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(Alliance News) - Stocks in London are set to open lower on Thursday, ahead of a major interest rate decision by the Bank of England and a day after the US Federal Reserve settled for another three-quarter-point rate hike.
The Federal Reserve "will keep at it" until inflation is well and truly tackled, Chair Jerome Powell said on Wednesday after a third successive 75 basis point rate hike by the central bank.
A third 75 basis point hike on-the-trot took the target range for the federal funds rate to 3.00% to 3.25%. The three-quarter point hike was largely what the market expected, though there had been some that believed the Fed would turn to a 1% lift.
On Thursday, the latest Bank of England will unveil its own interest rate decision at 1200 BST.
At the previous meeting, the BoE increased bank rate by half a percentage point to 1.75% from 1.25%. It was the largest rate rise since 1995.
In the US on Wednesday, Wall Street ended firmly in the red and the dollar was stronger following the US Fed decision.
In early UK corporate news on Thursday, sportswear retailer JD Sports announced a rise in interim revenue but a drop in profit, though it said the results were ahead of expectations.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called down 0.9% at 7,173.60
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Hang Seng: down 1.9% at 18,098.41
Nikkei 225: closed down 0.6% at 27,153.83
Sydney market closed for holiday.
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DJIA: closed down 522.45 points, 1.7%, at 30,183.78
S&P 500: closed down 1.7% at 3,789.93
Nasdaq Composite: closed down 1.8% at 11,220.19
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EUR: down at USD0.9819 (USD0.9879)
GBP: down at USD1.1230 (USD1.1336)
USD: up at JPY145.25 (JPY144.13)
Gold: down at USD1,659.25 per ounce (USD1,667.36)
Oil (Brent): up at USD90.30 a barrel (USD89.80)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
Australia National Holiday holiday. Financial markets closed.
16:00 CEST EU flash consumer confidence
12:00 BST UK BoE interest rate decision
08:30 EDT US unemployment claims
08:30 EDT US weekly export sales
10:00 EDT US leading indicators
11:00 EDT US Fed Kansas City survey
16:30 EDT US federal discount window borrowings
16:30 EDT US foreign central bank holdings
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EU foreign policy chief Josep Borrell has promised new sanctions targeting Russia following President Vladimir Putin's latest escalation in his war against Ukraine. "We decided to bring forward as soon as possible additional restrictive measures against Russia in coordination with partners," Borrell said late on Wednesday following a meeting of EU foreign ministers on the sidelines of the UN General Assembly in New York. The meeting was convened by Borrell after Putin ordered the partial mobilization of reservists in order to bolster his military's flagging efforts in Ukraine.
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Manufacturers in the UK have slashed their growth forecasts for next year amid "gathering storm clouds" for industry. Make UK said a survey of firms suggested growth in the sector of just 0.6% in 2023, down from 1.7% as recently as June. The manufacturers' organisation has cut its forecast for economic growth from 3.6% this year to 0.3% in 2023. Make UK called on the government to bring forward a "shock and awe" package of policy measures in its mini-budget on Friday in line with those seen during the worst points of the pandemic to help protect viable companies and avert significant job losses.
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BROKER RATING CHANGES
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Berenberg cuts Aveva Group to 'hold' from 'buy'
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JPMorgan reinitiates FirstGroup with 'overweight'
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RBC starts Ceres Power with 'sector perform'
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COMPANIES - FTSE 100
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Sportswear retailer JD Sports announced a rise in interim revenue but a drop in profit, which it said was due to the previous year experiencing a one-off benefit in the US from government stimulus. In the six months to July 30, revenue rose to GBP4.42 billion from GBP3.89 billion a year previous. Cost of sales ticked up to GBP2.28 billion from GBP2.00 billion. Pretax profit dropped to GBP298.3 million from GBP364.6 million. Chair Andrew Higginson says the results were at the "top end" of the company's expectations. JD Sports reinstated an interim dividend of 0.13 pence per share. It added that it expects its pretax profit for the year as a whole to be in line with the record performance for the year that ended this past January 29.
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Safety equipment maker Halma said its progress in the first half of its financial year to date has been in line with expectations, despite a challenging operational environment. It noted strong demand for products and services, with order intake "strongly" ahead of both revenue in the year to date and order intake for the same period last year. Halma left its revenue growth guidance for the full-year unchanged at "good single digit percentage organic constant currency revenue growth."
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Pharmaceutical firm AstraZeneca, along with American pharmaceutical firm Merck & Co, announced that Lynparza has been approved in China for the treatment of adults with advanced epithelial ovarian, fallopian tube or primary peritoneal cancer who are in complete or partial response to first-line platinum-based chemotherapy in combination with bevacizumab, and whose cancer is associated with homologous recombination deficiency-positive status. The approval was based on a Paola-1 phase III trial which showed Lynparza plus bevacizumab demonstrated a substantial progression-free survival improvement versus bevacizumab alone for patients with HRD-positive advanced ovarian cancer.
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Telecommunications firm BT said that its workers, along with those at Openreach, are to stage fresh strikes in a long-running dispute over pay. The Communication Workers Union said its members will walk out on October 6, 10, 20 and 24. The action will include the tens of thousands of Openreach engineers and BT call centre workers who have walked out in previous months. The dispute centres on workers opposing the imposition by company management of an "incredibly low" flat-rate pay rise of GBP1,500 which the union said was a real-terms pay cut because of the soaring rate of inflation.
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COMPANIES - FTSE 250
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Gambling software firm Playtech reported a fall in pretax profit but a rise in revenue in the six months ended June 30. Revenue jumped to EUR792.3 million from EUR457.4 million, while pretax profit fell to EUR103.7 million from EUR278.1 million. The fall in profit was balmed on "EUR299.9 million of unrealised fair value gains on derivative financial assets recognised in the prior period." Chief Executive Mor Weizer said the performance was ahead of expectations and powered by Playtech's B2B business in the Americas and Europe. Weizer added that this "excellent" performance has continued into the second half of the year.
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Personal healthcare and consumer goods maker PZ Cussons posted a "resilient" performance in the year ended May 31, with dips in both revenue and profit amid a "challenging" market backdrop. In the year, revenue slipped by 1.7% to GBP592.8 million from GBP603.3 million. Pretax profit declined 8.7% to GBP65.3 million from GBP71.5 million. Cost of sales grew 11% year-on-year. PZ Cussons blamed the fall in profit on the reduction in revenue and a brand impairment. It increased its final dividend to 6.40 pence from 6.09 pence, however. The company also noted a "good" start to financial 2023.
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OTHER COMPANIES
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Veterinary service provider CVS Group posted a rise in annual profit and revenue as the company benefited from favourable and "resilient" market dynamics in the year. In the year ended June 30, revenue rose 8.6% to GBP554.2 million from GBP510.1 million, while pretax profit climbed 8.8% to GBP36.0 million from GBP33.1 million. CVS also increased its final dividend to 7.0 pence per share from 6.5p the prior year. In the first 10 weeks of its new financial year, the firm reported strong sales and like-for-like growth against the previous year. CVS added that trading was in line with market expectations.
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By Heather Rydings; heatherrydings@alliancenews.com
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