposal will further strengthen the balance sheet by reducing net debt and provide additional capacity for reinvestment into the core portfolio," Hammerson said.
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OTHER COMPANIES
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CEVA Logistics UK Rose said it has reached agreement with the board of logistics provider Wincanton on the terms of an increased recommended cash offer, amid a potential rival bid. It is now offering 480p per share, a 6.7% increase from its original offer of 450p. Shares in Wincanton had closed at 449.34p on Friday. CEVA Logistics is a subsidiary of CMA CGM, a shipping and logistics company based in Marseille, France. The planned takeover under the initial offer was announced last month. Wincanton said it has received an approach from a potential competing bidder, and is providing due diligence as the potential competing bidder evaluates a possible offer for the company. "Although the potential competing bidder has indicated that it is considering making a proposal, as of the date of this announcement, it has not provided the board of Wincanton with any formal proposal relating to a possible offer, including as to terms or price. If any such proposal is provided by the potential competing bidder, the board of Wincanton will carefully consider its terms, in conjunction with its advisers," Wincanton said. Wincanton said its directors continue to recommend unanimously the increased offer from CEVA to shareholders.
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India's Reliance Industries has signed a "binding pact" for a merger deal with Walt Disney's local unit, Bloomberg News reported, a major shakeup for the country's multi-billion dollar entertainment industry. India's entertainment market is already one of the world's biggest, with the expected merger set to create a vast and powerful entertainment giant. The report of the deal comes as billionaire tycoon Mukesh Ambani, chair of oil-to-telecoms giant Reliance Industries, readies to host Disney chief Robert Iger on March 1 for his son's wedding in India's western Gujarat state. Bloomberg said the deal is expected to see the media unit of Reliance and its affiliates hold at least a 61% stake in the merged entity, with Disney holding the rest. There was no immediate response from either Disney or Reliance.
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By Elizabeth Winter, Alliance News deputy news editor
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