(Alliance News) - London's FTSE 100 is called to open slightly higher on Wednesday, with focus on what UK Chancellor Jeremy Hunt has in store in his budget this afternoon.
Shares in Asia ended higher, following a positive handover in New York, as Silicon Valley Bank-related fears recede for now.
Strong Chinese retail sales figures, as well as Tuesday's soft US inflation reading, have lifted the mood the global equities.
Chinese retail sales rebounded in January and February. This came after Beijing abandoned its suffocating zero-Covid policy, reopening borders and ending mandatory quarantine, and as the country celebrated the Lunar New Year holiday.
The 3.5% growth, released by the National Bureau of Statistics, came in line with expectations and was much better than the 1.8% drop suffered in December, indicating the world's number two economy was picking up after years of painful restrictions.
Figures on Tuesday had showed annual growth in the US consumer price index slowed to 6.0% last month from 6.4% in January.
"Discomfort regarding the US inflation data, combined with the gently waning stress in banks, brought the expectation of a 25 basis point hike [by the Federal Reserve] back on the table. Note that, if we hadn't had the SVB debacle, that expectation would've easily been stuck around 50bp. And this is something that we could see reflected in the Fed's March dot plot," Swissquote analyst Ipek Ozkardeskaya commented.
In early UK corporate news, Prudential said 2023 has got off to an encouraging start, helped by an easing of Covid curbs in China. Trainline hailed record net ticket sales, while events organiser Hyve has backed a GBP320 million takeover offer.
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 0.1% at 7,643.51
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Hang Seng: up 1.5% at 19,540.79
Nikkei 225: closed marginally higher at 27,229.48
S&P/ASX 200: closed up 0.9% at 7,068.90
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DJIA: closed up 336.26 points, 1.1%, at 32,155.40
S&P 500: closed up 1.7%, at 3,920.56
Nasdaq Composite: closed up 2.1% at 11,428.15
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EUR: up at USD1.0735 (USD1.0719)
GBP: flat at USD1.2152 (USD1.2150)
USD: up at JPY134.89 (JPY134.45)
GOLD: down at USD1,897.62 per ounce (USD1,903.01)
(Brent): down at USD78.35 a barrel (USD79.36)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
1000 GMT EU industrial production
1230 GMT UK government spring budget
1230 GMT US producer price index
1230 GMT US retail sales
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UK Chancellor Hunt will pledge to tackle labour shortages and get people back to work when he delivers his budget. Announcements on energy bill support, benefits reform and pensions allowances are all expected to form part of the budget package when Hunt addresses MPs on Wednesday afternoon, even if he is expected to resist calls from Conservative backbenchers to go further on tax cuts. Hunt is expected to reference the "difficult decisions" taken last November to stabilise the markets, following the short-lived premiership of Liz Truss, as he pitches a plan the government hopes can deliver "sustainable" growth. Lower than expected borrowing figures and a recent drop in wholesale energy prices has created some good news for the Treasury on the public finances, but the chancellor is still likely to proceed with caution and avoid any spending largesse. Sluggish UK growth has dominated political and economic debate in recent months, while the challenge of inflation and widespread industrial disputes over public sector pay have not gone away. But Hunt will promise a growth plan that will remove "the obstacles that stop businesses investing" while also "tackling the labour shortages that stop them recruiting" and "breaking down the barriers that stop people working".
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The UK government needs to transform up to 11 ports around the UK to enable the roll-out of floating offshore wind at scale, according to a new report. The Floating Offshore Wind Taskforce – which includes the UK and devolved governments, renewable trade associations and major offshore wind and port developers – said up to 34 gigawatts could be installed by 2040 if the government takes swift action. They said ministers should improve their ambitions to install five gigawatts by 2030 and push the UK to become a global leader in the industry. The taskforce called on the government to invest GBP4 billion, calculating that every GBP1 invested in UK port facilities would generate up to GBP4.30 of added value to the economy. Floating wind farms function in the same way as traditional offshore turbines but they are instead attached to floating platforms that are tied to the seabed with anchors. This means they can be built further out to sea where the wind is stronger and provides more energy. On Monday the Welsh government announced its consent to allow an offshore wind farm to be built in the Celtic Sea which it hopes will transform the region into a clean energy superpower.
