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(Alliance News) - Stocks in London were called to open higher on Wednesday after surprisingly resilient economic data for the world's largest economy on Tuesday helped lift market mood.
US consumer confidence surged unexpectedly to an 18-month high in June, fuelled by an uptick in the outlook for family finances, while new home sales in the US reached the highest rate in over a year.
Consumer inflation in Australia slowed by more than expected last month, according to official data from the Australian Bureau of Statistics.
The reduction in price inflation fuelled hopes for a pause in interest rate hikes by the Reserve Bank of Australia at its policy meeting next week.
In early UK corporate news, boohoo flagged "serious concerns" regarding the conduct of the board of Revolution Beauty, in which it holds a 27% stake. Revolution's shares were restored to trading on AIM on Wednesday, as the company responded by saying "boohoo's hostile actions are value-destructive, opportunistic and self-serving".
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 26.24 points, or 0.4%, at 7,487.70
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Hang Seng: down 0.1% at 19,129.23
Nikkei 225: closed up 2.2% at 33,193.99
S&P/ASX 200: closed up 1.1% at 7,196.50
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DJIA: closed up 212.03 points, 0.6%, at 33,926.74
S&P 500: closed up 1.2% at 4,378.41
Nasdaq Composite: closed up 1.7% at 13,555.67
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EUR: lower at USD1.0944 (USD1.0959)
GBP: lower at USD1.2730 (USD1.2748)
USD: lower at JPY143.89 (JPY144.01)
Gold: lower at USD1,912.73 per ounce (USD1,914.73)
(Brent): lower at USD72.69 a barrel (USD73.55)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
BoE's Andrew Bailey, Fed's Jerome Powell and ECB's Christine Lagarde join policy panel at the ECB Forum
08:00 CEST Germany GfK consumer climate survey
11:00 IST Ireland retail sales
07:00 EDT US MBA mortgage applications survey
08:30 EDT US advance economic indicators report
16:30 EDT US Fed releases annual bank stress test results
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German consumer confidence has fallen for the first time since October, a key survey showed on Wednesday, after Europe's largest economy fell into recession and while inflation remained stubbornly high. Pollster GfK said its forward-looking survey of around 2,000 people fell to minus 25.4 points in July from 24.4 points in June. The drop is the first since October when the barometer hit a low of minus 42.8 points, as inflation soared and consumers worried about the cost of heating their homes over the coming winter. Consumer confidence bounced back as energy prices stabilised, but the economic outlook has remained clouded.
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Advertising for online gambling should be banned in Australia within three years, a parliamentary inquiry recommended Wednesday, citing serious harm caused by an inescapable "torrent" that is "grooming children". The inquiry said that partial bans do not work and called for a "phased, comprehensive" ban that "leaves no room for circumvention". Australians spend more on online gambling than citizens of any other country, the report said, adding that almost half of those surveyed last year had placed a bet on sports or racing.
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The UK and EU have signed a deal to work closer together on financial services regulation in the latest sign of a post-Brexit thaw in relations. Brussels' financial services commissioner Mairead McGuinness said it was "fair to say we have turned a page" in the relationship. The memorandum of understanding signed by McGuinness and UK Chancellor Jeremy Hunt will see greater co-operation between officials from the EU and the Treasury. Speaking alongside the chancellor in Brussels after signing the memorandum, McGuinness said the Windsor Framework deal to address concerns over Northern Ireland had helped smooth relations between the UK and EU.
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More than four in 10 UK house sellers are having to shave more than 5% off the original asking price to achieve a sale, according to Zoopla, in signs that rising mortgage rates are dampening the market. The property website said this proportion, seen in June, is the highest it has recorded since 2018. Around one in six, 15% of, sellers are having to shave more than 10% off the initial asking price to get a sale over the line, Zoopla said. It said that with around 70% of sales being made to buyers who are relying on a mortgage, rising rates have delivered a hit to house hunters' purchasing power. Zoopla's report said: "Our view remains that 5% mortgage rates represent a tipping point, beyond which house prices will post annual price falls with lower sales volumes."
