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(Alliance News) - Stocks in London are set to open higher on Tuesday as markets hoped that interest rates in the world's largest economy have peaked.
On Monday, the vice-chair of the Federal Reserve said the US central bank needed to "proceed carefully" with forthcoming interest rate decisions.
Officials "are in a sensitive period of risk management", Philip Jefferson said in prepared remarks, needing to balance the respective risks of not tightening enough and being too restrictive.
His comments aligned with those from Dallas Fed President Lorie Logan, who noted that tighter financial conditions could mean the bank does less in terms of raising its policy rate.
Referring to the rise in bond yields, Logan said: "If term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening to achieve the [Federal Open Market Committee]'s objectives."
In early UK corporate news, YouGov reported a 77% jump in its annual pretax profit and Kingspan offered to buy the shares in Nordic Waterproofing that it does not already own.
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 54.19 points, or 0.7%, at 7,546.40
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Hang Seng: up 0.9% at 17,668.72
Nikkei 225: closed up 2.4% at 31,746.53
S&P/ASX 200: closed up 1.0% at 7,040.60
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DJIA: closed up 197.07 points, 0.6%, at 33,604.65
S&P 500: closed up 0.6% at 4,335.66
Nasdaq Composite: closed up 0.4% at 13,484.24
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EUR: higher at USD1.0557 (USD1.0548)
GBP: higher at USD1.2222 (USD1.2213)
USD: higher at JPY148.79 (JPY148.59)
Gold: higher at USD1,857.97 per ounce (USD1,852.16)
(Brent): lower at USD87.56 a barrel (USD87.94)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
US FRB Atlanta President Raphael Bostic speaks
10:00 CEST Italy industrial production
08:55 EDT US Johnson Redbook retail sales index
10:00 EDT US monthly wholesale trade
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UK retail sales increased last month, data on Tuesday showed, though purchases of big-ticket items fell, as consumers continue to grapple with cost of living pressures. According to the latest British Retail Consortium-KPMG tracker, UK retail sales rose 2.7% on-year in September. Growth slowed from 4.1% in August. The latest reading was in line with the three-month average growth rate, but lagged the 12-month average climb of 4.2%. "Sales growth in September slowed as the high cost of living continues to bear down on households. Big ticket items such as furniture and electricals performed poorly as consumers limited spending in the face of higher housing, rental and fuel costs. The Indian summer also meant sales of autumnal clothing, knitwear and coats, have yet to materialise," BRC Chief Executive Helen Dickinson said.
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Israel kept up its deadly bombardment of Hamas-controlled Gaza Tuesday after the Palestinian militant group threatened to execute some of the around 150 hostages it abducted in a weekend assault if air strikes continue without warning. Israel already imposed a total siege on the Gaza Strip on Monday, cutting off food, water and electricity supplies, and sparking fears of that an already dire humanitarian situation will swiftly deteriorate. Israel has been left reeling by Hamas's unprecedented ground, air and sea assault. The death toll rose to more than 900 in Israel, which has retaliated with a withering barrage of strikes on Gaza, raising the death toll there to 687. The Israeli army said Tuesday it had "more or less restored control" over the Gaza border after Saturday's mass breach by Palestinian gunmen.
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BROKER RATING CHANGES
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Barclays cuts Haleon price target to 367 (381) pence - 'overweight'
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Berenberg cuts Croda International price target to 5,000 (6,800) pence - 'buy'
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RBC cuts Rio Tinto price target to 4,800 (5,100) pence - 'sector perform'
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COMPANIES - FTSE 100
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Centrica begins the first tranche of its GBP450 million share buyback programme, announced in July. The maximum consideration for the purchase of shares in the first tranche is GBP200 million, representing around 2.4% of the company's shares. The energy company said the purpose of the buyback is to reduce its capital.
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COMPANIES - FTSE 250
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Target Healthcare REIT reported a total net asset value return of negative 1.2% in the 12 months ended June 30, compared to a positive return of 8.1% the year prior. The UK care home investor said this was driven by an EPRA net tangible asset reduction of 6.9% to 104.5 pence as at June 30 from 112.3p at the same time a year prior. More positively, the firm's rental income increased 13% to GBP56.4 million in the 12 month period, from GBP49.8 million the year prior. Looking forward, Target Healthcare said it intends to increase the quarterly dividend in respect for the year ending June 30 by 2.0% to 1.428 pence per share. This would represent a total annual payout of 5.712p. In the recently ended financial year, Target paid out 6.18p in dividends.
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Foresight Group said its assets under management and funds under management as at September 30 were GBP12.1 billion and GBP8.8 billion, respectively. This was down marginally from GBP12.2 billion and GBP9.0 billion at the same time a year prior. The infrastructure and private equity investment manager said its core earnings before interest, tax, depreciation and amortisation pre-share based payments in the six months ended September 30 is expected to be 20% to 25% ahead of the prior year. "Over the last six months we have seen strong inflows into higher margin retail vehicles and successful institutional fundraising in our private equity business. We have also seen continuing growth in our substantial international infrastructure deployment pipeline which reflects the very significant investment opportunities created by the worldwide energy transition," Chair Bernard Fairman.
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OTHER COMPANIES
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Kingspan announced an offer of SEK160 in cash per share - around GBP11.94 - to the shareholders of Nordic Waterproofing Holding AB to acquire all the shares it does not already own in the company. Kingspan has been the largest shareholder in Nordic Waterproofing since August 2022 when it acquired 24% of the company's share. In September of this year, Kingspan upped its interest in the firm to 31% thereby crossing the mandatory bid threshold of 30% of the voting rights in the firm. "We have admired Nordic Waterproofing for some time due to its strong product and service offering across the Nordic region. It is a complementary geographical fit with our expanding Roofing and waterproofing division," comments Chief Executive Gene Murtagh.
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Research and data analytics firm YouGov reported a pretax profit of GBP44.7 million in the year ended July 31, jumping 77% from GBP25.3 million the year prior. The improved profitability came as the company reported revenue of GBP258.3 million, up 17% from GBP221.1 million, despite a "challenging" macroeconomic backdrop. YouGov also noted that its annual revenue performance was "well ahead" of the wider industry. Looking forward, the company said it remains confident in its prospects for financial 2024 and in meeting the current market expectations on a stand-alone basis for the year. "Demand for YouGov's products and services remains strong with continued new business momentum, high renewal rates and sticky customer relationships. As a result, we remain confident in the group's prospects for [financial 2024] and beyond, aiming to maintain the strong sales momentum seen over the past year," commented Chief Executive Steve Hatch.
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By Heather Rydings, Alliance News senior economics reporter
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