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BROKER RATING CHANGES
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Berenberg raises Spirent Communications to 'buy' from 'hold' -price target 250 (300) pence
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JPMorgan resumes Petershill Partners with 'overweight' - price target 246 pence
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JPMorgan resumes Intermediate Capital with 'neutral' - price target 1,451 pence
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COMPANIES - FTSE 100
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Prudential reported higher profit for 2022, and the insurer said it has made an encouraging start to new year after Covid-19 curbs in China were eased. Annual premium equivalents - a measure of the new policies sold - rose 4.7% to USD4.39 billion from USD4.19 billion in 2021. The figure came in ahead of company-compiled consensus of USD4.22 billion. Gross premiums earned fell 3.6% to USD23.34 billion from USD24.22 billion. Hurting its bottom-line was a USD30.16 billion investment loss, swinging from a return of USD3.49 billion in 2021. Pretax profit halved to USD1.48 billion from USD3.02 billion. European embedded value operating profit, however, increased 12% to EUR3.95 billion. The figure is based on longer-term investment returns and ignores short-term fluctuations. Pru declared a second interim dividend of 13.04 cents per share, up 9.9% from 11.86 a year earlier. It gave a total yearly payout of 18.78 cents per share, up 9.0% from 17.23 cents. "2022 was the first full year for the group as an Asia and Africa focused business. We have delivered a resilient performance against a backdrop of Covid-19-related disruption and broader macroeconomic volatility. The results reflect the advantage of our diversified business model across the Asia region, highlighted by a balanced contribution to APE sales and new business profit from Hong Kong, the Chinese mainland and Taiwan and from South-east Asia, including Singapore, Indonesia and Malaysia," Chief Executive Anil Wadhwani said. "The removal of the bulk of Covid-19-related restrictions across the region and the progressive opening up of the Chinese mainland economy has meant that 2023 has started well with encouraging progress in year-on-year sales, with group-wide APE sales for the two months ended February 2023 up 15% [at constant currency] over the prior year."
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Burberry named Kate Ferry as its new chief financial officer. Ferry joins the luxury retail company from early September "at the latest", succeeding Julie Brown who is currently chief operating and financial officer. Brown departs at the start of April have six years with the company. Ian Brimicombe will become Burberry's interim CFO after Brown's departure. Brown joins from automotive company McLaren Group. She was formerly CFO of telecommunications firm TalkTalk Telecom Group and is a an independent non-executive director at Greggs. "I am very pleased to announce Kate's appointment as chief financial officer. Kate has extensive experience of public markets, business transformation and development and an excellent understanding of the luxury industry," Burberry CEO Jonathan Akeroyd said.
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COMPANIES - FTSE 250
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Trainline said it saw "record" ticket sales last year, and the rail booking platform expects profit to be in line with expectations. Net ticket sales in the year ended February 28 jumped 72% to GBP4.32 billion from GBP2.52 billion. It helped revenue to climb 74% to GBP327 million from GBP189 million. Trainline expects annual adjusted earnings before interest, tax, depreciation and amortisation to be in line with market expectations and internal guidance. It expects an adjusted Ebitda of 1.9% to 2.1% of guided net ticket sales. "Trainline delivered record net ticket sales, with growth led by International Consumer, which became a EUR1 billion business for the first time. A key driver is the arrival of carrier competition on key European routes, particularly in Spain where we are increasingly positioning ourselves as the aggregator of choice," CEO Jody Ford said.
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Balfour Beatty reported improved yearly earnings and said it has a "positive" outlook going forward. Revenue in 2022 increased 8.1% to GBP8.93 billion from GBP8.26 billion in 2021. Pretax profit jumped to GBP287 million from GBP87 million. "The strong results in 2022 are a testament to Balfour Beatty's transformation into a well-balanced and lower risk group. The diversified portfolio, both geographically in the UK, US and Hong Kong, and operationally across Construction Services, Support Services and Infrastructure Investments, plus the strength of our balance sheet and cash management, have provided the resilience for the group to deliver ahead of expectations and grow our order book through the global instability seen in 2022," CEO Leo Quinn said. Balfour lifted its final payout by 17% to 7.0p per share from 6.0p. It takes its annual payout to 10.5p per share, a 17% hike from 9.0p. In addition, it plans to repurchase GBP150 million of shares in 2023, as part of its multi-year stock buyback programme. Balfour added: "The longer-term outlook for the group is also positive. The further growth and de-risking of the order book delivered in 2022, combined with the opportunities identified in the group's chosen markets, give the board confidence in Balfour Beatty's continued ability to deliver profitable managed growth and sustainable cash generation, and in turn significant ongoing shareholder returns."
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OTHER COMPANIES
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Events firm Hyve Group has agreed to a GBP320 million takeover from investor Providence Equity Partners. The bid values each Hyve share at 108p, a 41% premium to its 77p stock price the day before it received an approach from Providence. The bid gives Hyve an equity value of GBP320 million and an enterprise value of GBP481 million. "Providence believes that Hyve has established a strong platform for future organic and inorganic growth underpinned by Hyve's portfolio of high-quality global brands and market-leading events focused on developed markets and in growing sectors," Providence said. Media-focused investor Providence made an approach back in February, pitching a bid of 105p per share. Hyve said the bid announced on Wednesday has the support of around 17% of shareholders. Chair Richard Last said: "The board believes the offer represents value for shareholders and that Providence, with their knowledge of the sector and belief in the business and management team, will be a good partner for Hyve. I would like to take this opportunity to recognise the exceptional contribution of our people, whose commitment and hard work have fundamentally changed Hyve for the better, and place us at the forefront of our industry."
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Keywords Studios reported annual earnings growth and said it has started the new year in line with expectations. The video game services provider said revenue in 2022 rose 35% to EUR690.7 million from EUR512.2 million. Pretax profit increased 42% to EUR68.0 million from EUR48.0 million. Keywords proposed a final dividend of 1.60p per share, up 10% from 1.45p. It gives a yearly dividend of 2.37p, up 10% from 2.15p.
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By Eric Cunha, Alliance News news editor
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