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(Alliance News) - Stocks in London are expected to open lower on Thursday, as global equity markets take a hit from US Treasury yields hitting fresh highs, and the ongoing concerns about an escalation in the Middle East conflict.
"The US 10-year yield is now flirting with the 5% psychological mark... a move in the US 10-year yield above the 5% mark will certainly increase the selling pressure in the S&P500 in the middle of the earnings season – regardless of how good or bad the results are," said Swissquote Bank's Ipek Ozkardeskaya.
In early company news, Mondi said that challenges continue, citing soft demand in the third quarter. Hargreaves Lansdown reported a double-digit revenue rise in its first quarter, thanks to an improved net interest margin. Hipgnosis Songs Fund launched a strategic review, after withdrawing its interim dividend earlier this week.
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 38.0 points, 0.5%, at 7,550.00
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Hang Seng: down 2.0% at 17,372.24
Nikkei 225: closed down 1.9% at 31,430.62
S&P/ASX 200: closed down 1.4% at 6,981.60
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DJIA: closed down 332.57 points, or 1.0%, at 33,665.08
S&P 500: closed down 1.3% at 4,314.60
Nasdaq Composite: closed down 1.6% at 13,314.30
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EUR: flat at USD1.0533 (USD1.0533)
GBP: down at USD1.2123 (USD1.2151)
USD: down at JPY149.81 (JPY149.86)
GOLD: up at USD1,947.63 per ounce (USD1,941.78)
OIL (Brent): up at USD91.25 a barrel (USD91.10)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
10:00 CEST EU balance of payments
08:30 EDT US Philadelphia Fed business outlook survey
08:30 EDT US unemployment insurance weekly claims report
10:00 EDT US leading indicators
10:00 EDT US existing home sales
12:20 EDT US Fed Chicago President Austan Goolsbee speaks
16:00 EDT US Fed Atlanta President Raphael Bostic delivers the annual Schwartz Lecture
16:30 EDT US foreign central bank holdings
16:30 EDT US federal discount window borrowings
17:30 EDT US Fed Philadelphia President Patrick Harker speaks
19:00 EDT US Fed Dallas President Lorie Logan speaks
US Federal Reserve Chair Jerome Powell speaks at New York Economic Club
US Federal Reserve Vice Chair Michael Barr speaks
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UK Prime Minister Rishi Sunak will travel to Israel on Thursday before heading to other countries in the region in an effort to deescalate the Israel-Gaza conflict, his office has said. Sunak will stress the international community must "not let Hamas' barbaric terrorism and disregard for human life become a catalyst for further escalation of conflict in the region", the statement said. Expected in Israel early on Thursday morning, Sunak is due to meet his counterpart Benjamin Netanyahu and Israeli President Isaac Herzog. Alongside the British prime minister's trip, his Foreign Secretary James Cleverly is due to visit Egypt, Turkey and Qatar "in the coming days", according to Downing Street.
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BROKER RATING CHANGES
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Barclays cuts Tate & Lyle to 'equal weight' (overweight) - price target 760 (950) pence
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Barclays cuts Kerry Group to 'equal weight' (overweight) - price target 85 (110) EUR
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Barclays cuts easyJet to 'equal weight' (overweight) - price target 415 (550) pence
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COMPANIES - FTSE 100
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Packaging company Mondi updated on its third quarter, which saw continued challenging market conditions. It said demand remained soft, but the lower average selling prices were "largely" mitigated by lower input costs and tight fixed cost control. A "much-reduced" forestry fair value gain of EUR14 million led to lower underlying earnings before interest, tax, depreciation and amortisation of EUR261 million, when compared to the second quarter, which saw a fair value gain of EUR72 million and underlying Ebitda of EUR329 million. "Demand has remained subdued in the third quarter with stable pricing in containerboard but continued price declines in kraft paper. We expect this trend to continue through the final quarter of the year along with stabilising input costs and a greater impact from maintenance and project-related shuts," said CEO Andrew King.
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Hargreaves Lansdown said it saw net new business of GBP600 million in its first quarter ended September 30, slowing annually from GBP700 million, reflecting "moderated flows" seen across the market. Net new clients grew by 8,000 over the quarter, bringing its total to 1.8 million active clients, at a 91.7% retention rate. Revenue grew 13% year-on-year to GBP183.8 million from GBP162.9 million, as growth in net interest margin offset the revenue impact of lower share dealing volumes.
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COMPANIES - FTSE 250
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Hipgnosis Songs Fund said it was launching a strategic review to consider future options for the company. This follows Monday's call from one of its shareholders, urging investors to vote against its continuation and planned disposal. Earlier that day, Hipgnosis pulled a previously declared interim dividend, due to lower expected retroactive songwriter royalties. On Thursday, the musical intellectual property rights investor said it continued to recommend shareholders vote in favour of the continuation and disposal, but would launch the review, "believing it is in shareholders' interest" to assess its options. It does not envisage the review resulting in any offer for the company. It has begun the process to identify a new chair for the company, and appointed an executive search firm. Hipgnosis said its board will be undertaking a further round of engagements with shareholders. "
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OTHER COMPANIES
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Nestle backed its yearly outlook but reported sales in its financial year to date were short of expectations. Nestle, behind brands such as Kit Kat and Nespresso, said that while prices rose, volumes were hurt amid inflation pressure. Total sales for the nine months fell 0.4% to CHF68.83 billion, around USD76.56 billion, from CHF69.13 billion a year prior. It fell short of company-compiled consensus of CHF69.54 billion. Organic sales rose 7.8%, Nestle said, though that was off the consensus forecast of an 8.1% climb. Pricing was 8.4% higher, missing expectations of an 8.6% rise. Real internal growth was negative at minus 0.6%, as consensus predicted. The real internal growth measure "represents the impact on sales of volume increases or decreases, weighted by the relative value per unit sold", according to Nestle. Looking ahead, it backed its organic sales growth guidance range at 7% to 8%. Underlying earnings per share in constant currency are still expected to increase between 6% and 10%.
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Property portal OnTheMarket said it has agreed on the terms of a takeover offer from a UK subsidiary of US commercial property group CoStar. The offer is for 110 pence for each OTM share, valuing the firm at around GBP99 million. The price is a premium of 56% to OTM's closing price of 70.50p on Wednesday. The deal already has the support of 29.5% of OTM's share capital, including its six largest shareholders. For CoStar, the deal is an "attractive strategic entry point" to enter the UK residential property market. OTM also reported interim results for the six month period to July 31, with revenue little changed year-on-year at GBP16.9 million from GBP16.8 million, as the firm swung to a pretax loss of GBP79,000 from profit of GBP92,000. "The macro-economic backdrop remains challenging, particularly for the property market, with lower transaction volumes, stubborn inflation, high cost of living, higher interest rates and a reduction in average house prices," OTM warned.
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By Elizabeth Winter, Alliance News senior markets reporter
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