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(Alliance News) - Stocks in London are set to open lower on Thursday in the wake of Federal Open Market Committee meeting minutes released on Wednesday.
The December meeting minutes indicated that further rate hikes would be "appropriate" for the Federal Reserve to contain "unacceptably high" inflation which remain "well above" the committee's target of 2%.
A slowing of rate hikes should not be seen as a "weakening of resolve" in the fight against inflation, the central bank cautioned.
In the UK, Prime Minister Rishi Sunak vowed that a recession-bound Britain will emerge from its winter of discontent with economic growth, lower inflation and shorter hospital waiting lists.
Sunak issued a five-point list of promises for 2023, vowing to bring down the national debt, and pass new legislation to stop boatloads of migrants crossing the Channel from France.
Elsewhere, China said it would begin to normalise travel between the mainland and Hong Kong from Sunday.
Data also revealed that the nation's service sector remained in a downturn, though the rate of the decline was only modest overall. The latest Caixin business activity index rose to 48.0 points in December, from a six-month low of 46.7 in November.
The in UK corporate space, clothing retailer Next upped its full-year guidance and bakery chain Greggs reported double-digit growth in fourth quarter sales.
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 down 11.99 points, or 0.2%, at 7,573.20
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Hang Seng: up 1.2% at 21,041.25
Nikkei 225: closed up 0.4% at 25,820.80
S&P/ASX 200: closed up 0.1% at 7,063.60
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DJIA: closed up 133.40 points, 0.4%, at 33,269.77
S&P 500: closed up 28.83 points, 0.8%, at 3,852.97
Nasdaq Composite: closed up 71.78 points, 0.7%, at 10,458.76
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EUR: higher at USD1.0608 (USD1.0598)
GBP: lower at USD1.2022 (USD1.2054)
USD: higher at JPY132.33 (JPY131.87)
Gold: lower at USD1,854.10 per ounce (USD1,857.48)
(Brent): higher at USD78.45 a barrel (USD78.07)
(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 CET EU PPI
08:00 CET Germany foreign trade
09:30 GMT UK S&P Global services PMI
00:01 EST US employment outlook survey
08:15 EST US ADP national employment report
08:30 EST US international trade
08:30 EST US unemployment insurance weekly claims report
11:00 EST US services PMI
16:30 EST US federal discount window borrowings
16:30 EST US Foreign Central Bank holdings
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Christmas shoppers provided UK retail and hospitality with a crucial boost despite the cost-of-living crisis and rail strikes, figures show. Shopper footfall in December was up 5.8% on the month before and 9.9% higher than a year before, while the all-important gap between pre-pandemic 2019 also narrowed to 10.9% from 11.4% in November, according to retail consultants Springboard. December footfall on high streets was 12.7% higher than in 2021, while shopping centres saw a 10.3% uplift and retail parks also enjoyed 3.6% more visitors. However, in the penultimate week before Christmas, marred by four days of rail strikes, footfall was 20.1% lower than 2019, more than doubling from 9.6% the week before.
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UK rail passengers face a third consecutive day of travel disruption on Thursday because of a strike by train drivers. Services will be crippled by the walkout by members of Aslef at 15 rail companies in a long-running dispute over pay, with some areas having no trains all day. The action follows a 48-hour strike by members of the Rail, Maritime & Transport union which led to widespread disruption across the country on Tuesday and Wednesday. The latest wave of industrial action comes as reports suggest the prime minister could announce legislation to enforce minimum service levels during strikes as soon as Thursday.
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Consumer confidence in Japan saw a boost in December, data from the Economic & Social Research Institute showed. The consumer confidence index was 30.3 in December, up 1.7 points from 28.6 in November. Overall livelihood, a category under the consumer perception indices, rose to 27.4 in December from 26.5 the previous month.
