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(Alliance News) - London's FTSE 100 is called to open higher on Thursday, with all eyes on the afternoon's US inflation reading, the next risk event for global markets.
According to FXStreet-cited consensus, headline inflation in the US is expected to pick-up to a 3.3% annual rise in July, from 3.0% in June.
However, if the headline rate was to undershoot the consensus, it would take some sting off US Federal Reserve interest rate expectations, and potentially put pressure on the dollar.
"Any bad surprise on the inflation front could revive the Federal Reserve hawks, but we are far from pricing another hike in September just yet; activity on Fed funds futures assesses more than 85% chance for pause in September FOMC meeting," Swissquote analyst Ipek Ozkardeskaya commented.
Ahead of the reading, there were a slew of UK corporate updates. Among them was Entain, which reported a swing to a half-year loss as it booked a provision of nearly GBP600 million. Persimmon's earnings fell as the UK housing market comes under pressure, while food delivery firm Deliveroo announced a capital return of GBP250 million.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.6% at 7,634.70
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Hang Seng: down 0.1% at 19,234.82
Nikkei 225: up 0.8% at 32,473.65
S&P/ASX 200: up 0.3% at 7,357.40
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DJIA: closed down 191.13 points, or 0.5%, at 35,123.36
S&P 500: closed down 0.7% at 4,467.71
Nasdaq Composite: closed down 1.2% at 13,722.02
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EUR: up at USD1.0993 (USD1.0977)
GBP: up at USD1.2727 (USD1.2717)
USD: up at JPY143.99 (JPY143.60)
GOLD: higher at USD1,917.88 per ounce (USD1,916.66)
(Brent): higher at USD87.49 a barrel (USD86.92)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 IST Ireland CPI
08:30 EDT US CPI
08:30 EDT US unemployment insurance weekly claims report
15:00 EDT US FRB Atlanta President Raphael Bostic and FRB Philadelphia President Patrick Harker speak
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The US announced steps to restrict certain US investments in China, targeting high-tech sectors like semiconductors and artificial intelligence – a move that could further strain bilateral ties. The long-anticipated measures come as US President Joe Biden issued an executive order to tighten outbound financial flows – a key step as Washington seeks to safeguard national security. "The outbound investment program will fill a critical gap in the US' national security toolkit," a senior government official said on condition of anonymity. "What we're talking about is a narrow and thoughtful approach as we seek to prevent (China) from obtaining and using the most advanced technologies to promote military modernization and undermining US national security."
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Rents are likely to continue rising sharply in the UK despite the cost-of-living crisis, surveyors are warning. Property professionals' expectations that rents will rise in the next few months are at the strongest levels seen so far this century, the findings from the Royal Institution of Chartered Surveyors indicate. A net balance of 63% of professionals expect rental prices to increase over the three months ahead, marking a fresh record high in records going back to the second quarter of 1999, Rics said. It said that in the lettings market, tenant demand rose firmly over the three months to July. Looking at the house sales market, a net balance of 45% of property professionals reported new buyer inquiries falling rather than rising. New instructions to sell homes also fell in July, indicating a deterioration in the flow of supply.
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BROKER RATING CHANGES
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Berenberg raises Hill & Smith price target to 2,000 (1,625) pence - 'buy'
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Jefferies raises Paypoint price target to 675 (550) pence - buy
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COMPANIES - FTSE 100
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Ladbrokes Coral owner Entain backed its full-year expectations and explained it has a "sufficient degree of confidence" to take a GBP585 million provision for a possible settlement of an ongoing UK probe on its legacy business in Turkey. The gambling firm said revenue in the six months ended June 30 climbed 11% on-year to GBP2.38 billion from GBP2.09 billion. Net gaming revenue, which excludes value-added tax and goods and services tax, rose 14% to GBP2.40 billion from GBP2.12 billion. Entains swung to a pretax loss of GBP502.5 million, from profit of GBP28.1 million, reflecting the HMRC provision. Entain lifted its dividend by 4.7% to 8.9 pence per share from 8.5p. "BetMGM continues to show momentum and backed by our technology and capabilities we are excited by the improvements we are delivering for customers in the US," Chief Executive Jette Nygaard-Andersen said. Excluding TAB NZ profit share payments, it expects to report full-year earnings before interest, tax, depreciation, and amortisation between GBP1.00 billion and GBP1.05 billion. Entain back in May said it was in talks with the UK Crown Prosecution Service regarding an ongoing investigation by HM Revenue & Customs into a potential breach of the bribery act at its former Turkey-facing business, which was sold in 2017. "The DPA negotiations have now progressed to the point where the company believes that it is likely to be able to agree a resolution of the HMRC investigation insofar as it relates to the company and the group," Entain explained. The full terms of the agreement are yet to be confirmed and are subject to judicial approval. However, it has booked the GBP585 million provision for a potential settlement, which would be paid over a four-year period. Entain added: "Section 7 of the Bribery Act 2010 relates to the failure of a relevant commercial organisation to have adequate procedures in place designed to prevent persons associated with it from undertaking bribery for the benefit of the commercial organisation."
