(Alliance News) - Stocks in London are tipped for a solid start on Tuesday, following a strong performance on Wall Street and in Asian markets.
Investors recovered some optimism ahead of US inflation data due later this week.
"US markets performed better than they did on Friday in the wake of a decent payrolls report and lacklustre ISM services survey for December, with tech outperforming. A decent performance from the Nasdaq 100, helped drive sentiment after Nvidia announced a significant improvement in chip design with extra components which would allow the better use of AI, sending the shares up to fresh record highs," noted CMC Markets UK chief market analyst, Michael Hewson.
Additionally, the latest retreat in oil prices was also helping to boost sentiment, soothing fears of a resurgence of energy-led inflationary pressures. This follows Saudi Arabia cutting selling prices by more than analysts had expected.
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 21.9 points, 0.3%, at 7,716.09
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Hang Seng: marginally lower at 16,216.91
Nikkei 225: closed up 1.2% at 33,763.18
S&P/ASX 200: closed up 0.9% at 7,520.50
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DJIA: closed up 216.90 points, 0.6%, at 37,683.01
S&P 500: closed up 1.4% at 4,763.54
Nasdaq Composite: closed up 2.2% to 14,843.77
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EUR: down at USD1.0951 (USD1.0974)
GBP: down at USD1.2735 (USD1.2757)
USD: up at JPY143.98 (JPY143.84)
GOLD: up at USD2,033.18 per ounce (USD2,032.33)
OIL (Brent): up at USD76.04 a barrel (USD75.73)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
11:00 CET Eurozone unemployment
08:30 EST US trade balance
08:30 EST US Redbook index
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UK retail sales edged slightly higher in December, numbers from the British Retail Consortium showed. According to the latest BRC-KPMG tracker, for 2023, retail sales increased by 3.6% from 2022. Annually, food growth was up 8.1% and non-food declined by 0.1%. UK total retail sales increased by 1.7% in December, against growth of 6.9% in December a year earlier. This was below the 3-month average growth of 2.3% and below the 12-month average growth of 3.6%. The period covers the five weeks November 26 to December 30.
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UK government legislation designed to maximise North Sea oil and gas production has been delayed to avoid it being rushed through its first stage in 45 minutes. The Offshore Petroleum Licensing Bill would require the industry regulator to run annual rounds for new oil and gas licences, subject to stringent new emissions and imports tests. It was due to receive its second reading on Monday evening, but additional Commons business – including lengthy exchanges on the Israel-Hamas conflict and the Horizon scandal – meant MPs would have been left with little more than 45 minutes to debate it.
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BROKER RATING CHANGES
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Goldman Sachs raises Intermediate Capital price target to 1,920 (1,840) pence - 'buy'
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Berenberg cuts Endeavour Mining price target to 2,000 (2,400) pence - 'buy'
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COMPANIES - FTSE 100
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B&M European Value Retail updated on trading over the 13 weeks from September 24 to December 23 - its financial third quarter. It said revenue grew 5.0% year-on-year to GBP1.65 billion. In the year-to-date, revenue was up 8.1% annually to GBP4.19 billion on a constant currency basis. In the 14 weeks to December 30, the retailer said UK like-for-like revenue growth was 1.2%, driven by "positive transaction numbers", and it was a "strong quarter given prior year comparatives". B&M said it will declare a special dividend of 20.0 pence to be paid next month. "The performance across the Golden Quarter has been pleasing, with strong operational execution across the three businesses. Our strategy remains unchanged - we are an everyday low-price discounter with a laser-focus in keeping excellence in retail standards and our costs the lowest," said Chief Executive Alex Russo. It reiterated guidance for adjusted earnings before interest, tax, depreciation and amortisation of GBP620 to GBP630 million in financial 2024, up from GBP573 million in financial 2023.
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Unite Group reported a "strong start" to the 2024/25 sales cycle, with 71% of its rooms reserved, compared to 70% the prior year. "We have been encouraged by particularly strong demand from university partners with 4,000 extra beds reserved compared to the same stage of the 2023/24 sales cycle," the student accommodation provider added. Unite said it is confident in its target of delivering 5% rental growth in the academic year sales cycle. It is on-site with four development schemes, to add 2,000 beds in the next two years, and says its Meridian Square project in London remains on track for delivery for 2027/28.
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Barclays has said it cut around 5,000 jobs globally during 2023 to "simplify and reshape the business". The bank said the jobs were "removed" as part of its "ongoing efficiency programme" – it is unclear how many of the 5,000 were UK-based. Barclays said the majority of individuals impacted by the job losses worked in the bank's support and UK chief operating officer functions as "management layers are reduced" and the group "improves its technology and automation capabilities". A Barclays spokesperson said: "Barclays removed approximately 5,000 headcount globally through 2023 as part of its ongoing efficiency programme designed to simplify and reshape the business, improve service, and deliver higher returns.
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COMPANIES - FTSE 250
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Games Workshop said revenue in the half-year ended November 26 rose 9.3% year-on-year to GBP247.7 million from GBP226.6 million, while pretax profit jumped 14% to GBP95.2 million from GBP83.6 million. It also noted that sales in December were in line with its expectations. It paid out and declared 195p in dividends per share during the period, compared to 165p a year before. "Games Workshop and the Warhammer hobby are in great shape. We continue to perform well during challenging economic times, delivering record group revenue, profit and dividends in the period. Morale is good at Games Workshop and our hobbyists are having fun too," said CEO Kevin Rountree. The firm noted its chief financial officer, Rachel Tongue, will not stand for re-election at the next annual general meeting in September, and will leave the firm in January 2025. The firm will begin looking for her replacement immediately.
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OTHER COMPANIES
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The Irish Government said it was extending the AIB share trading plan into a fifth phase, Minister for Finance Michael McGrath announced. The Irish government holds around a 40.8% stake in AIB, down from 71.1% when the trading plan began in 2022. The latest phase will run until no later than July 23 this year, unless extended by the minister. "The AIB trading plan has played an important role in enabling us to gradually reduce our shareholding in the bank since it became operational, especially when opportunities for larger block trades were not available to us. Therefore, I am happy to announce the renewal of the trading plan into a fifth phase. As before, we will continue to look at other disposal options, should they present themselves," McGrath said. The Irish state's stake in the company fell below 50% back in June, in what AIB labelled a "milestone". The government had stepped in to buy a stake in AIB in 2009 amid the global financial crisis.
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MJ Gleeson reported weaker sales in its recent half-year ended December 31. The firm's Homes division completed 769 home sales over the period, which was a 14% decrease year-on-year. It blamed weaker conditions across the housing market. However, it pointed to a stronger forward order book of 586 plots at the end of 2023, compared to 319 plots the prior year. Gross margins are expected to fall below expectations by around 1.5% to 2.0% in its full financial year. It expects to report net debt of GBP18.7 million at December 31, compared to net cash of GBP5.2 million at the end of June, which reflects the "significant investment in bringing forward a higher proportion of home starts before June 2023". The cash impact of this is expected to unwind over the next two years, it added. The firm commented: "Against the backdrop of stabilising interest rates the board anticipates a recovery in demand for low-cost housing in the seasonally busier selling period over the coming weeks and months. Gleeson Homes also continues to negotiate further multi-unit sales and expects to enter into agreements over the coming months for delivery of homes in the current and next financial year."
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By Elizabeth Winter, Alliance News deputy news editor
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