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(Alliance News) - London's FTSE 100 is called to open fractionally lower on Friday, possibly a tepid end to a decent week, as a robust US producer price reading hurt risk appetite on both sides of the Atlantic.
Numbers on Thursday showed US producer prices by 1.6% on-year in February, ahead of a forecast 1.1% climb. In January, prices had risen by 1.0% on-year.
Meanwhile, retail sales rose by 0.6% in February from January. They had been expected to rise by 0.8%, according to FXStreet, having fallen by 1.1% in January from December.
The US Department of Labor also released its initial weekly jobs report on Thursday.
In the week ending March 9, the advance figure for seasonally adjusted initial claims was 209,000, a decrease of 1,000 from the previous week's revised total. The previous week's level was revised down by 7,000 from 217,000.
This was lower than market consensus for initial jobless claims to rise to 218,000.
"Given a very mixed set of US data yesterday, the fact that US Treasury yields chose to move significantly higher, rather than fall or just muddle along sideways gives a sense of where the market's thinking currently is. A June cut is now just 65% priced in. A month ago, it was more than fully priced in. Our house view remains that the Fed is still inclined to cut at the June meeting," analysts at ING commented.
The next Federal Reserve decision is on Wednesday, with the Bank of England's coming a day later.
In early UK corporate news, there were planned share buybacks aplenty, telecommunications firm Vodafone, tech investor Scottish Mortgage, and AIM-listed advertising technology company Nexxen all announcing repurchase plans. Bodycote, meanwhile, said it will kick off one it announced in January.
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 just 1.0 point 7,742.15
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Hang Seng: down 1.5% at 16,701.70
Nikkei 225: down 0.3% at 38,707.64
S&P/ASX 200: down 0.6% at 7,670.30
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DJIA: closed down 137.66 points, 0.4%, at 38,905.66
S&P 500: closed down 0.3% at 5,150.48
Nasdaq Composite: closed down 0.3% at 16,128.53
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EUR: down at USD1.0882 (USD1.0887)
GBP: up at USD1.2741 (USD1.2737)
USD: up at JPY148.42 (JPY148.25)
GOLD: up at USD2,168.09 per ounce (USD2,154.76)
(Brent): up at USD85.12 a barrel (USD84.91)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
12:30 SAT US import and export prices
12:30 SAT US New York empire state manufacturing index
13:15 SAT US industrial production
14:00 SAT US Michigan consumer sentiment index
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UK Prime Minister Rishi Sunak has ruled out holding a general election on May 2, when voters are set to go to the polls for the local elections. The prime minister has previously been reluctant to make definitive statements about the date of the general election, saying only that his "working assumption" was that it would take place in the second half of the year. But in an interview with ITV News West Country, Sunak definitively ruled out a general election on May 2. He said: "In several weeks' time we've got elections for police and crime commissioners, for local councils, for mayors across the country – they're important elections." Asked whether there would be a general election on the same day, he said: "There won't be an election on that day." The statement will put paid to mounting speculation in Westminster that the prime minister was preparing to call a general election to coincide with the local elections, seeking to reap an advantage at the ballot box from the national insurance cut announced at the budget.
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The relationship between Ireland and the US could not be stronger, the Irish premier has said. On the eve of a bilateral meeting with US President Joe Biden, Leo Varadkar attended an event hosted at the Irish ambassador's residence in Washington DC. Speaking at the event, Varadkar said: "A hundred years of official diplomatic relations have woven a relationship that is stronger and deeper than ever." In his remarks, he also celebrated the countries' long-standing, two-way trade relations, emphasising that he was "proud" Ireland was one of the top 10 investors in the US. On Friday, Varadkar will meet US Vice President Kamala Harris before a bilateral with Biden at the White House. He will also meet the Speaker of the House of Representatives Mike Johnson at Capitol Hill. On Sunday, Taoiseach Varadkar will also gift Biden a bowl of shamrock as part of an annual tradition to mark St Patrick's Day.
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BROKER RATING CHANGES
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Jefferies raises Mondi to 'buy' (hold) - price target 1,650 pence
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Morgan Stanley raises Smurfit Kappa to 'overweight' (equal-weight) - price target 4,000 (3,200) pence
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HSBC raises Deliveroo to 'buy' - price target 150 pence
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COMPANIES - FTSE 100
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Housebuilder Berkeley Group backed its guidance for the current financial year, and also affirmed its outer year outlook. It still expects at least GBP1.5 billion in total pretax profit for the three years ending April 30, including a consensus-meeting outcome of GBP550 million for this financial year. For the period from November 1 to February 29, which makes up some of its second half, Berkeley said its sales rate has been "consistent" with what was seen in the first, so around a third lower year-on-year. It added: "Enquiry levels are good, with customers looking for the prevailing political and economic uncertainty to recede and interest rates to begin to fall. Pricing has been stable across our sites during the period and above business plan levels, while build cost inflation is negligible across most trades."