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Persimmon said it is "on track to deliver profit expectations" for 2023, though its first-half earnings declined amid an under-pressure UK housing market. persimmon's revenue in the first-half of 2023 fell 30% to GBP1.19 billion from GBP1.69 billion a year earlier. Pretax profit slumped roughly two-thirds to GBP151.0 million from GBP439.7 million. It declared an interim dividend of 20 pence per share, having not paid a first-half dividend in 2022. For the full-year, it expects to maintain its dividend at 60p. Chief Executive Dean Finch said: "Against a backdrop of higher mortgage rates, the removal of Help to Buy and significant market uncertainty, Persimmon has delivered a robust sales rate excluding bulk sales whilst growing the private average selling price in our forward order book and also securing cost savings. We are on track to deliver profit expectations for the year and are building a platform for future growth." Looking ahead, Persimmon expects full-year completions of at least 9,000, the top end of its previously guided range of 8,000 to 9,000. It expects operating profit "in line with expectations given stubborn build cost inflation in the period".
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COMPANIES - FTSE 250
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Watches of Switzerland said its first-quarter revenue declined slightly, though it said demand for luxury watches "remains robust and continues to exceed supply". Revenue in the 13 weeks to July 30 declined 2.3% to GBP382 million from GBP391 million a year earlier, an outcome in line with guidance. US revenue alone grew 7% to GBP163 million. Looking ahead, it still expects annual revenue between GBP1.65 billion and GBP1.70 billion, growth of 8% to 11% at constant currency. "FY24 guidance remains unchanged, with a return to more normalised growth in the balance of the financial year where we will maintain performance against softer comparatives. Our guidance does not reflect any expectation of an improvement in consumer confidence in the remainder of the financial year," it said.
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OSB Group reported profit tumbled in the first-half of 2023, after taking a hit from customers acting more quickly than expected to refinance their mortgages at favourable rates. OSB, which stands for OneSavings Bank, said pretax profit in first-half of 2023 slumped 73% to GBP76.7 million from GBP285.2 million. Net interest income, declined to GBP237.5 million from GBP343.4 million. It reported an adverse underlying effective interest rate adjustment of GBP180.7 million, hurting its bottom-line. OSB in July said that as its mortgage customers reach the end of their initial fixed term, they chose to refinance earlier than expected and therefore spent less time on the higher reversion rate. This rate is linked to the Bank of England's bank base rate and has been rising over the past year as the central bank hikes UK interest rates. OSB lifted its interim dividend by 17% to 10.2p from 8.7p. Chief Executive Andy Golding said: "I am disappointed by the results which reflect the adverse EIR adjustment announced in early July, against a backdrop of otherwise strong operational and financial performance in the first half. We continue to do the right thing by our customers by offering a full range of mortgage products, despite the volatile rate environment, resulting in strong demand and higher retention, driving net loan book growth of 4% in the period.
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OTHER COMPANIES
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Deliveroo reported a "strong financial performance" in the face of tough market conditions during the first-half of 2023. It also announced a GBP250 million return of surplus cash. During the half-year, revenue improved 4.9% on-year to GBP1.02 billion from GBP972.9 million. Its pretax loss narrowed to GBP57.6 million from GBP127.1 million. It reported an adjusted Ebitda of GBP39.4 million, swinging from a loss of GBP51.6 million. "I am very pleased with our progress so far this year. We have delivered a strong financial performance despite challenging macroeconomic conditions. This has been achieved alongside continued improvements to our proposition for consumers, riders and merchants. In particular, for consumers we have continued to innovate, for example now offering a more personalised in-app experience and enabling consumers to top up their restaurant orders with grocery items," CEO Will Shu said. "Over the last 18 months, Deliveroo has reached adjusted EBITDA profitability ahead of plan, and we are progressing towards our goal of generating consistent positive free cash flow." Looking ahead, it lifted its full-year adjusted Ebitda guidance range to GBP60 million to GBP80 million, from GBP20 million to GBP50 million previously. CEO Shu added: "Against this backdrop of strategic progress and growth opportunity, the board has considered our strong capital position and is proposing an additional GBP250 million capital return to shareholders."
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By Eric Cunha, Alliance News news editor
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