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(Alliance News) - Stocks in London are called lower on Tuesday, following a US holiday, and a mixed performance in Asian markets.
Earlier on Tuesday, China's central bank cut a key benchmark lending rate used to price mortgages, as Beijing seeks to rescue its housing market from a deepening crisis and boost flagging growth in the country's economy.
The five-year loan prime rate was lowered to 3.95% from 4.2%, the People's Bank of China announced, in the first cut since June. It is the largest cut to the rate since it was introduced in 2019, according to Bloomberg, deeper than that expected by economists polled by the financial newswire. The one-year LPR, which serves as a benchmark for corporate loans, remained unchanged at 3.45%.
"The cut to the 5-year LPR is likely aimed at supporting the recovery of the property market, and could improve affordability for buyers by lowering the mortgage rates. However, banks were already facing record low net interest margins as of the third quarter of 2023, and have been tasked with extending loans to support troubled property developers. The 5-year LPR cut could add further pressure to Chinese bank margins," said ING.
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 14.4 points, 0.2%, at 7,714.1
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Hang Seng: up 0.3% at 16,205.37
Nikkei 225: closed down 0.3% at 38,363.61
S&P/ASX 200: closed down 0.1% at 7,659.00
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US financial markets were closed on Monday for Washington's birthday
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EUR: up at USD1.0774 (USD1.0764)
GBP: flat at USD1.2591 (USD1.2589)
USD: up at JPY150.36 (JPY150.17)
Gold: up at USD2,019.68 per ounce (USD2,013.67)
Oil (Brent): down at USD83.45 a barrel (USD83.53)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
10:00 CET eurozone current account
11:00 CET eurozone construction output
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BROKER RATING CHANGES
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JPMorgan cuts Airtel Africa price target to 93 (130) pence - 'neutral'
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COMPANIES - FTSE 100
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Barclays said its total income in 2023 rose 1.7% year-on-year to GBP15.38 billion from GBP24.96 billion, with growth in Barclays UK of 4.5% to GBP7.59 billion. However, pretax profit fell 6.5% to GBP6.56 billion from GBP7.01 billion, as its credit impairment charge widened to GBP1.88 billion from GBP1.22 billion. In the fourth quarter, total income fell 3.5% to GBP5.60 billion, while pretax profit plunged 92% to GBP110 million, after restructuring costs of GBP927 million. For 2023, the total dividend rose to 8.0 pence from 7.25p the year before. The bank plans to begin another share buyback worth GBP1.0 billion, bringing total capital distributions for the year to GBP3.0 billion, which is up around 37% on 2022. Barclays return on tangible equity fell to 9.0% in 2023 from 10.4% in 2022, but the bank is targetting a RoTE of over 10% in 2024. It is also planning at least GBP10 billion in capital returns to shareholders between 2024 and 2025. Barclays also announced it will now be managed and report via five focused operating divisions, allowing it to provide an "enhanced and more granular disclosure" on its performance. "Our new three-year plan, which we will be announcing at the Investor Update today, is designed to further improve Barclays' operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions," said Chief Executive CS Venkatakrishnan.
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InterContinental Hotels Group said revenue from reportable segments in 2023 jumped 17% year-on-year to USD2.16 billion from USD1.84 billion. Total revenue was up 19% to USD4.62 billion from USD3.89 billion. Pretax profit surged 87% to USD1.01 billion from USD540 million. The total dividend per share for the year rose 10% to 152.3 cents from 138.4 cents, with the final dividend rising 10% year-on-year to 104.0 cents. IHG also announced the launch of a new USD800 million buyback programme. "Travel demand was strong across all markets, with [revenue per available room] up 16% on last year and 11% ahead of the 2019 pre-pandemic peak. Combined with the power of our enterprise and efficient operating model, profit from reportable segments grew 23% and exceeded one billion dollars for the first time," said CEO Elie Maalouf. "Alongside strong trading and financial performances, we continued to grow our portfolio and the global footprint of our brands. We opened 275 hotels in 2023 and signed more than double that amount - 556 hotels - into our pipeline."
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Severn Trent has been fined more than GBP2 million for polluting the River Trent near Stoke. Huge amounts of raw sewage were discharged into the river from Strongford Wastewater Treatment Works near Stoke-on-Trent, Staffordshire, between November 2019 and February 2020. District Judge Kevin Grego ruled at Cannock Magistrates Court that there was a reckless failure by the company to have in place and implement a proper system of contingency planning. Severn Trent Water had previously pleaded guilty to two charges of illegally discharging raw sewage. The company was fined GBP1,072,000 and GBP1,000,000 plus costs of GBP16,476.67 and a victim's surcharge of GBP181.
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COMPANIES - FTSE 250
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Transport provider Mobico announced a delay to the publication of its annual results for 2023, which were due on February 29. This is due to account judgements relating to its German Rail business which "should be subject to further review". Mobico said it continues to expect adjusted earnings and interest for tax for 2023 to be in the guided range of GBP175 to GBP185 million. "The German Rail business has been impacted by industry-wide driver shortages, energy price volatility and lower energy cost recovery than previously anticipated. As a result, and subject to the conclusion of the review mentioned above, the group currently expects the onerous contract provision as at 31 December 2023 to increase by between GBP40 million - GBP70 million which will be utilised over the remaining life of the contract between 2024 and 2033," Mobico said. It expects results to be published "before the end of March".
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OTHER COMPANIES
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BHP reported a slump in interim profit, after its half-year was stung by an impairment of its nickel assets, and a charge related to the Brazilian dam incident in 2015. The Melbourne, Australia-based resource miner said attributable profit dropped 86% to USD927 million in the six months to December 31, from USD6.46 billion the prior year. BHP last Thursday had flagged that two charges would hit its interim results. The sharp drop stemmed from a non-cash impairment charge of USD2.5 billion against the carrying value of Western Australia Nickel, the company's Australian nickel business unit. BHP also recorded an income statement charge of USD3.2 billion in relation to the fatal failure in 2015 at the company's jointly-owned Samarco dam in southeastern Brazil. BHP cut its interim dividend by 20% to 72 cents from 90 cents. More positively, revenue rose 5.9% year-on-year to USD27.23 billion from USD25.71 billion. The rise was mostly down to higher iron ore and copper prices, as well as the contribution from new mines.
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By Elizabeth Winter, Alliance News deputy news editor
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