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(Alliance News) - Stocks in London are set for a good start to the week ahead of some key economic indicators, starting with a UK gross domestic product reading for July on Monday morning.
However, while the UK economy rebounded from June's slump, July's recovery was underwhelming.
"Looking ahead, the extra public holiday for the Queen's funeral on September 19 has the potential to be more damaging for the economy than the extra day off for the Jubilee in June, as the hospitality and tourism sector likely won't benefit, but many businesses still will shut...For now, then, we're pencilling in a 0.2% hit to the level of GDP in September from the funeral. That suggests that a technical recession - widely defined as two quarters of declining GDP - is hanging in the balance," said Pantheon Macroeconomics.
The pound clung on to Monday's gains despite the data.
The week picks up pace with US consumer inflation figures at 1330 BST on Tuesday and UK inflation numbers at 0700 BST on Wednesday.
Due to take place this Thursday was the Bank of England's latest interest rate decision, but this has been postponed by one week following the death of Queen Elizabeth II.
The BoE is widely expected to hike interest rates by another 50 basis points at September's meeting, after last month carrying out a half-point hike - the biggest hike since 1995 - to take UK Bank Rate to 1.75%.
The BoE said it will make a further announcement regarding existing banknotes following the period of national mourning.
It also was confirmed that the day of the Queen's funeral, to take place next Monday, will be a bank holiday in the UK. The London Stock Exchange previously had said it recognises all UK bank holidays, so likely will be shut that day.
In early UK company news, Serco said Chief Executive Rupert Soames plans to step down from the role, as does the chair of DFS Furniture, while Grainger reported accelerating momentum.
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 23.53 points, or 0.3%, at 7,374.60
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Nikkei 225: closed up 1.2% at 28,542.11
S&P/ASX 200: closed up 1.0% at 6,964.50
Financial markets closed in China for Mid-Autumn Festival.
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DJIA: closed up 377.19 points, 1.2%, at 32,151.71
S&P 500: closed up 61.23 points, 1.5%, at 4,067.40
Nasdaq Composite: closed up 250.18 points, 2.1%, at 12,112.31
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EUR: up at USD1.0090 (USD1.0003)
GBP: up at USD1.1602 (USD1.1580)
USD: up at JPY143.39 (JPY142.53)
Gold: down at USD1,713.83 per ounce (USD1,715.81)
Oil (Brent): up at USD91.93 a barrel (USD91.75)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
Germany balance of payments
1000 CEST Germany IFO economic forecast
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UK gross domestic product rebounded by less than expected in July, official data showed. The UK economy expanded 0.2% month-on-month in July, the Office for National Statistics said. This marked a recovery from June's 0.6% slide, but undershot market forecasts for 0.5% growth. Services grew by 0.4% in July after a fall of 0.5% the month before. This was the main driver behind the rise in GDP. Production fell 0.3%, trimming but extending June's 0.9% fall, and construction declined 0.8% after a fall of 1.4% in June. Annually, GDP rose 2.3% in July, accelerating from June's 1.9% rise. In the three months to July, the UK economy stagnated entirely as a 0.2% decline in services offset growth of 0.6% in production and 1.4% in construction. Separately, the ONS said the UK trade deficit slimmed to GBP19.36 billion in July from GBP22.85 billion in June.
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King Charles III paid tribute to the reign of the late Queen, "unequalled in its duration, its dedication and its devotion", as he was formally declared the nation's new monarch. During a poignant and sombre meeting of the Accession Council, the King spoke movingly about his mother and the grief his family is experiencing, but said the "sympathy expressed by so many to my sister and brothers" had been the "greatest consolation". A number of procedural matters were completed including the King approving the day of the late Queen's funeral, to take place on Monday September 19, to be a bank holiday. The Australian prime minister has faced backlash from the business and health care sector following the announcement of a one-off bank holiday on September 22 to mark a national day of mourning for the late Queen.
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Bank of Japan Governor Haruhiko Kuroda said the yen's recent struggles are undesirable, Reuters reported on Friday. Kuroda met with Prime Minister Fumio Kishida to discuss the currency, as it hurtles towards JPY150. The yen is currently priced at levels not seen since 1998, despite its status as a safe-haven currency in the midst of the war in Ukraine. "Sharp currency moves are undesirable as they destabilise corporate business plans and heighten uncertainty," Kuroda told reporters after the meeting. "When the yen is moving 2 to 3 yen per day, that's a rapid move," Kuroda said, when asked about the Japanese currency's recent fluctuations.
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Russian troops were withdrawing from key areas of Ukraine's Kharkiv region, including the strategically important city of Izyum, the Defence Ministry in Moscow said on Saturday, as Kiev's counteroffensive to recapture territory gained momentum. Russian troops were also to withdraw from the city of Balakliya, which the Ukrainians had reported as having liberated last week. The Russian Defence Ministry said the regrouping is intended to strengthen units in the neighbouring Donetsk region. But according to many military experts the pressure of the massive Ukrainian advance in Kharkiv has pushed the Russians to pull back. More than 10,000 Russian soldiers were said to be threatened with encirclement by Ukrainian troops. President Volodymyr Zelensky on Saturday evening said that, since the beginning of the month, the Ukrainian army recaptured around 2,000 square kilometres of territory in areas previously occupied by Russia as part of Kiev's counter-offensive.
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BROKER RATING CHANGES
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Berenberg cuts Persimmon to 'hold' (buy) - price target 1,700 (3,440) pence
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Berenberg cuts Barratt Developments to 'hold' (buy) - price target 459 (790) pence
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Berenberg raises Berkeley Group to 'buy' (hold) - price target 4,500 (4,120) pence
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COMPANIES - FTSE 100
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Miner Antofagasta said severe sea swells in August overturned a construction platform working on the marine works of the Los Pelambres desalination plant project. These have continued, impeding further recovery work. As a precautionary measure, the Chilean environmental authority has instructed that marine works should be placed on hold "until the clean-up of the remaining sunk equipment carrying fuel or lubricants is progressed such that any risk of environmental impact is removed". Antofagasta added: "The recovery of the lost equipment and materials is underway and is expected to be completed once weather conditions improve. To date, there has been no material impact to the expected completion date of the overall desalination plant project."
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COMPANIES - FTSE 250
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Serco said Chief Executive Rupert Soames intends to retire from the firm in September next year, at which point he will have served the outsourcer for over nine years. He will step down as CEO at the end of 2022 and will be succeeded by Mark Irwin, who is currently the CEO of Serco's UK & Europe division. "It has been the privilege of my working life to lead Serco for the last eight years, but it is now time for me to outsource myself," said Soames.
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Landlord Grainger reported like-for-like rental growth of 4.5% in the 11 months to the end of August. Its financial year runs to September 30. "Momentum in the business is continuing to accelerate and our mid-market strategy and in-house scalable operating platform has delivered a strong performance. Occupancy remains at record levels at over 98%. At the same time, like-for-like rental growth across our national portfolio is continuing to build over the second half of our financial year," said Chief Executive Helen Gordon.
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OTHER COMPANIES
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DFS Furniture said Chair Ian Durant will retire at the conclusion of its November annual general meeting. He will be succeeded by Steve Johnson, who has been part of the sofa retailer's board since December 2018. "He has considerable retail experience having previously held several senior roles with major UK retailers, starting his career with Asda and most recently Matalan," DFS noted.
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By Lucy Heming;Â lucyheming@alliancenews.com
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