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(Alliance News) - Stocks in London were set to open higher on Monday, following a decent handover from Asia, as equities look to reverse some of Friday's weakness that was prompted by US rate hike fears.
It may be a muted day for European equities trading, however, with New York closed for the Washington's Birthday holiday in the US.
"Today looks set to see markets in Europe open modestly higher against a backdrop of continued weakness in energy prices, which is relieving some of the worst case economic scenarios that were being modelled at the end of last year," CMC Markets analyst Michael Hewson commented.
The dollar was lower across the board.
Investors also are watching the progress of post-Brexit negotiations.
In early corporate news, Darktrace said it has called in Ernst & Young to perform a third-party review of its "financial processes". The cybersecurity firm believes the results will be favourable, as it defends itself against a short-seller attack. Meanwhile, Bank of Cyprus said it is preparing to start paying "meaningful" dividends.
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 0.4% at 8,034.45
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Hang Seng: up 0.9% at 20,909.80
Nikkei 225: closed up 0.1% at 27,531.94
S&P/ASX 200: closed up 0.1% at 7,351.50
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DJIA: closed up 129.84 points, or 0.4%, to 33,826.69
S&P 500: closed down 11.32 points, or 0.3%, to 4,079.09
Nasdaq Composite: closed down 68.56 points, or 0.6% to 11,787.27.
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EUR: up at USD1.0699(USD1.0662)
GBP: up at USD1.2048 (USD1.1999)
USD: down at JPY134.06 (JPY134.37)
GOLD: up at USD1,844.91 per ounce (USD1,835.70)
(Brent): up at USD83.62 a barrel (USD82.79)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
US Washington's Birthday: financial markets closed
1000 GMT EU construction output
1500 GMT FCCI consumer confidence indicator
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UK Prime Minister Rishi Sunak is set for his biggest political test yet as he presses to unveil a deal to fix issues with the Northern Ireland protocol, despite pushback from predecessor Boris Johnson and unionists. Downing Street said talks are ongoing to reach an agreement with the EU aimed at breaking the impasse over the contentious post-Brexit trading arrangements. Number 10 denied reports suggesting the prime minister has been forced to delay an announcement – widely expected as early as this week – amid backlash from senior Tories and the Democratic Unionist Party. The DUP has warned it would not support a deal retaining the oversight role of the European Court of Justice. It is understood by PA that Sunak's officials held talks with their Brussels counterparts on Sunday on how to give local politicians a greater say in the application of EU law in the region, addressing what unionists call the "democratic deficit". But pressure on Sunak is mounting after his predecessor-but-one made a weekend intervention calling for him to take a tougher line with the EU. A source close to Johnson said his view was that "it would be a great mistake to drop the Northern Ireland protocol bill" – which would empower the UK to unilaterally scrap parts of the treaty.
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UK house prices were largely unchanged in February, figures from Rightmove showed, in a sign of buyer confidence despite robust mortgage rates. The property portal said the average price of properties coming on the market was GBP362,452, up ever-so-slightly from GBP362,438 in January. It is the smallest February increase on record, Rightmove said, but the reading "could be seen as a positive indicator for the year ahead". There were worries that house prices would tumble in the face of interest rate hikes. Rightmove's numbers suggest that may not be the case. "This month's flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint. In addition to market conditions demanding greater realism on price, we are transitioning into a slower paced market, where buyers will take longer to find the right property at the right price due to the higher cost of servicing a mortgage," Rightmove analyst Tim Bannister said. "There are other indicators that this will be a softer rather than a hard transition, despite the turbulence at the end of 2022."
