(Correcting spelling of name of new De La Rue chair.)
(Alliance News) - Stocks in London opened higher on Thursday, as global markets switched to risk-on, following signs of progress on US debt negotiations.
US President Biden said he is "confident" a deal can be reached with Republicans leaders to avert a potentially catastrophic US debt default, which could come as early as June 1.
Biden arrives Thursday in Hiroshima, Japan and will meet leaders from the rest of the G7 club – Britain, Canada, France, Germany, Italy, Japan.
However, visits next week to Papua New Guinea and to a Sydney meeting of the Quad, comprising Australia, India, Japan and the US, were cancelled so that Biden can rush back home Sunday and negotiate with Republican opponents on the debt crisis.
Financial markets in Paris and Frankfurt will remain open for Ascension Day on Thursday, but Zurich will be closed.
In early UK corporate news, luxury retailer Burberry reported double-digit annual growth. Luxury car maker Aston Martin received a sizeable investment from a Chinese automotive group. Postal firm International Distributions Services swung to an annual loss after a year beset by strikes at Royal Mail.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 36.29 points, 0.5%, at 7,759.52
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Hang Seng: up 0.5% at 19,655.05
Nikkei 225: closed up 1.6% at 30,573.93
S&P/ASX 200: closed up 0.5% at 7,236.80
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DJIA: closed up 408.63 points, 1.2%, at 33,420.77
S&P 500: closed up 1.2% at 4,158.77
Nasdaq Composite: closed up 1.3% at 12,500.57
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EUR: flat at USD1.0828 (USD1.0826)
GBP: down at USD1.2466 (USD1.2474)
USD: flat at JPY137.49 (JPY137.47)
Gold: down at USD1,978.07 per ounce (USD1,982.40)
Oil (Brent): up at USD76.64 a barrel (USD75.96)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
10:15 BST UK BoE Governor Andrew Bailey appears before Treasury Committee in Parliament
10:00 EDT US quarterly retail e-commerce sales
08:30 EDT US unemployment insurance weekly claims report
08:30 EDT US Philadelphia Fed business outlook survey
10:00 EDT US leading indicators
16:30 EDT US federal discount window borrowings
16:30 EDT US foreign central bank holdings
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Japanese businesses are committing to invest nearly GBP18 billion in the UK, Rishi Sunak has announced as he meets the bosses of major firms in Tokyo. The prime minister said the pledges are a "massive vote of confidence" in the British economy after he painted an optimistic outlook for the national finances. But Sunak has ordered talks with the EU about automotive concerns, following warnings of an "existential threat" posed by a looming Brexit trade deal deadline.Sunak set out the investments as he prepares to host a reception of business chiefs in the Japanese capital on Thursday, seeking to foster closer ties ahead of attending the G7 summit in Hiroshima.
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BROKER RATING CHANGES
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Jefferies raises Mitchells & Butlers to 'buy' (hold) - price target 270 (170) pence
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Citigroup cuts Marks & Spencer to 'neutral' (buy) - price target 170 (175) pence
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COMPANIES - FTSE 100
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Burberry reported double-digit annual growth in both revenue and profit. In the 52 weeks to April 1, the trench coat and handbag maker said revenue rose 10% year-on-year to GBP3.09 billion from GBP2.83 billion. Company-compiled consensus had been expecting GBP3.11 billion. Burberry said the performance was supported by progress in core leather goods and outwear categories, with revenue growth accelerating in its final quarter as growth rebounded in mainland China. Pretax profit jumped 24% to GBP634 million from GBP511 million. Adjusted operating profit rose 21% to GBP634 million, which was ahead of consensus of GBP621 million. Burberry maintained its guidance for financial 2024 of high single-digit revenue compound annual growth rate from financial 2020's base, and around 20% adjusted operating profit margin at constant exchange rates. Based on recent spot currency rates, it anticipates a GBP70 million currency headwind on revenue, and a GBP40 million headwind on adjusted operating profit in financial 2024. CEO Jonathan Akeroyd said the firm would focus on realising Burberry's potential as "the modern British luxury brand". It proposed a dividend of 61.0p, up 30% year-on-year from 47.0p.
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Telecommunications provider BT said that, despite an "extraordinary" macro-economic backdrop, it delivered on its guidance, growing pro-forma revenue and adjusted earnings before interest, tax, depreciation, and amortization. In the financial year that ended March 31, BT said revenue edged down 0.8% to GBP20.68 billion from GBP20.85 billion, but adjusted Ebitda rose 4.6% to GBP7.93 billion from GBP7.58 billion. Revenue was up 1% and adjusted Ebitda was up 3% on a Sports Joint Venture pro forma basis, BT said. Pretax profit fell 12% to GBP1.73 billion from GBP1.96 billion. Looking ahead, BT expects revenue and Ebitda growth on pro forma basis in financial 2024. It maintained total annual dividends of 7.7p, including a final dividend of 5.39p.
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COMPANIES - FTSE 250
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Royal Mail parent International Distributions Services swung to a GBP676 million pretax loss in the 52 weeks to March 26, compared to profit of GBP662 million the year before. Revenue fell 5.3% to GBP12.04 billion from GBP12.71 billion. Non Executive Chair Keith Williams said he was pleased to have "moved on from the crossroads", after reaching an agreement with the Communication Workers Union on pay and change last month, though members are yet to vote on the deal. "The trading environment continues to be uncertain for both Royal Mail and GLS. All of our markets are impacted by a challenging global economy, including high levels of inflation and expectations of lower future economic growth," IDS said. It expects to achieve adjusted operating profit at a group level in financial 2024. It decided against paying a final dividend.
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Aston Martin Lagonda Holdings announced a GBP234 million investment from Geely Holding, a Chinese automotive group. It forms part of a new agreement between the two companies that "seeks to support Aston Martin's growth and vision to be the world's most desirable ultra-luxury British performance brand". Geely will acquire around 42 million existing shares from Yew Tree Consortium at 335p each and subscribe for around 28 million new shares from Aston Martin at the same price. Yew Tree will remain the largest shareholder with around a 21% stake, as Geely's rises to around 17%. Saudi Arabia's Public Investment Fund continues to have an 18% stake. Aston Martin will receive around GBP95 million in cash from the subscription. "This transaction enables the creation of a long-term partnership with Geely - a relationship that I believe will bring very significant value for all of our shareholders over time," said Executive Chair Lawrence Stroll.
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OTHER COMPANIES
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Banknote printer and authentication firm De La Rue announced it has appointed Clive Whiley as non-executive chair with immediate effect. Whiley is currently chair of Mothercare, and senior independent non-executive director of Griffin Mining and Sportech. He was previously chair at funeral services provider Dignity. Interim Chair Nick Bray will return to his role as non-executive director. The firm's former chair, Kevin Loosemore, recently resigned following months of pressure from the firm's major shareholder Crystal Amber Fund, who had called for him to step down.
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By Elizabeth Winter, Alliance News senior markets reporter
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