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(Alliance News) - Stocks in London are set to open lower on Monday, ahead of a busy week focused on key interest rate decisions from the three major central banks.
The US Federal Reserve will announce its rate decision on Wednesday, with the European Central Bank following suit a day after. Both central banks are expected to raise their respective interest rates by 25 basis points.
The Bank of Japan begins its two-day monetary policy meeting on Thursday. Though hikes are expected from the Fed and the ECB, the BoJ is expected to leave its ultra-loose monetary policy unchanged.
In early UK company news, Vodafone reported a dip in first-quarter revenue and Ryanair announced a surge in profit.
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 36.93 points, or 0.5%, at 7,626.80
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Hang Seng: down 2.4% at 18,624.24
Nikkei 225: closed up 1.2% at 32,700.94
S&P/ASX 200: closed down 0.1% at 7,306.40
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DJIA: closed up just 2.51 points at 35,227.69
S&P 500: closed marginally higher at 4,536.34
Nasdaq Composite: closed down 0.2% at 14,032.81
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EUR: higher at USD1.1126 (USD1.1121)
GBP: higher at USD1.2869 (USD1.2852)
USD: lower at JPY141.57 (JPY141.64)
Gold: lower at USD1,959.53 per ounce (USD1,960.17)
(Brent): higher at USD80.70 a barrel (USD80.41)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
10:00 CEST EU flash PMI
09:15 CEST France flash PMI
09:30 CEST Germany flash PMI
09:30 BST UK flash PMI
08:30 EDT US Chicago Fed national activity index
09:45 EDT US flash manufacturing PMI
09:45 EDT US flash services PMI
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Activity in Japan's private sector continued to expand in July, preliminary survey data showed, despite a sharp slowdown in new order growth. The au Jibun Bank flash composite purchasing managers' index was unchanged at 52.1 points in July. Remaining above the 50-point no-change mark, it shows activity in Japanese businesses continued to grow during the month. The flash services PMI eased to 53.9 from 54.0, suggesting a fairly robust rate of growth continues in the services sector. Meanwhile, the flash manufacturing PMI fell to 49.4 from 49.8 - indicating the marginal contraction in Japan's factories continues.
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Australia's private sector fell back into contraction for the first time since March, initial survey results from S&P Global showed. The Judo Bank flash composite purchasing managers' index fell to 48.3 points in July from 50.1 in June. Falling below the 50-point no-change mark, the reading indicates a slight downturn. "In a reversal of the recent trend, services was the main source of private sector weakness in July," S&P Global said. The flash services PMI fell to 48.0 points from 50.3 in June, indicating the sector saw a deterioration this month, swinging from slight expansion. However, the downturn in the factory sector eased somewhat, with the flash manufacturing PMI rising to 49.6 from 48.2. "The good news is that this gradual easing in activity will help take pressure off inflation and interest rates, but it will need to be sustained for the rest of 2023 and into 2024," said Warren Hogan, Judo Bank chief economic advisor.
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BROKER RATING CHANGES
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Peel Hunt raises International Distribution Services to 'hold' (sell) - price target 260 (190) pence
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Berenberg cuts Hiscox price target to 1,245 (1,285) pence - 'hold'
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RBC raises AB Foods price target to 2,400 (2,350) pence - 'outperform'
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COMPANIES - FTSE 100
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Online supermarket Ocado is to be paid GBP200 million in a deal with Norwegian warehouse automation firm AutoStore, which accused it of breaching patents. In a joint statement released on Saturday, Ocado and AutoStore said they have settled their long-running dispute over robot patents. A High Court judge ruled in March that AutoStore's "patents were invalid" and that, regardless, Ocado did not infringe them. In 2020, AutoStore tried to protect six patents that it said Ocado had breached, and launched a legal battle. AutoStore is to pay Ocado GBP200 million in 24 monthly instalments starting in July 2023 under the new settlement.
