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(Alliance News) - Stocks in London were called to open slightly higher on Thursday, as investors were unfazed by a fairly uneventful set of policy meeting minutes from the US central bank.
"They confirmed that the Federal Reserve officials are indeed not lying when they say that they will continue hiking the interest rates to tame inflation toward the 2% mark," said Swissquote Bank's Ipek Ozkardeskaya.
Although the 25 basis point rate hike was agreed upon, the minutes showed a "few" members of the Federal Open Market Committee said they wanted a half-point, or 50-basis-point, hike that would show even greater resolve to get inflation down.
Since the February meeting, regional presidents James Bullard of St Louis and Loretta Mester of Cleveland have said they were among the group that wanted a more aggressive move at the January 31 to February 1 rate-setting meeting.
"Of course, the latest minutes came as no surprise, and investors had already cut their dovish positioning the day before the release. This is certainly why the market reaction to the minutes wasn't bloody," Ozkardeskaya said.
Wall Street closed narrowly mixed on Wednesday.
In early UK corporate news on Thursday, WPP reported a double-digit rise in profit and revenue in 2022, while Hikma Pharmaceuticals said profit fell due to an impairment in its Generics business. Redx Pharma agreed to an all-share merger with Nasdaq-listed Jounce Therapeutics.
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 11.2 points, 0.1%, at 7,941.83
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Hang Seng: down 0.3% at 20,367.64
S&P/ASX 200: closed down 0.4% at 7,285.40
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DJIA: closed down 84.50 points, 0.3%, at 33,045.09
S&P 500: closed down 0.2% at 3,991.05
Nasdaq Composite: closed up 0.1% at 11,507.07
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EUR: soft at USD1.0624 (USD1.0629)
GBP: unchanged at USD1.2068 (USD1.2066)
USD: up at JPY134.78 (JPY134.67)
GOLD: down at USD1,832.38 per ounce (USD1,835.00)
OIL (Brent): down at USD80.76 a barrel (USD81.16)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
Japan Emperor's Birthday holiday. Financial markets closed.
11:00 CET EU consumer price index
11:00 GMT Ireland labour force survey
09:30 GMT UK BOE MPC Member Catherine Mann speech
08:30 EST US Chicago Fed national activity index
08:30 EST US gross domestic product
08:30 EST US unemployment insurance weekly claims report
16:30 EST US federal discount window borrowings
16:30 EST US Foreign Central Bank holdings
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UK opposition leader Keir Starmer is to launch a series of five national "missions" setting out his objectives for a Labour government if the party gains power at the next general election. In a keynote speech in Manchester, the Labour party leader will say UK needs a "serious plan" if it is finally to fix some of the deep-seated problems it is facing. The five missions are expected to be based around the economy, climate, crime, skills — with a particular focus on education and childcare — and the NHS. His main economic goal will contain a pledge to make the UK the fastest-growing economy in the G7. He is expected to contrast his programme – with measures ranging from tackling the crisis in the NHS to the stalled economy – with the "sticking plaster politics" of UK Prime Minister Rishi Sunak's five priorities set out in his new year address.
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BROKER RATING CHANGES
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Berenberg cuts BP to 'hold' (buy) - price target 590 (560) pence
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Jefferies cuts Doric Nimrod air two to 'hold' (buy)
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COMPANIES - FTSE 100
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BAE Systems reported record orders alongside revenue growth in 2022, but a slight decline in profit. The defence contractor said annual revenue rose 8.9% to GBP21.26 billion from GBP19.52 billion. Pretax profit fell to GBP1.99 billion from GBP2.11 billion. "We've delivered sales, underlying EPS and free cash flow all above guidance, which is a testament to our people and their continued, long-term focus on operational excellence," said Brad Greve, finance director. The firm noted a "record" order intake of GBP37.1 billion, bringing its backlog to GBP58.9 billion. For 2022, dividends increased 7.6% from the year before to 27.0 pence per share. In 2023, BAE expects sales to increase by 3% to 5%, with underlying earnings before interest and tax to grow 4% to 6%, and underlying earnings per share to rise 5% to 7%.
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WPP said it saw a strong performance across all its major agencies in 2022. The communications firm said revenue in 2022 rose 13% to GBP14.43 billion from GBP12.80 billion in 2021. Revenue less pass-through costs rose 14% to GBP11.80 billion. Pretax profit jumped 22% to GBP1.16 billion from GBP951 million. WPP raised its dividend to 39.4p from 31.2p. "We enter 2023 in a strong financial position with good momentum from new business and the many opportunities ahead of us," said CEO Mark Read. WPP expects like-for-like revenue less pass-through costs growth of 3% to 5% in 2023.
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Jet engine maker Rolls-Royce said annual revenue increased to GBP13.52 billion from GBP11.22 billion a year before, as pretax loss widened to GBP1.50 billion from GBP294 million, due to GBP2.42 billion in net financing costs. Operating profit improved to GBP837 million from GBP513 million, however. CEO Tufan Erginbilgic said Rolls-Royce will begin a strategic review as part of its restructuring programme, and will share the findings and its medium term goals in the second half of 2023. Looking to 2023, the company noted a "continued recovery" in its end markets, and is confidence of higher profit and cash flow.
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COMPANIES - FTSE 250
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Hikma Pharmaceuticals reported a dip in annual revenue, as profit tumbled. Revenue edged down 1% to USD2.52 billion from USD2.55 billion, but pretax profit dropped to USD233 million from USD544 million. This was due to an impairment in its Generics business. Hikma noted a strong performance from Injectables and Branded businesses, which helped to partially offset the Generics decline. "Looking ahead, we are confident that we will deliver good growth across all three of our businesses in 2023," said Chair & CEO Said Darwazah. The annual dividend was lifted by 4% to 56 cents.
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OTHER COMPANIES
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Clinical-stage biotechnology company RedX Pharma has reached an agreement for an all-share merger with Massachusetts, US-based Jounce Therapeutics. "The business combination will create a transatlantic organisation specialised in developing both small molecule targeted therapeutics and antibody drug discovery for the treatment of cancer and fibrotic diseases, that will leverage the proven capabilities of both companies," the release stated. RedX shareholders would hold 63% of the enlarged group after the merger, with Jounce shareholders to hold 37%. It will have a combined market value of USD425 million and listed on Nasdaq. The new company will be named Redx Inc and be led by Redx CEO Lisa Anson.
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Pan-European stock market operator Euronext on Wednesday confirmed it is interested in purchasing Allfunds, an Anglo-Spanish firm that provides services to fund managers. Following media speculation Euronext said it had submitted an indicative offer for the Britain-based firm, which said the proposed cash-share transaction worth EUR5.5 billion. "This indicative offer is currently under consideration by the board of Allfunds, and Euronext reserves the right to amend its terms," the stock markets operator said in a statement. It said the indicative offer is conditional, amongst other things, on reaching agreement with existing largest shareholders in Allfunds, and there was no certainty a binding offer would be made.
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By Elizabeth Winter, Alliance News senior markets reporter
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