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(Alliance News) - Stocks in London are called higher on Tuesday, as the market watches closely for further clues regarding the UK's economic direction.
The Conservative Party Conference continues in Birmingham, with eyes on keynote speeches by Home Secretary Suella Braverman and Foreign Secretary James Cleverly, which will set out the government's plans on immigration and commitment to support Ukraine.
The pound has continued to rebound, but there are doubts over the sustainability of the recovery.
"The bearish bets against pound are at the historical high levels, and Liz Truss must do more to reverse the negative sentiment in the pound, and against the UK. Because yesterday's U-turn on high earners will save the government GBP2 billion, while the rest of the huge 'mini budget' is still on course, and will continue pressure the UK sovereign bonds and the pound," said Swissquote Bank's Ipek Ozkardeskaya.
Meanwhile, Prime Minister Liz Truss said she has to take a "responsible" approach to the public finances, as she faces a fresh battle with Tory rebels over the level of benefits.
The prime minister has so far refused to confirm whether benefits will be uprated in line with soaring inflation, meaning some of the poorest households could face a real-terms cut in their income.
Critics who forced Truss and Chancellor Kwasi Kwarteng to perform a humiliating U-turn over the plan to abolish the 45 pence tax rate for top earners are now stepping up pressure on the government to confirm that benefits will increase to match rising prices.
Truss said she is "committed to supporting the most vulnerable" but "we have to be fiscally responsible".
In a sign of continuing disquiet among Conservative MPs, Priti Patel is set to accuse Truss and Kwarteng of "spending today with no thought of tomorrow".
"I want to see our party regain its credibility by restoring its commitment to sustainable public spending...which is affordable today, tomorrow and for the foreseeable future," the former home secretary will tell a conference fringe event, according to The Times.
In local corporate news, Legal & General said it is trading well, despite challenges from market volatility, and budget airlines Wizz Air and Ryanair saw significant year-on-year passenger growth in September.
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 49.0 points, 0.7%, at 6,957.76
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Hang Seng: financial markets closed for National Day Golden Week
Nikkei 225: closed up 3.0% at 26,990.14
S&P/ASX 200: closed up 3.8% at 6,699.30
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DJIA: closed up 765.38 points, or 2.7%, at 29,490.89
S&P 500: closed up 92.81 points, or 2.6%, at 3,678.43
Nasdaq Composite: closed up 239.82 points, or 2.3%, at 10,815.44
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EUR: higher at USD0.9857 (USD0.9834)
GBP: higher at USD1.1354 (USD1.1309)
USD: higher at JPY144.85 (JPY144.35)
GOLD: sharply higher at USD1,703.54 per ounce (USD1,690.38)
OIL (Brent): higher at USD89.41 a barrel (USD88.30)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
17:45 BST UK Kwasi Kwarteng at IEA Tory Conference fringe event
08:55 EDT US Johnson Redbook retail sales index
10:00 EDT US labor turnover survey
11:45 EDT US Federal Reserve Governor Philip Jefferson and FRB Dallas President Lorie Logan speak
16:30 EDT US API Weekly statistical bulletin
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Having more women in executive roles at the UK's top 350 companies could boost the economy by GBP58 billion, a study suggests. Businesses are missing out on billions of pounds in profits because of a lack of gender diversity within their leadership teams, according to the stark findings of the annual Women Count 2022 report. Three-quarters of executive committee members at FTSE 350 listed companies are men, and 96% of chief executives are men, the report found, revealing that there has been slow progress towards gender equality at Britain's biggest firms.
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UK homeowners who end up struggling with their mortgage payments due to a job loss may have to build up significant arrears before help arrives, according to a former pensions minister. Steve Webb said the number of people receiving government help with their mortgage costs has collapsed since a reform to the system in 2018. From April 2018, a system of benefits for mortgaged homeowners who lost their job was replaced with a system of repayable loans, secured against the claimant's property. Former Liberal Democrat MP Webb highlighted figures for May 2022, suggesting around 12,845 loans were in payment, compared with around 90,000 receiving help through the benefit system in March 2018, just before the new regime was introduced, and around 200,000 being helped a decade ago.