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Vodafone reported a dip in first-quarter revenue but nonetheless reiterated its full-year earnings guidance. In its first financial quarter, ended June 30, the telecommunications firm reported revenue of EUR10.74 billion. This was down 4.8% from EUR11.28 billion the year prior, though up 3.7% on an organic basis. As a result, Vodafone reiterated its full-year guidance which sees adjusted earnings before interest, tax, depreciation and amortisation after leases of EUR13.3 billion. Vodafone also announced the appointment Luka Mucic as its new chief financial officer from September 1. Mucic was CFO at Walldorf, Germany-based software firm SAP from 2014 until March 2023.
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Anglo American reported the interim results of its subsidiary Anglo American Platinum. The platinum producer reported adjusted earnings before interest, tax, depreciation and amortisation of ZAR13.4 billion in the six months ended June 30, around USD730 million. This was down sharply from ZAR42.8 billion the year prior. "In the first half of 2023, and despite the challenging global macro-economic and operating environment, we have achieved results in line with expectations following the change in guidance," said Chief Executive of Anglo American Platinum Natascha Viljoen.
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COMPANIES - FTSE 250
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Cranswick reported trading in its first quarter has been strong with demand remaining "resilient" in its core categories. Revenue in the 13 weeks to June 24 was up 15% from the year prior. Consequently, the outlook for the year ended March 30, 2024 is expected to be ahead of the board's previous expectations. The food producer added that the strong momentum seen in the first quarter has continued into the second. "We have made a strong start to the year, delivering another quarter of growth during which we have again supported our customers by providing excellent service levels to ensure full availability of our products...Our continued positive progress reflects the substantial ongoing investment in our asset base and the quality and capability of our colleagues across the business," said CEO Adam Couch.
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discoverIE said the positive trading momentum seen in the final quarter of its last financial year has continued into the current financial year, with organic sales growth at a similar level and earnings in line with expectations. Against the year prior, sales are up 4%. The customised electronics maker added that its order book has continued to normalise gradually from the record level at 30 September, as it converts into sales.
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3i Infrastructure announced it intends to sell its 25% stake in Attero, a waste treatment and recycling company based in the Netherlands, to Ardian Infrastructure. Expected net proceeds from the sale are seen at EUR215 million, representing a 31% uplift from 3i Infrastructure's valuation of EUR164 million at 31 March for the firm. Completion is expected in the final quarter of 2023. "Attero has been a most successful investment for the company, experiencing substantial growth during our investment period. Whilst 3i Infrastructure aims to hold its investments over the longer term, we will sell investments where this generates significant additional value for our shareholders," said Chair Richard Laing.
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OTHER COMPANIES
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CentralNic said it delivered another strong performance in the first half of 2023, with revenue for the half expected at USD396 million and adjusted earnings before interest, tax, depreciation and amortisation expected at USD44 million. This represents an increase of 18% and 15%, respectively, against the year prior. The internet services, developing and managing online marketplace said, considering its robust performance, it remains confident that it will continue to trade "at least in line" with current market expectations for the full year, which it did not outline.
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Budget airline Ryanair announced quarterly revenue and profit soared. The Dublin-based firm reported that revenue increased by 40% to EUR3.65 billion in the quarter ended June 30, from EUR2.60 billion a year earlier. Pretax profit in the company's first quarter of its financial year surged to EUR740.7 million from EUR203.0 million. Rynair said this was thanks to a strong Easter, the extra UK Coronation public holiday and May and weak prior year comparisons due to Russia's invasion of Ukraine in February 2022, which damaged last year's traffic and fares. The number of customers increased annually by 11% to 50.4 million from 45.5 million. Load factor improved to 95% from 92%.
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S4 Capital said revenue in the first half of 2023 was below budget, reflecting "challenging" macroeconomic conditions and clients remaining "cautious and very focussed on the short term". As a result, the company's operational earnings before interest, tax, depreciation and amortisation and operational Ebitda margin are below budget, but showing "progress" on the prior year. S4 is now targeting full-year like-for-like net revenue growth in a range of 2% to 4%, as opposed to 6% to 10% previously, and operational Ebitda margin of 14.5% to 15.5%, as opposed to 15% to 16% previously.
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By Heather Rydings, Alliance News senior economics reporter
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