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(Alliance News) - Stocks in London are expected to tread water on Wednesday, despite a strong performance in the US and Asia.
Asian stocks performed well overnight, after a surprise stimulus move from China on Tuesday.
China unveiled plans for USD137 billion in extra debt to boost infrastructure spending. The country approved a plan to issue CNY1 trillion in sovereign bonds to be distributed to local governments to support national disaster prevention and recovery.
Stocks in the US also put in a good performance, on the back of some good earnings.
In local corporate news, Lloyds saw its profit surge. Reckitt announced the start of its USD1 billion share buyback, as part of its strategic plans.
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 marginally at 7,391.80
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Hang Seng: up 1.1% at 17,170.94
Nikkei 225: closed up 0.7% at 31,269.92
S&P/ASX 200: closed marginally lower at 6,854.30
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DJIA: closed up 204.97 points, or 0.6%, at 33,141.38
S&P 500: closed up 30.64 points, or 0.7%, at 4,247.68
Nasdaq Composite: closed up 121.55 points, or 0.9%, at 13,139.88
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EUR: up at USD1.0600 (USD1.0588)
GBP: up at USD1.2167 (USD1.2163)
USD: down at JPY149.84 (JPY149.90)
Gold: up at USD1,975.44 per ounce (USD1,963.03)
(Brent): up at USD86.87 a barrel (USD86.37)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
US Joe Biden hosts state visit for Australian PM
10:00 EDT Canada interest rate announcement
10:00 CEST EU monetary developments
10:00 CEST Germany Ifo business climate index
09:00 CEST Spain PPI
07:00 EDT US MBA weekly mortgage applications survey
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The raging war between Israel and Hamas is already battering the economies of nearby countries, the managing director of the International Monetary Fund told a Saudi investor forum. "You look at the neighbouring countries -โ Egypt, Lebanon, Jordan โ- there the channels of impact are already visible," Kristalina Georgieva said at the Future Investment Initiative in the Saudi capital Riyadh. Georgieva spoke one day after Wall Street titans warned the war could deal a heavy blow to the global economy, especially if it draws in other countries.
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BROKER RATING CHANGES
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Barclays cuts Mondi to 'underweight' (equal weight) - price target 1,150 (1,485) pence
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Davy starts Spectris with 'neutral' - price target 3,300 pence
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Davy starts Oxford Instruments with 'outperform' - price target 2,200 pence
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COMPANIES - FTSE 100
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Lloyds reported that in the third quarter of 2023 pretax profit jumped to GBP1.86 billion from GBP576 million a year earlier. Net income, however, was up just 1% to GBP4.51b billion from GBP4.48 billion. The bank's net interest margin improved to 3.08% from 2.98%. Looking ahead, Lloyds reaffirmed its 2023 guidance. It expects banking net interest margin above 3.10%. "Guided by our purpose, we remain focused on supporting our customers and helping them navigate the uncertain economic environment," said Chief Executive Charlie Nunn. "The group continues to perform well. Robust financial performance and strong capital generation in the first nine months of the year was driven by net income grow, cost discipline and resilient asset quality."
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Consumer goods firm Reckitt Benckiser reported that life-for-like revenue in the third quarter of 2023 rose 3.4% to GBP3.60 billion. This was driven by growth in its Hygiene and Health arms, and was offset by a 12% fall in its Nutrition division. In the year-to-date like-for-like revenue climbed 5.1% to GBP11.04 billion. Reckitt also announced a strategic update. As part of this, Chief Executive Officer Kris Licht said: "We do, however, have room to sharpen and improve. We will continue to invest in the superiority of our products, work to improve the consistency of our in-market execution and optimise our cost base. At the same time, we will constantly sharpen our portfolio in line with our clear principles for portfolio value creation." Reckitt also said that it is beginning its GBP1 billion share buyback programme, which will commence imminently and last over the next 12 months.
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COMPANIES - FTSE 250
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Oxford-based components company Essentra said it has continued to deliver a "resilient" performance in the third quarter of 2023. On a like-for-like and trading day adjusted basis, revenue declined by 7.1% in the third quarter, compared to the same period in the prior year. Reflecting the softer trading environment, Essentra expects to deliver adjusted operating profit within its expectations for financial 2023, but towards the lower end. "EMEA performance in the third quarter has experienced market softening, in line with changes to the macro-economic environment. In AMERS, destocking behaviour continues to be observed in distributor end-market channels, whilst the APAC business continues to recover at a gradual pace, driven by the market dynamics in China," the company explained.
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Ibstock left its 2023 guidance unchanged. The Leicestershire, England-based maker of clay and concrete building products said it has delivered a "resilient" performance in the third quarter of 2023. However, it noted that market demand in the period was more subdued than expected. As a result, and in line with the wider UK brick industry, sales volumes in the third quarter were below those achieved during the second quarter of the year. Despite these weaker volumes, Ibstock said "effective cost reduction action combined with stable pricing resulted in margins for the quarter remaining robust." Looking ahead, the company left underlying profit expectations for 2023 unchanged.
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OTHER COMPANIES
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Banco Santander said it is confident in hitting its targets for 2023, providing "positive momentum" for 2024, as it reported a strong rise in third-quarter profit. The Madrid-based lender reported attributable profit of EUR2.90 billion for the three months that ended September 30, up 8.7% from EUR2.67 billion in the second quarter and up 20% from a year before. The increases were 11% and 26% at constant currency. Total income in the third quarter was EUR14.86 billion, up 5.5% from EUR14.09 billion in the second quarter and 10% from a year before. Of this, net interest income was EUR11.22 billion, up 6.6% from EUR10.52 billion in the second quarter. Less positively, net loan-loss provisions were EUR3.27 billion, up 19% from a year before. Santander said its loan-loss provision "continued to normalize as expected" amid higher interest rates and inflation pressures on customers.
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Deutsche Bank reported a rise in third-quarter revenue, despite grappling with an investment banking slowdown, and it set out plans to lift dividends going forward. Total net revenue in the three months to September 30 increased 3.1% on-year to EUR7.13 billion from EUR6.92 billion. Pretax profit increased 6.7% to EUR1.72 billion from EUR1.62 billion a year earlier. Revenue topped company-compiled consensus of EUR7.10 billion, with profit ahead of the expected EUR1.58 billion. Deutsche's corporate bank saw a 21% year-on-year revenue surge to EUR1.89 billion, while growth in its private bank was 3.4% to EUR2.34 billion. It was a trickier quarter for its investment bank, however, with revenue slipping 4.3% to EUR2.27 billion. Deutsche's common equity tier one capital ratio, a key measure of a bank's financial strength, increased to 13.9% from 13.3% a year prior.
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By Sophie Rose, Alliance News reporter
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