(Alliance News) - Stocks in London are called higher on Monday after Democrats in the US managed to keep control of the Senate, and the UK government promised crack down on an "outrageous" waste of public money.
If Democrats manage to pull off a win in the House of Representatives as well, it would mean full control of Congress for Democrats — and another chance to advance US President Joe Biden's priorities, though the party still lacks the 60 votes in the Senate needed to move many kinds of major legislative changes.
In addition, Biden said Sunday he will seek to establish "red lines" in America's fraught relations with Beijing when he holds high-stakes talks with Chinese counterpart Xi Jinping.
Washington and Beijing are at loggerheads over issues ranging from trade to human rights in China's Xinjiang region and the status of the self-ruled island of Taiwan. Biden said he expected candid talks with Xi.
The dollar was slightly stronger on Monday morning ahead of the talks.
In the UK, government ministers are determined to crack down on an "outrageous" waste of public money, while seeking billions in tax hikes and savings, as the chancellor warned he will be playing Scrooge at the upcoming autumn budget.
Jeremy Hunt has promised a "rabbit-free" statement on Thursday this week, with a focus on delivering "certainty" to families and businesses in the wake of the market turmoil sparked by his predecessor's GBP45 billion tax-cutting bonanza.
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 0.2% at 7,335.70
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Hang Seng: up 1.8% at 17,638.68
Nikkei 225: down 1.1% at 27,963.47
S&P/ASX 200: closed down 0.2% at 7,146.30
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DJIA: closed up 32.49 points, 0.1%, at 33,747.86
S&P 500: closed up 36.56 points, 0.9%, at 3,992.93
Nasdaq Composite: closed up 209.18 points, 1.9% at 11,323.33
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EUR: up at USD1.0335 (USD1.0326)
GBP: down at USD1.1759 (USD1.1781)
USD: down at JPY138.98 JPY139.07)
Gold: down at USD1,762.03 per ounce (USD1,763.60)
Oil (Brent): down at USD95.75 per barrel (USD96.32)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 CET EU industrial production
Germany Euro Finance Week event
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Chinese authorities have unveiled sweeping measures to rescue the struggling property sector, as regulators seek to offset years of harsh pandemic curbs and a real estate crackdown that have stalled the world's number-two economy. The banking regulator and central bank on Friday issued a 16-point set of internal directives to promote the "stable and healthy development" of the industry, which were reported by Chinese state media on Monday. The measures include credit support for debt-laden housing developers, financial support to ensure completion and handover of projects to homeowners, and assistance for deferred-payment loans for homebuyers. That came on the same day the National Health Commission issued 20 rules for "optimising" Beijing's zero-Covid policy, where certain restrictions were relaxed to limit its social and economic impact.
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Australian Prime Minister Anthony Albanese said he will hold talks with his Chinese counterpart Xi Jinping in Bali, Indonesia on Tuesday, the first leaders meeting between the two countries after years of soured relations. "We enter this discussion with goodwill. There are no preconditions on this discussion. I am looking forward to having constructive dialogue," Albanese told media as he touched down on the resort island for the G20 summit. Australian and Chinese leaders had a brief exchange at the 2019 G20 summit in Japan, but have not had a formal sitdown in five years. China remains Australia's largest trading partner, but relations atrophied over disputes about Chinese influence and behaviour in the Asia-Pacific region – and all but collapsed after Canberra called for an investigation into the origins of the Covid-19 pandemic.
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BROKER RATING CHANGES
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Credit Suisse cuts Anglo American price target to 3,300 (3,400) pence - 'outperform'
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Credit Suisse cuts Ferrexpo to 'neutral' ('outperform' - price target 140 (225) pence
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Goldman raises Bank of Ireland price target to 9.60 (8.40) EUR - 'neutral'
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COMPANIES - FTSE 100
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Business publisher and events organiser Informa upgraded its full-year outlook on the back of strong underlying revenue growth in the first 10 months of the year. The firm reported underlying revenue growth of 41% in its continuing business in the 10-months to October, thanks to strong trading in all three of its Business-to-Business Markets businesses and in its Academic Market business. As a result, Informa increased its guidance range for revenue to between GBP2.30 billion and GBP2.35 billion for 2022. Adjusted operating profit was raised to between GBP490 million and GBP505 million to reflect "further outperformance of Live and On-Demand Events" in North American, Europe, the Middle East and Africa, and Southeast Asia.
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Aveva said that the offer from Schneider Electric has the support of 4.1% of its shareholders. This equates to 10% of its non-Schneider shareholders, as Paris-based Schneider already owns a 59% stake in Aveva. On Friday, the firms announced they had agreed an increase and final cash offer for Schneider's takeover of Aveva. Schneider offered 3,225 pence in cash for each Aveva share, which valued Aviva equity at GBP9.86 billion, and implied an enterprise value of GBP10.57 billion. The offer was around 4% higher than that agreed a couple of months ago.
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COMPANIES - FTSE 250
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Software firm Kainos reported a rise in interim profit and revenue due to "robust" underlying market demand and high levels of customer engagement. In the six months ended September 30, Kainos posted revenue totalling GBP179.8 million, up 26% against the GBP142.3 million achieved the year prior. Pretax profit rose 11% to GBP27.5 million from GBP24.8 million. Chief Executive Brendan Mooney boasted that demand for the firm's services has "never been higher", underpinning its confidence moving forward. At September 30, Kainos's bookings were up 18% against the prior year at GBP221.5 million, and its contracted backlog was up 23% at GBP307.9 million, it said.
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Diversified Energy said it traded in line with expectations during the quarter that ended September 30, as it declared an increased quarterly dividend of 4.375 US cents per share. In the third quarter, the gas and oil production company reported average net daily production of 135,000 barrels of oil equivalent per day at an average realised price of USD21.95 per barrel. Chief Executive Rusty Hutson said the firm remained "nimble" in a "dynamic market".
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OTHER COMPANIES
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iEnergizer said it is increasingly confident for the full-year as it posted an increase in interim profit and revenue. In the half-year that ended September 30, the IT service management company reported revenue of USD152.0 million, up 24% from USD122.6 million the previous year. Pretax profit was up 17% to USD44.3 million from USD37.9 million as the company noted "sustained margin improvements". Chair Marc Vassanelli said the interim performance exceed the firm's expectations and declared an interim dividend of 11.07 pence, up from 8.12p the year prior.
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Despite "economic gloom and slowing tech growth", S4 Capital said its top-line momentum has been "more than maintained" in the third quarter of the year. The advertising agency reported revenue in the three months ended September 30 climbed 68% to GBP300.1 million from GBP178.4 million, while gross profit jumped 73% to GBP249.9 million from GBP144.4 million. Looking at current performance, S4 Capital said it continues to trade in line with its top-line objective for 2022 of 25% like-for-like gross profit/net revenue growth and profitability objective of operational earnings before interest, taxation, depreciation, and amortization of around GBP120 million. S4 said it continues to convert new clients, with "ten whoppers now in sight". The Martin Sorrell-led outfit said that current economic pressures benefit S4 as it accelerates client shifts toward digital marketing.
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Bank of Ireland announced the hiring of Myles O'Grady as chief executive officer. He will succeed Gavin Kelly who served as interim CEO and who will step down on Thursday. O'Grady previously had been the Dublin-based lender's chief financial officer from January 2020 until this past March.
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By Heather Rydings; heatherrydings@alliancenews.com
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