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(Alliance News) - London's FTSE 100 is called to open higher on Tuesday, the eve of the next Federal Reserve decision, with a batch of data from the eurozone due in the morning.
There are gross domestic product and consumer price index readings for the single currency area, after GDP data for Germany.
"Due today, core inflation in the eurozone is expected to print a further retreat from 2.9% to 2.6% in April along with a slight improvement in GDP growth. If we don't see a major surprise in data, the expectation that the European Central Bank will opt for the first rate cut in June will remain intact, yet what will happen after the June meeting remains uncertain and will depend on whether inflation in Europe shows signs of heating up, and if yes, how badly." Swissquote analyst Ipek Ozkardeskaya commented.
The Federal Open Market Committee meeting kicks off Tuesday, with a decision on Wednesday. The Fed is expected to leave rates unmoved, with focus on what Chair Jerome Powell has to say at a subsequent press conference.
In early UK corporate news, Prudential reported rise in annual premium equivalent sales, soft drink bottler Coca-Cola HBC maintained its outlook, while Hargreaves Lansdown hailed "good momentum" in its third-quarter. HSBC announced a new buyback and said its chief executive plans to retire from the bank after nearly five years at the helm.
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 0.2% at 8,163.43
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Hang Seng: up 0.1% at 17,756.87
Nikkei 225: up 1.2% at 38,405.66
S&P/ASX 200: up 0.4% at 7,664.10
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DJIA: closed up 146.43 points, 0.4%, to 38,386.09
S&P 500: closed up 0.3% at 5,116.17
Nasdaq Composite: closed up 0.4% at 15,983.08
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EUR: down at USD1.0693 (USD1.0717)
GBP: down at USD1.2525 (USD1.2554)
USD: up at JPY156.79 (JPY156.64)
GOLD: down at USD2,320.56 per ounce (USD2,337.40)
(Brent): down at USD86.93 a barrel (USD87.27)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
11:00 BST eurozone GDP
11:00 BST eurozone CPI
09:00 BST Germany GDP
09:30 BST UK mortgage approvals
13:30 BST US employment cost index
15:00 BST US Conference Board consumer confidence
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UK shop price inflation eased in April, as non-food inflation entered deflation, the British Retail Consortium reported. According to BRC, UK shop price annual inflation eased to 0.8% in April, ebbing from 1.3% in March. This is below the 3-month average rate of 1.4% and marks the lowest shop price annual growth since December 2021. Non-food entered deflation, falling by 0.6% in April, down from 0.2% growth in the preceding month. This is below the 3-month average rate of 0.2%. Food inflation decelerated to 3.4% in April, down from 3.7% in March. This is below the 3-month average rate of 3.9% and is the 12th consecutive deceleration in the food category. "One year on from the peak, shop price inflation levels are showing signs of normalising, providing relief to households. Both food and non-food have seen shop inflation rates ease to more manageable levels. In April, non-food prices fell, especially in clothing and footwear, where retailers ramped up promotions to encourage consumer spend. Food inflation slowed for the 12th consecutive month, as fresh products such as butter, fish and fruits, continued to fall in price due to easing input costs and intense competition between grocers," said Helen Dickinson, chief executive of the British Retail Consortium.
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BROKER RATING CHANGES
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Deutsche Bank starts Watches of Switzerland Group with 'hold' - price target 370 pence
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Deutsche Bank starts AO World with 'buy' - price target 120 pence
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COMPANIES - FTSE 100
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Prudential reported a rise in first-quarter annual premium equivalent sales, but said new business profit was largely flat after "allowing for economic impacts". The Asia focused insurer said first-quarter APE sales rose 4.2% to USD1.63 billion from USD1.56 billion a year prior. At constant currency, it grew 7.3%. Prudential reported new business profit, excluding economic impacts, rose 11% at constant currency to USD810 million from a year prior, 9.0% growth on actual exchange rates. However, "after allowing for economic impacts," new business profit was largely flat at constant currency at USD726 million, and at actual exchange rates, it was down 2.3%. CEO Anil Wadhwani said: "Against a strong prior period comparator that reflects our outperformance in Q1 2023 when the border between Hong Kong and the Chinese Mainland reopened, I am pleased the group has delivered new business profit growth of 11%, excluding economic impacts. Our continued focus on the quality of business written is reflected in new business profit (excluding economic impacts) growing more than APE sales. Our total APE sales have grown sequentially each quarter since Q3 2023, reflecting resilient consumer demand across Asia and demonstrating the strength of our multi-market and multi-channel distribution model." Wadhwani added that the firm will update on "capital management plans" by its half-year results.