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BROKER RATING CHANGES
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Jefferies raises HSBC to 'buy' ('hold') - price target 770 (574) pence
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Exane BNP cuts Prudential to 'underperform' ('neutral')
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Jefferies raises GSK price target to 1,575 (1,475) pence - 'hold'
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COMPANIES - FTSE 100
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Clothing retailer Next increased its pretax profit guidance for the year ending January 2023 by GBP20 million to GBP860 million as a result of better than expected full price sales during the year, as well as a stronger-than-anticipated Christmas period. The guidance would represent growth of 4.5% against the year prior, if achieved. It said in the six months to December 30, full price sales were up 2.2% against the previous year. In the three months to December 30, full price sales were up 4.7% against the year prior. In the nine weeks to December 30 alone, they were up 4.8% annually. "Sales in the Christmas period have been better than we anticipated," the company explained. Next, nonetheless, said it remained "cautious" in its outlook for the year ahead, with initial guidance for the year ending January 2024 at GBP795 million for pretax profit. It also expects a full price sales decline of 1.5% in that year against the current year. During financial 2023, Next has tinkered with its guidance on several occasions. It initially forecast pretax profit of GBP860 million, but then lowered this to GBP850 million in March. It raised its outlook back to GBP860 million in August, but cut it to GBP840 million in September.
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Retailer B&M European Value Retail reported strong momentum across its "golden" third quarter despite a challenging macroeconomic environment. In the 13-week period from September 25, revenue grew by 12% year-on-year to GBP1.57 billion. It noted a very good performance across all B&M UK categories, both in grocery and general merchandise, as well as solid momentum in B&M France and Heron Foods. As a result, full-year earnings before interest, tax, depreciation and amortisation are now expected between GBP560 million to GBP580 million, coming above current analyst outlook consensus of GBP557 million.
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COMPANIES - FTSE 250
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Bakery chain Greggs noted strong double-digit growth in fourth quarter sales, despite the impact of adverse weather and strikes at the end of 2022. Like-for-like sales in company-managed shops grew by 18% as a result of a favourable trading pattern leading into the Christmas period and softer trading conditions in the comparable quarter of 2021 due to disruption caused by the Omicron variant of Covid. In 2022, sales totalled GBP1.51 billion, up 23% from GBP1.23 billion the previous year. Greggs said it expects its full-year results to be in line with previous expectations. "While market conditions in 2023 will remain challenging, our value-for-money offer of freshly-prepared food and drink is highly relevant as consumers look to manage their budgets without compromising on quality and taste," the chain said.
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OTHER COMPANIES
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Mattioli Woods reported a "resilient" trading performance in the six months ended November 30, despite a "complex" macroeconomic and geopolitical backdrop. The wealth and asset management firm reported revenue in the half totalled GBP54.9 million, up 10% against the previous year. Gross discretionary asset under management fell 4% to GBP4.9 billion. Mattioli Woods said its outlook for the full-year remains in line with expectations. Chief Executive Ian Mattioli said: "The group delivered creditable revenue and profit before tax growth in the first six months of this financial year, despite the difficult economic and political complexities that persisted throughout the period."
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Glenveagh Properties reported a strong revenue performance in 2022, driven by its Suburban business segment. The housebuilder posted revenue of EUR649 million, up 36% against the previous year. Operating profit improved to around EUR70 million from EUR50.6 million, while its gross margin fell to 17% from 17.4%. Glenveagh said it was also beginning a buyback programme to repurchase up to 10% of the firm's share capital." Looking forward, the firm said it was "very well positioned" to grow longer term revenue and profitability. It currently expects an earnings per share outturn for 2023 in line with its 2022 performance.
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Amazon announced Wednesday it will cut more than 18,000 jobs from its workforce, citing "the uncertain economy" and the fact that the online retail giant had "hired rapidly" during the pandemic. "Between the reductions we made in November and the ones we're sharing today, we plan to eliminate just over 18,000 roles," said Chief Executive Andy Jassy in a statement to his staff. The company had announced 10,000 layoffs in November. Some of the layoffs would be in Europe, Jassy said, adding that the impacted workers would be informed starting on January 18.
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By Heather Rydings, Alliance News senior economics reporter
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