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(Alliance News) - Stocks in London were expected to make gains at Wednesday's market open, as investors continued to pin their hopes on US interest rate cuts.
After the early close in London on Friday, data from the US showed inflation eased a bit more in November.
The Bureau of Economic Analysis said the core personal consumption expenditures price index rose annually by 3.2% in November, slowing from 3.4% in October, which was first reported at 3.5%. The latest figure was just below the FXStreet-cited market consensus of 3.3%. The core reading, the Federal Reserve's preferred inflation gauge, does not include food or energy.
"The market optimism is overstretched. The Fed's rate cut expectations are unfunded in that, yes, the Fed will probably cut rates but not at the speed that's been currently priced in. The oversold market conditions do hint that a downside correction would be healthy. Once the Santa high fades, the hangover will hit," predicted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
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 44.0 points, 0.6%, at 7,741.51
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Hang Seng: up 2.0% at 16,663.05
Nikkei 225: closed up 1.1% at 33,681.24
S&P/ASX 200: closed up 0.8% at 7,561.20
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DJIA: closed up 0.4% at 37,545.33
S&P 500: closed up 0.4% at 4,774.75
Nasdaq Composite: closed up 0.5% at 15,074.57
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EUR: up at USD1.1043 (USD1.1019)
GBP: up at USD1.2730 (USD1.2719)
USD: up at JPY142.67(JPY142.14)
Gold: up at USD2,065.64 per ounce (USD2,055.55)
(Brent): up at USD81.14 a barrel (USD80.02)
(changes since previous London equities close on Friday)
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ECONOMICS
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Wednesday's key economic events still to come:
08:55 EST US Johnson Redbook retail sales index
10:00 EST US Richmond Fed business activity survey
16:30 EST US API weekly statistical bulletin
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UK Conservatives have been dropping hints they could make attention-grabbing pledges on housing and taxes as Prime Minister Rishi Sunak struggles to turn around his party's major deficit in the polls. Housing Secretary Michael Gove suggested to the Times that the Conservatives will promise to cut the up-front cost of a home for first-time buyers in a pre-election giveaway. And the prime minister has ordered a "gear change" to reduce the historically high tax burden, possibly axing inheritance tax and reducing income tax, according to the Telegraph. The Times said that UK government ministers are considering government support for longer fixed-term mortgages to reduce the size of deposits for first-time buyers. A resurrected help-to-buy scheme was also said to be on the table for the spring budget or the Conservative election manifesto. Meanwhile, the Telegraph said senior figures in No 10 were considering a handful of major tax cuts as Sunak comes under continued pressure from Tory MPs.
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COMPANIES - FTSE 100
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AstraZeneca said it has agreed to buy Nasdaq-listed Gracell Biotechnologies and will pay about USD1.2 billion for the clinical-stage company. The Cambridge, England-based pharmaceutical company said it expects the acquisition to close in the first quarter of 2024. Gracell is a Suzhou, China-based biopharmaceutical firm developing cell therapies for cancer and autoimmune diseases. AstraZeneca will pay USD2.00 per share, or USD10.00 per American Depositary Receipt, for Gracell at closing, plus USD0.30 per share "upon achievement of a specified regulatory milestone". The upfront cash portion represents a transaction value of around USD1.0 billion, with the total value being about USD1.2 billion if the milestone is achieved. Gracell ADSs closed up 60% at USD9.92 in New York on Tuesday.
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COMPANIES - FTSE 250
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HgCapital Trust said its manager Hg agreed a partial sale of Iris Software Group, which provides software and services in accountancy, payroll, human resources and eduction to a Los Angeles-based private equity firm. The terms of Hg's transaction were not disclosed, but HGT said the deal valued its investment in Iris at around GBP99.8 million. "HGT will receive a net distribution of approximately GBP42.1 million from Iris, having re-invested a portion of its proceeds in the business alongside other institutional clients of Hg investing through Hg Saturn. As part of the transaction, Hg's Saturn 1 fund will fully exit its remaining position in Iris. HGT's exposure to Iris will be GBP57.7 million at closing representing approximately 2.5% of [net asset value]," HGT explained.
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OTHER COMPANIES
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Stockbroker and wealth manager WH Ireland reported a weaker set of results for the six months that ended September 30. Pretax loss widened to GBP3.9 million from GBP384,000 a year before, as revenue dropped to GBP10.7 million from GBP14.3 million and WH Ireland took GBP1.7 million in non-recurring costs. Assets under management for its Wealth Management division shrunk to GBP1.8 billion from GBP2.1 million a year before, while the number of corporate clients in its Capital Markets unit slipped to 86 from 90 a year prior. "WH Ireland's interim results reflect both the well documented challenging market backdrop, as well as the impact of the non-recurring costs incurred in streamlining the business after the refinancing in the summer," said CEO Phillip Wale. Market conditions have shown "some tentative signs of improvement" since November, he added, which has enabled WH Ireland to undertake some its largest fundraising in many months across public and private markets. The business delivered underlying monthly profitability in November, he noted.
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Canadian Overseas Petroleum said its chief executive officer, John Cowan, has resigned. Cowan will remain on the board for the time being while a replacement is found, COPL said. No reason was provided for his resignation. The oil and gas explorer had a challenging week in the run-up to Christmas, with its shares plunging 70%. It had reported last Monday that its non-binding Cole Creek joint venture letter of intent with "an established energy company" has been terminated, and it planned "no further discussions at this stage". It followed up on Wednesday to say its indirect affiliate COPL America's senior lender was unwilling to amend or waive the terms of its senior credit facility. COPL said it expects to require additional financing in January, with no assurance that funds will be secured. "Should the company be unsuccessful in raising the required capital, it would have to seek some form of creditor protection," it had warned.
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By Elizabeth Winter, Alliance News deputy news editor
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