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Soft drink bottler Coca-Cola HBC backed yearly guidance as it hailed a "strong start" to the year. Net sales revenue in the first-quarter of 2024 rose 1.0% on-year to EUR2.23 billion from EUR2.20 billion. Organic revenue jumped 13%. It added: "We have delivered a strong start to 2024. While we expect the macroeconomic and geopolitical environment to remain challenging, we have high confidence in our 24/7 portfolio and the opportunities for growth in our diverse markets, amplified by our bespoke capabilities, and above all, the talent of our people. In 2024 we expect to make progress against our medium-term growth targets." Coca-Cola HBC backed its outlook, still expecting to achieve organic revenue growth of 6% to 7% for 2024, in line with its "mid-term target".
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HSBC announced its chief executive intends to step down, as it unveiled a new buyback and special dividend alongside first-quarter results. The Asia-focused lender said first-quarter net interest income fell 3.4% to USD8.65 billion from USD8.96 billion year-on-year, though came in higher than company-compiled consensus of USD8.50 billion. Net operating income increased 1.5% to USD20.03 billion from USD19.74 billion. Pretax was USD12.65 billion, 1.8% lower than the prior year's USD12.89 billion, but ahead of USD12.61 billion consensus. HSBC noted the figure included a USD4.8 billion gain following the disposal of its Canadian banking business, which was partially offset by a USD1.1 billion impairment related to the sale of its business in Argentina. HSBC said it has approved a first interim dividend of USD0.10 per share, up year-on-year from USD0.09. It will also pay a special dividend of USD0.21 following the sale of its Canadian banking business. In addition, it announced a new share buyback of up to USD3 billion, following the conclusion of the USD2 billion buyback announced with its full-year results. HSBC said CEO Noel Quinn has informed the board of his intention to retire from the bank after nearly five years leading the company, and 37 years at the firm in total. Quinn said he plans to "pursue a portfolio career" going forward.
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COMPANIES - FTSE 250
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Hargreaves Lansdown reported assets under administration spiked to a record high in its recently-ended third-quarter, and it said "momentum" has continued this month. The wealth management platform reported net new business of GBP1.6 billion for the three months ended March 31. It noted "good momentum into tax year end with increased gross inflows, net new clients and share dealing volumes". Assets under administration rose 5.3% on-quarter to GBP149.7 billion, a record, from GBP142.2 billion. Hargreaves Lansdown noted the net new business outcome was a "significant step up versus the first half of the year". It posted net client growth of 34,000 in the quarter, picking up speed from 23,000 a year prior. Share dealing volumes averaged 794,000 per month, rising on-year from 770,000. Total revenue in the quarter was 6.2% higher year-on-year at GBP199.7 million from GBP188.1 million. It added: "Looking ahead to the remainder of the financial year, we are pleased to see momentum continue into April as clients take advantage of the benefits of investing at the start of the tax year. We continue to make good progress against our priorities for the year - improving our client proposition, controlling our costs and increasing our execution pace so that we can capitalise on the significant growth opportunities that lie ahead and create value for all our stakeholders."
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OTHER COMPANIES
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Bank of Ireland Group reported a "strong first quarter" and it lifted its net interest income guidance. The lender said net interest income in the first-quarter was in line with expectations and similar to the fourth quarter's level. "This reflects positive lending momentum combined with continued strong commercial pricing discipline, partially offset by lower deposit volumes and modestly higher deposit funding costs," it added. Looking ahead, it noted market expectations for interest rates have picked up. The lender now expects interest rates to be on average 25 basis points higher in the US, the eurozone and the UK compared to what it predicted in its full-year results. As a result, it now expects net interest income for the year to fall between 3% and 4%, its guidance lifted from a previously forecast 5% to 6% decline. It added: "Operating expenses have progressed in-line with expectations in Q1 2024. The group continues to maintain tight control over its cost base while absorbing inflation and continuing to invest in strategic growth and simplification opportunities."
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Cleaning products maker McBride expects annual profit to top market expectations. It said that trading in March and April beat internal expectations. Volumes over the nine months to March 31 were 6.5% higher on-year. Revenue rose 8.2% at constant currency. McBride added: "Input costs for chemicals and packaging remain at similar levels as at our last update in February 2024, with employment, general supplies and financing costs continuing to apply inflationary pressures. There are early signals that certain materials will see price rises as we progress into the second half of 2024, primarily in the more sustainable materials categories. Additionally, the group continues to monitor and manage potential supply chain risks caused by heightened geopolitical tensions." It now predicts adjusted operating profit for the year to June 30 will be 10% higher than the current market expectations of GBP61.0 million.
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By Eric Cunha, Alliance News news editor
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