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The foreign secretary will declare that the UK has the "strategic endurance" to see Ukraine through to victory over Russian invaders, in his Conservative Party conference speech. James Cleverly will say that Ukraine has Britain's unwavering support in its efforts to push back Vladimir Putin's forces, saying that "we are players on the pitch" and not just "commentators". It comes after Britain ramped up sanctions against Moscow, with new measures targeting vulnerable sectors of the economy, in response to the Russian president's "illegal" annexation of swathes of Ukrainian territory. Cleverly will repeat Prime Minister Liz Truss's vow that the UK will never accept Putin's claim to the regions of Donetsk, Luhansk, Kherson, Zaporizhzhia or Crimea.
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BROKER RATING CHANGES
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RBC raises Severn Trent to 'outperform' (sector perform) - price target 2,900 (2,950) pence
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Citigroup raises National Grid to 'neutral' (sell) - price target 921 (998) pence
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RBC raises Pennon Group to 'outperform' (sector perform) - price target 975 (1,050) pence
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Jerenberg starts Hikma Pharmaceutical with 'hold' - price target 1440 pence
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Jefferies raises Hargreaves Lansdown to 'hold' (underperform) - price target 930 (800) pence
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Jefferies raises AJ Bell to 'hold' (underperform) - price target 250 (220) pence
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COMPANIES - FTSE 100
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Legal & General said it has maintained positive momentum from the first half into the second, "despite market volatility", which has had a "limited economic impact" on the firm. The financial services firm said it expects to deliver annual operating profit growth in line with the 8% seen in the first half. It said recent "extraordinary" interest rate hikes have been challenging for its pension fund clients and counterparties of its Investment Management liability-driven investment business. However, recent purchases of long-dated gilts by the Bank of England have helped to alleviate the pressure. Its annuity portfolio continues to perform well, and "has not experienced any difficulty in meeting collateral calls and we have not been forced sellers of gilts or bonds", it said. L&G estimates a solvency coverage ratio between 235% to 240% as at September 30.
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COMPANIES - FTSE 250
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Greggs said total sales were up 15% for the 13 weeks to October 1, as it backed its full year expectations. It continued to expect around 150 net shop openings in 2022, and left its cost inflation outlook unchanged for the year at around 9%. "As expected, year-on-year growth moderated in August given the particularly strong 'staycation' effect seen in 2021, however, momentum returned in September. We closed our shops on September 19 for the funeral of Her Majesty The Queen and this impacted reported LFL sales growth for the third quarter by around one percentage point," the food-to-go seller noted. It acknowledged "considerable" economic uncertainty but expects full-year results to be in line with previous expectations.
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Wizz Air saw significant annual growth in September. The budget airline said passengers in the month were up 52% year-on-year to 4.5 million, as capacity rose 37% to 5.3 million. Rolling 12-month passengers more than doubled to 41.1 million from 15.6 million year-on-year. Rolling capacity over 12 months also doubled to 48.5 million from 23.1 million a year before. Load factor in September improved to 87.1% from 78.7% a year before.
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OTHER COMPANIES
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Ryanair posted an improved performance in September, with guests rising 49% year-on-year to 15.9 million, and load factor improving to 94% from 81% a year prior. Its rolling 12-month guests surged to 153.0 million from 49.5 million a year before, with its rolling 12-month load factor rising to 90% from 77%.
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Poolbeg Pharma said the US Patent & Trademarks Office has indicated that its patent application "that is directed to the use of POLB 001 and its homologues for the treatment of hypercytokinemia" is allowable. It expects the formal patent grant in due course, and has filed a continuing application to protect additional claims around this indication.
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By Elizabeth Winter; elizabethwinter@alliancenews.com
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