(Alliance News) - Stocks in London are set to build on Wednesday's gains, as risk appetite recovers following the recent banking turmoil.
The day's economic calendar has the final iteration of US gross domestic product data for the final quarter of 2022 at 1330 BST.
CMC's Michael Hewson said the market is expecting a "modest revision upwards to 2.8% [annual growth] from 2.7%, which would be a modest slowdown from the 3.2% seen in Q3".
"While higher-than-expected inflation indicator is bad, resilient growth could see a positive market reaction on thinking that…'we are almost done with Fed rate hikes, and the economy is at a significantly better place compared to where we thought it would be by now'," said Swissquote Bank's Ipek Ozkardeskaya.
"A soft data, on the other hand, could further push the Fed hawks away, and boost equity appetite on softening Fed expectations."
Shortly before, there will be a flash German inflation reading for March at 1300 BST.
Inflation had remained unchanged at 8.7% in February, with the market having expected it to cool to 8.5%. Market consensus, as cited by FXStreet, is expecting a reading of 7.3% this month. On a EU harmonised basis, inflation is expected to cool to 7.5% from 9.3%.
In early UK company news, AstraZeneca signed an exclusive global license for antibody drug conjugate to treat gastric cancers, SSE increased its annual earnings guidance, and Ithaca Energy lowered its annual production guidance.
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 30.5 points, 0.4%, at 7,594.77
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Hang Seng: up 0.2% at 20,236.78
Nikkei 225: closed down 0.4% at 27,782.93
S&P/ASX 200: closed up 1.0% at 7,122.30
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DJIA: closed up 323.35 points, 1.0%, at 32,717.60
S&P 500: closed up 1.4% at 4,027.81
Nasdaq Composite: closed up 1.8% at 11,926.24
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EUR: up at USD1.0844 (USD1.0834)
GBP: soft at USD1.2322 (USD1.2326)
USD: down at JPY132.44 (JPY132.51)
GOLD: down at USD1,963.75 per ounce (USD1,967.03)
OIL (Brent): down at USD78.12 a barrel (USD78.37)
(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 CET EU ECB economic bulletin
11:00 CEST EU economic sentiment indicator
14:00 CEST Germany consumer price index
08:30 EDT US gross domestic product
08:30 EDT US unemployment insurance weekly claims report
12:45 EDT US Fed Richmond President Thomas Barkin speaks
16:30 EDT US foreign central bank holdings
16:30 EDT US federal discount window borrowings
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The Confederation for British Industry said its latest growth report showed "signs of green shoots" amid projections that UK industry will return to growth in the next quarter. However, the fresh CBI data showed that activity across the UK private sector contracted by around 4% over the three months to March. It is the eight consecutive quarter of decline but the mildest drop since July 2022. The drop was largely driven by weakness in the service sector, amid an 11% drop in consumer services volumes, according to the survey.
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UK Chancellor Jeremy Hunt unveiled the first step of the government's response to the US's multibillion-dollar investment in green technology with a swipe at US President Joe Biden. Writing in The Times, Hunt said Biden was leading a "distortive" global subsidy race, arguing that the long-term solution to the threat of protectionism was "not subsidy but security". He went on to say that the government was investing GBP30 billion to support "[the UK's] green industrial revolution, with an additional GBP6 billion for energy efficiency, and up to GBP20 billion for carbon capture, utilisation and storage". "While taxpayer support is important to kick-start new industries, we need to leverage billions more in private capital," Hunt said.
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China's economy is showing "strong momentum" despite a challenging global environment, Premier Li Qiang said, promising to bolster support for business as the country emerges from strict Covid controls that hurt GDP growth. Li's speech at the Boao Forum, a high-profile meeting on China's southern Hainan island, was his first to an international conference since being appointed Beijing's number-two official in early March. "China's economic growth shows strong momentum," Li told top politicians and business leaders. "Judging from the situation in March, it is better than in January and February," he said, referring to a period when China saw a surge in Covid-19 infections following the lifting of strict pandemic controls. China set an economic growth target of "around five percent" this month, one of its lowest in decades as it emerges from strict zero-Covid rules.