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BROKER RATING CHANGES
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RBC starts IAG with 'sector perform' - price target 180 pence
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RBC starts Wizz Air with 'outperform' - price target 3,900 pence
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RBC starts easyJet with 'sector perform' - price target 540 pence
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COMPANIES - FTSE 100
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Spirits maker Diageo late Tuesday confirmed it is ending its relationship with Sean 'Diddy' Combs, after the US rapper launched legal action against the UK-based firm and accused it of racism. The drinks firm, which owns brands such as Guinness and Tanqueray, announced the move in a court filing in the US on Tuesday. Last month Combs's business began legal action claiming that the DeLeon tequila brand co-owned by the two groups, and Ciroc vodka brand, which is owned by Diageo but has collaborated with Combs, were typecast as "black brands".
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JD Sports Fashion on Tuesday said shareholders backed all its annual general meeting proposals, though not all went through without a hitch, as a motion to re-elect a non-executive director received sizeable opposition. A proposal to re-elect Non-Executive Director Mahbobeh Sabetnia was rejected by just under 21% of shareholders. Sabetnia has held executive posts at Amazon.com, McDonald's and HSBC.
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COMPANIES - FTSE 250
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SDCL Energy Efficiency Income Trust reported an annual loss and a lower net asset value as a result of increase discount rates. The energy efficiency sector-focused investor reported a net asset value per share of 101.5 pence at March 31, down from 108.4p at the same time a year prior. The trust said this was largely as a result of increases in discount rates. The company also swung to a pretax loss in the year ended March 31 of GBP19 million from a profit of GBP80 million the year prior. The trust said this reflected a below expectation performance and increased discount rates. "During the year, and in particular since early September 2022, there were significant increases in interest rates globally, including in SEEIT's key geographical areas. This has stemmed from geopolitical uncertainties and a high inflationary environment due, in part, to high energy costs. This has led to an increase in discount rates across the whole investment portfolio," the company explained.
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Diversified Energy announced the sale of some of its non-core, non-operated assets within it the company's Central region for a gross consideration of USD40 million. The assets include around 200 non-operated wells producing 3 million barrels of oil equivalent per day. The US-focused energy company said the consideration represents an approximate 4 times next twelve months cash flow multiple. Chief Executive Rusty Hutson said: "This divestiture of non-operated properties underscores our commitment to optimise the assets we operate while strategically realising value from assets better suited for other operators and owners. Selling these assets with operating costs higher than those we operate positions us to further reduce our Central Region lease operating expenses and improve operating margins."
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OTHER COMPANIES
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boohoo flagged "serious concerns" regarding the conduct of the board of Revolution Beauty. The online fashion retailer holds just under a 27% stake in the beauty products seller. boohoo called the Revolution board "self-serving" and said it was not acting in the best interest of shareholders. It pointed to the attempts of the company's board to adjourn a quorate meeting with the approval of shareholders present, the annual general meeting proceeding with defeated resolutions, and the conduct of independent director Jeremy Schwartz as evidence of this. boohoo said it was supportive of the lifting of the suspension of Revolution's shares but "not at the expense of doing so with a board that has proven to behave inappropriately". boohoo called on the Revolution board to convene a requisitioned general meeting, proposing to remove three directors and appoint another two.
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Revolution Beauty responded: "The board of Revolution Beauty remains focussed on value creation at this critical time for the company, and continues to believe that boohoo's hostile actions are value-destructive, opportunistic and self-serving, as well as not being in the interests of the company's shareholders as a whole." It shares resume trading on AIM on Wednesday.
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AIB confirmed the Irish Department of Finance has sold around a 5% stake in the company, bringing the state's shareholding in the bank down to 47%. "We very much welcome the decision and subsequent transaction undertaken by the minister for Finance, Mr Michael McGrath, which has led to a further divestment of the state's shareholding in AIB Group PLC to about 46.9%. It is another important development in the process of returning the state's investment in the group and a normalisation of the share register. Today also marks a significant milestone for the group as we return to majority private ownership," said Chief Executive Colin Hunt. Late Tuesday, the Irish government announced plans to its holding in AIB below 50% for the time since the bank was bailed out in 2009 in the wake of the financial crisis.
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By Heather Rydings, Alliance News senior economics reporter
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