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(Alliance News) - Stock prices in London are set to open slightly higher on Monday, with key economic data from the EU due and the week also holding interest rate decisions from the US Federal Reserve on Wednesday and the Bank of England on Thursday.
"After last week’s positive finish European markets look set to start the week slightly higher, despite another set of weak Chinese services and manufacturing PMIs, which has prompted a mixed Asia session," said CMC's Michael Hewson.
In early corporate news, Bodycote named Rolls-Royce's Ben Fidler as its new chief financial officer, and TP Group has agreed to a GBP17.5 million takeover offer from Science Group.
An interest rate decision by the Bank of England is set for Thursday.
"It still seems more likely than not that we'll see 50 basis points from the Bank of England this week, given rising concerns about slowing growth, with any rate increases after that likely to be much slower. The Bank of England will also have to deliver its latest economic forecasts for inflation and GDP. Let's hope they are more accurate than they have been so far this year," said Hewson.
In the economic calendar on Monday, there are EU gross domestic product and consumer price index reports at 1000 BST.
Consumer prices in the eurozone are expected to have edged up 0.6% monthly in October, and risen by 9.8% annually, according to FXStreet-cited market expectations. This compares with a monthly increase of 1.2% and an annual rise of 9.9% in September.
GDP is expected to have grown by 2.1% on an annual basis in the third quarter and 0.2% from the second quarter, compared to an annual rise of 4.1% in the second quarter and an increase of 0.8% from the first quarter.
Before the Bank of England, on Wednesday, there will be an interest rate decision from the US Federal Reserve.
"There are unlikely to be too many surprises this week when the Federal Reserve is expected to raise the Fed Funds rate by another 75bps, following on from three similar moves in June, July and September. In September Fed chair Jay Powell indicated that the [Federal Open Market Committee] were 'strongly committed' to driving inflation lower while signalling that more rate rises are on the way," CMC's Hewson said.
Swissquote Bank analyst Ipek Ozkardeskaya said: "What's more important than the rate hike itself is what the Fed will be doing next. While some Fed members voiced the possibility of slowing the pace of rate increases over the past weeks, there is a good chance that Jerome Powell slashes the dovish hopes this week, as he has done earlier this year. If that's the case, we could see positive market vibes evaporate."
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called up 5.1 points, 0.1% , at 7,052.77
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Hang Seng: down 1.1% at 14,690.46
Nikkei 225: closed up 1.8% at 27,587.46
S&P/ASX 200: closed up 1.2% at 6,863.50
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DJIA: closed up 828.52 points, or 2.6%, at 32,861.80
S&P 500: closed up 93.76 points, or 2.5%, at 3,901.06
Nasdaq Composite: closed up 309.78 points, or 2.9%, at 11,102.45
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EUR: up at USD0.9952 (USD0.9943)
GBP: up at USD1.1606 (USD1.1595)
USD: up at JPY147.83 (JPY147.54)
Gold: up at USD1,642.36 per ounce (USD1,640.91)
Oil (Brent): up at USD94.76 a barrel (USD93.34)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 CET EU GDP
11:00 CET EU CPI
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China's factory activity shrank in October, official data showed, after industries were hit by strict Covid lockdowns. The purchasing managers' index came in at 49.2 points, down from September's 50.1 and below the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics. The manufacturing PMI has been in contraction territory for six out of the past eight months, as sweeping Covid restrictions paralysed major industrial cities such as Shanghai, Shenzhen and Chengdu and a summer of searing heat hit production.
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Demand for new homes from first-time buyers in the UK has dropped by a third since the former chancellor announced his mini-budget, according to measurements from property company Zoopla. As mortgage rates soared to highs of 6%, it put the biggest squeeze on new buyers since the late 1980s. The company warned that "mortgage rates of 4% to 5% are likely to be the new norm" even after rates have dropped back in recent days. Mortgage rates soared after the mini-budget, with many lenders pulling products from the market as they needed time to reprice them. The company said that house prices had grown 8.1% in the last year, amid high demand and low supply in recent months. The number of homes for sale is 13% lower than the average over the last five years.
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BROKER RATING CHANGES
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Jefferies raises Centrica to 'buy' (hold) - price target 90 pence
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Jefferies raises Drax to 'buy' (hold) - price target 600 (800) pence
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Citigroup cuts Berkeley to 'neutral' (buy) - price target 3,654 (4,665) pence
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COMPANIES - FTSE 100
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Tesla engaged in discussions with Glencore about taking a stake in the Swiss-based miner and commodities trader, the Financial Times reported. The electric car maker was seeking to secure supplies of battery materials, such as cobalt, lithium and nickel, the FT explained. Citing "two people familiar with the matter", the newspaper said talks about Tesla buying a 10% to 20% stake in Glencore began last year and continued until this past March. However, no deal was reached, the two people said, partly over Tesla's concern that Glencore's coal mining operations conflicted with its environmental message and partly over reluctance to take a minority stake.
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COMPANIES - FTSE 250
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Engineering firm IMI said it has acquired CorSolutions, a company focused on micro-fluid flow control, based in Ithaca, New York for USD10 million. CorSolutions will be integrated into IMI's Precision Fluid original equipment manufacturer business unit within IMI Precision Engineering. "CorSolutions brings unique microfluidic capabilities to IMI's leading product portfolio within the attractive analytical instrument market," IMI said.
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Bodycote named Ben Fidler as CFO-designate, to be effective from May 1 next year. Fidler will join the thermal processing services provider from jet engine maker Rolls-Royce, where is currently deputy CFO. He succeeds Dominique Yates, who previously announced her intention to retire. "We are delighted to welcome Ben to the group. His experience as a senior executive at a FTSE 100 company, as well as his in-depth knowledge of our end markets, make him an excellent fit for Bodycote," said Chief Executive Stephen Harris.
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OTHER COMPANIES
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Student accommodation operator Empiric Student Property said it is trading well, with "record high" revenue occupancy of 98% achieved for the academic year 2022-23, which exceeded guidance of 90% to 95% provided back in August. Growth in like-for-like average weekly rent is 5.2%. It expects adjusted earnings per share for the financial year to be "broadly in-line" with consensus at 3.2 pence per share. For the academic year 2023-24, Empiric expects revenue occupancy to remain strong, and targets weekly like-for-like rental growth of at least 5% to offset inflationary impacts. "Given the current market volatility we have largely paused our development and acquisition pipeline," Empiric noted. "The wider economic outlook remains uncertain, however the higher education sector is known for its resilience and we expect UK universities to remain attractive to both domestic and international students."
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TP Group, a consulting, software and engineering company, has agreed to a GBP17.5 million takeover by Science Group. TP shareholders will receive 2.25 pence per share in cash, which is almost triple that of the closing price of 0.78p on Friday. Around 11.7% TP shareholders have given a letter of intent to accept the offer. Science Group itself already holds a 28% stake, meaning almost 40% support in total. TP said the "onerous nature" of legacy contracts in its Maritime division had become apparent late last year and early this year, and then escalated. The situation had put the security of its Maritime subsidiary, and potentially the whole group in jeopardy. However, with new management at the Maritime unit, including a senior manager seconded from Science Group, "a serious financial solvency crisis" was averted. "To remain as an independent company, the capital structure of the group needs to be addressed. It is not certain that any refinancing can be completed on terms which would be acceptable to the board or TP Group shareholders," the firm said.
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By Elizabeth Winter; elizabethwinter@alliancenews.com
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