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Australia will force coal mines, smelters and oil refineries to cut their emissions by about 5% each year after passing breakthrough climate laws targeting the nation's worst polluters. The laws apply to some 215 major industrial facilities – each producing more than 100,000 tonnes of greenhouse gases a year – and form the backbone of Australia's pledge to reach net zero by 2050. By forcing those facilities to reduce emissions by 4.9% each year, the government thinks it can stop 200 million tonnes of carbon being pumped into the atmosphere over the next decade.
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BROKER RATING CHANGES
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Morgan Stanley raises Anglo American to 'equal-weight'
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Berenberg raises Tritax Big Box to 'buy' (hold) - price target 170 pence
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Jefferies cuts CMC Markets to 'hold' (buy) - price target 190 (275) pence
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COMPANIES - FTSE 100
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AstraZeneca said it has completed an exclusive global license agreement with KYM Biosciences for CMG901. This is a "a potential first-in-class antibody drug conjugate targeting Claudin 18.2, a promising therapeutic target in gastric cancers", Astra explained. The license covers the research, development, manufacture and commercialisation of the treatment for an upfront payment of USD63 million. There may also be potential milestone payments of up to USD1.1 billion, with "low double digit" tiered royalties, Astra said. KYM is a joint venture established by affiliates of Chinese biotech firm Keymed Biosciences and Lepu Biopharma. "The transaction does not impact AstraZeneca's financial guidance for 2023," the company said.
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SSE upgraded its guidance for the financial year that ends on Friday. It now expects adjusted earnings per share of over 160p, compared to previous guidance of over 150p. "This reflects the strength and stability of SSE's balanced mix of regulated and market-facing businesses and the continued narrowing of the range of probable financial outcomes for the period," the electricity utility explained. SSE also said it plans to delivery record investment during the year, in excess of GBP2.5 billion, as part of its Net Zero Acceleration Programme.
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COMPANIES - FTSE 250
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QinetiQ has won a contract worth USD92.6 million over four years for digital night vision technology from the US Army. The defence and security-focused science & engineering company said it will assist the US Army in evolving is DNVT capabilities. "DNVT will better enable soldiers to view and understand information in tactical environments allowing them to react and respond to real-time data," said QinetiQ US CEO Shawn Purvis.
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North Sea oil and gas operator Ithaca Energy said annual revenue jumped to USD2.60 billion from USD1.43 billion a year before. Pretax profit surged to USD2.24 billion from USD763.1 million, and to USD1.03 billion after tax from USD426.0 million. Ithaca said it achieved record production of 71,400 barrels of oil equivalent per day, which was up 26% from the prior year. It expects average production in the first quarter to be between 70-72,000 boepd. However, Ithaca downgraded 2023 production guidance to 68-74,000 boepd from a previous range of 72-80,000 boepd, due to lower first quarter volumes, non-operated portfolio delivery, and the hit from the Energy Profit Levy on capital programmes.
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OTHER COMPANIES
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Recent FTSE 250-demotee Moonpig backed its annual revenue expectations, after seeing its "largest ever week of sales" in the UK leading up to Mother's Day. It expects revenue for the year ending April 30 to be GBP320 million, and also left expectations for annual adjusted earnings before interest, tax, depreciation and amortisation unchanged. It expects revenue to grow in financial 2024, with a weighting towards the second half.
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Genedrive said the UK National Institute for Health & Care Excellence has ratified and finalised its recommendation that the antibiotic hearing loss test, the MT-RNR1 ID kit, can be used in the UK's NHS. This follows a public consultation process last month, after NICE's preliminary recommendation. The test is used to screen infants for a genetic variant which causes lifelong hearing loss if those who carry it are dosed with certain antibiotics.
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By Elizabeth Winter, Alliance News senior markets reporter
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