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BROKER RATING CHANGES
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Berenberg cuts Spectris to 'hold' ('buy') - price target 3,470 (3,835) pence
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Barclays starts Alphawave with 'overweight' - price target 160 pence
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Jefferies raises Jet2 price target to 1,600 (1,300) pence - 'buy'
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COMPANIES - FTSE 250
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Darktrace said that as a "sign of confidence" in its financial processes, it has turned to accountants Ernst & Young to conduct a third-party probe. The cybersecurity firm recently received scrutiny from short-seller Quintessential Capital Management, which criticised Darktrace's management and said it is "sceptical" about the its growth figures. Quintessential said it found "numerous transactions" in the run-up to Darktrace's initial public offering which involved simulated or anticipated sales to phantom end-users, meaning ones that do not actually exist. "The board and management are confident that Darktrace's independently audited public company financial statements fairly represent Darktrace's financial position and results. The board and management stand firmly behind the statement made on 1 February 2023 and they believe it appropriate to demonstrate that by commissioning an independent review," the company said. Darktrace is due to report interim results on March 8. The company said it does not expect to be in a position to update on the E&Y probe at the time and but will present the investigations findings "once it is complete". Chair Gordon Hurst said: "The board believes fully in the robustness of Darktrace's financial processes and controls. As a sign of that confidence, we have commissioned this independent third-party review by E&Y. We look forward to the outcome of this review."
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OTHER COMPANIES
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Bank of Cyprus said the foundations to begin "meaningful dividend distributions" have been laid. The Nicosia-based lender said revenue in 2022 rose 20% to EUR904.2 million from EUR754.6 million in 2021. Pretax profit jumped to EUR109.8 million from EUR36.1 million. It reported "record new lending" of EUR2.1 billion in 2022, up 17% from 2021. Chief Executive Panicos Nicolaou said: "Against the backdrop of the challenging global and European economic environment, the Cypriot economy is proving resilient and is delivering strong growth notwithstanding headwinds. In the fourth quarter, GDP increased by 4.4% in Cyprus and is forecast to grow by [around] 3.0% in 2023, according to the ministry of Finance, outperforming the eurozone average." Bank of Cyprus said recurring return on tangible equity beat guidance, rising to 11.3% in 2022 from 5.5% in 2021. It had been expected to land at 10%. Bank of Cyprus lifted its ROTE guidance for 2023 to over 13%, from more than 10% previously. Nicolaou added: "Capitalising on this strong performance we are today upgrading our ROTE target for 2023 to over 13% from over 10%, laying the foundations to commence meaningful dividend distributions from 2023 onwards, subject to regulatory approval and market conditions. The ROTE target upgrade is facilitated by our positive gearing to rising interest rates, the significant contribution from non-interest income whilst maintaining cost discipline, a healthy loan portfolio and solid capital position."
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Oil and gas explorer Serica Energy said soon-to-be-acquired Tailwind Energy Investments has reported first production from its Gannet GE-04 well in the North Sea. "The well results were above the pre-drill expectation and initial production rates have exceeded 10,000 barrels of oil per day," Serica said. Serica proposed the acquisition of Tailwind Energy back in late December. The transaction will see Serica pay GBP58.7 million in cash and issue up to 111.0 million new shares in Serica to seller Tailwind Energy Holdings.
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Silverwood Brands said its move to acquire just shy of a 20% stake in cosmetics products seller Lush received a blow. The investment firm said Lush refused to record a transfer of shares to its own subsidiary Cosmic Cirles. "The letters failed to provide any reasons for this, and the company's solicitors have been instructed to seek further clarification from Lush," Silverwood said. Silverwood was to acquire the stake for a total of GBP216.8 million, payable in the firm's shares. "Silverwood is disappointed by the response from Lush. The company believes the transfers complied with Lush's articles of association and therefore it believes Lush's actions have no merit. Together with its legal advisers, Silverwood will seek to engage with Lush and its solicitors to resolve the current situation, however the company will explore all options available to it to protect its interests for the benefit of its shareholders as a whole. As a purported arbiter of fairness, ethics, and champion of environmental, social and governance issues, the company is surprised that Lush is behaving in this manner and expects that ultimately it will stand by their ethos and avoid potentially prejudicing minority interests," Silverwood said. VSA Capital Group, Silverwood's Aquis corporate advisor, noted the announcement. It holds 0.9% of Silverwood shares.
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Keystone Law said "favourable market conditions" continued in its financial second half ended January 31. Client demand "remained robust", the law firm said. It said annual revenue and adjusted pretax profit will now top current market expectations. "There is no question in my mind that the benefits of the Keystone model have been completely validated by the shift away from conventional working practices experienced over the last few years, and I am confident that as the recruitment market stabilises we will see further impetus to our future growth," CEO James Knight said.
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By Eric Cunha, Alliance News news editor
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