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The UK's competition watchdog said it is mulling whether the planned Barratt Developments and Redrow housebuilding tie-up would lead to a "substantial lessening of competition" in the sector. It is inviting comments on the deal until April 2. "This invitation to comment is the first part of the CMA's information-gathering process," the Competition & Markets Authority added. The duo announced the takeover deal last month. Under the takeover offer from Barratt, each Redrow shareholder will receive 1.44 new Barratt shares for each Redrow share. Following completion, shareholders in Redrow will hold around 33% of the combined group, while Barratt shareholders will hold around 67%.
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Scottish Mortgage Investment Trust has set aside GBP1 billion for share buybacks over the next two years, and the tech sector-focused investor hailed "strong operational results" from its portfolio. Free cashflow from portfolio companies "more than doubled over the past year", it added. Scottish Mortgage added: "Collectively, portfolio companies have adapted to a higher cost of capital and are funding their future growth. Against this backdrop and having further strengthened the company's balance sheet, the board now intends to take more concerted action to address the discount to net asset value at which the company's shares continue to trade." Scottish Mortgage has stakes in the likes of Nvidia, Amazon, Meta Platforms and Tesla. Manager Tom Slater said: "We own a portfolio of established companies achieving rapid expansion, propelled by enduring structural trends. Advances in foundational technologies are unlocking exciting new products, services, and business models. These well-funded public and private companies are shaping the future of the economy. The stock market has yet to fully recognise their progress, which creates the opportunity for us to buy the portfolio for less than its market value. In doing so, we can provide liquidity and augment returns for our shareholders. We intend to pursue this opportunity with conviction."
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COMPANIES - FTSE 250
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Volution Group lifted its payout and reported improved half-year earnings. The energy-efficient indoor air quality solutions firm said pretax profit in the six months to January 31 rose 28% to GBP29.0 million from GBP22.6 million. Revenue rose 6.3% to GBP172.5 million from GBP162.3 million. In addition, it lifted its interim dividend by 12% to 2.8p per share from 2.5p. Its UK residential-focused offering led the charge, amid weakness in a "difficult" UK original equipment manufacturer division, as well as in Continental Europe. "We made strong progress in the first half of the year, against a backdrop of higher interest rates and weaker new build demand. UK residential was once again the standout performer, with tighter regulation and strong social housing demand continuing to drive activity levels. Our greater exposure to refurbishment supported organic revenue growth in the period, and inorganic growth was strong due to a good performance from our recent acquisitions," Chief Executive Officer Ronnie George said. Volution expects full-year adjusted earnings per share to be "slightly ahead of consensus" of 26.1 pence. For the first half, its basic adjusted EPS rose 10% to 13.7p from 12.4p, while its adjusted diluted EPS climbed 11% to 13.5p from 12.2p.
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Heat treatments and specialist thermal processing services supplier Bodycote lifted its dividend hailed "another year of strong growth". Revenue in 2023 rose 7.9% to GBP802.5 million from GBP743.6 million. Pretax profit shot up 17% to GBP111.7 million from GBP95.3 million. Bodycote lifted its final dividend by 7.4% to 16.0p per share from 14.9p, bringing the full-year total to 22.7p, a rise of 6.6% from 21.3p. It also said it has kicked off a GBP60 million share buyback programme it unveiled in January. Bodycote added: "Despite macroeconomic uncertainty we expect to deliver further progress in 2024. We anticipate a reduction in the level of energy surcharges, reflecting further normalisation of energy prices. 2024 should see us take another step towards our medium term margin target of more than 20%."
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Retailer WH Smith tapped Burberry's Max Izzard as its next chief financial officer. Izzard replaces Robert Moorhead, who steps down after "more than 20 years" with WH Smith. Moorhead leaves the board on November 30, and Izzard takes a seat on the board a later, though he joins WH Smith on September 1. Izzard is senior vice-president of group and corporate finance at Burberry.
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OTHER COMPANIES
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Advertising technology company Nexxen International plans a USD50 million share buyback. The buyback needs the consent of its bank lenders. It added: "Nexxen is required to comply with newly-adopted Israeli regulations that require the company to await the expiration of a creditor objection period before the new ordinary share repurchase programme can become effective. The newly-adopted Israeli regulations replace the mandatory Israeli court approval that was in effect prior to the new regulations, resulting in a shorter authorization process."
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By Eric Cunha, Alliance News news editor
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