(Alliance News) - Stocks in London are called lower on Monday, as investors focus on the week's upcoming central bank decisions.
The economic calendar this week has interest rate decisions from the US Federal Reserve on Wednesday and the Bank of England on Thursday, with the Bank of Japan to follow on Friday.
The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July. Investors will be paying attention to any guidance on future rate hikes, as well as any hints on the timeline for future rate cuts.
In early UK company news, Phoenix Group said it was on track to reach the upper end of its cash generation annual guidance. HgCapital Trust said it outperformed the FTSE All-Share Index return in the first half.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 5.98 points, 0.1%, at 7,705.4
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Hang Seng: down 1.0% at 18,010.85
Nikkei 225: financial markets in Japan closed for Respect for the Aged Day
S&P/ASX 200: closed down 0.7% at 7,230.40
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DJIA: closed down 288.87 points, or 0.8%, at 34,618.24
S&P 500: closed down 1.2% at 4,450.32
Nasdaq Composite: closed down 1.6% at 13,708.34
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EUR: down at USD1.0665 (USD1.0672)
GBP: down at USD1.2395 (USD1.2401)
USD: down at JPY147.60 (JPY147.80)
Gold: up at USD1,929.20 per ounce (USD1,927.20)
Oil (Brent): up at USD94.68 a barrel (USD93.72)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
09:30 BST UK card spending statistics
10:00 EDT US NAHB housing market index
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The average UK new seller asking price in September was "lower than is usual" for this time of the year, according to data from Rightmove. The Rightmove house price index showed the average new seller asking price increased by 0.4% month-on-month, or GBP1,386, in September to GBP366,281. This was "lower than is usual" for this time of year, the property portal noted. On an annual basis, prices fell 0.4% in September. Rightmove said this was the biggest drop in prices since March 2019 and meant prices are still on track to meet its prediction of a 2% fall over the year as a whole.
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The UK announced it had granted 21 carbon storage permits, in a first licensing round for the still largely experimental technology that the government hopes will help reach net zero. A total of 14 companies were awarded 21 licences to utilise depleted oil and gas reservoirs and saline aquifers which cover around 12,000 square kilometres, the North Sea Transition Authority said in a statement. The agency regulates and influences the oil, gas and carbon storage industries. The locations could store up to 30 million tonnes of carbon dioxide per year by 2030 – approximately 10% of UK annual emissions which were 341.5 million tonnes in 2021.
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Former UK prime minister Liz Truss is set to urge the government to cut taxes, shrink welfare spending and raise the retirement age in a speech one year on from her disastrous mini-budget. The former prime minister will use a speech at the Institute for Government think tank on Monday to defend decisions made during her brief spell in Number 10, calling it unfair to say she had pursued unfunded tax cuts. She will also call for Rishi Sunak's Conservative Party to embrace free market ideologies and ditch some green commitments amid cost-of-living pressures on voters.
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Keir Starmer has said he will be seeking a closer trading relationship with the EU if Labour wins the next UK election. Speaking to The Financial Times, the frontrunner to become the next UK prime minister said he would be seeking a rewritten Brexit deal. Labour has long been critical of the deal negotiated by the Conservatives under Boris Johnson, with the trade & cooperation agreement up for review in 2025. Starmer told the paper: "Almost everyone recognises the deal Johnson struck is not a good deal – it's far too thin. As we go into 2025 we will attempt to get a much better deal for the UK." Labour has ruled out rejoining the customs union or single market, but Starmer said he was confident a better deal could be secured from Brussels.
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BROKER RATING CHANGES
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RBC raises Fevertree Drinks to 'sector perform' (underperform) - price target 1,300 (1,000) pence
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JPMorgan raises International Distributions Services to 'overweight' - price target 310 (300) pence
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Jefferies raises Energean to 'buy' - price target 1,500 (1,100) pence
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COMPANIES - FTSE 100
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Phoenix Group said that in the first half of 2023, its incremental new business long term cash generation more than doubled to GBP885 million from GBP430 million a year before. The insurance provider also said new business net fund flows jumped 72% annually to GBP3.1 billion from GBP1.8 billion. Phoenix said it is now on track for positive group net fund flows from 2024. It now expects to deliver at the top end of its GBP1.3 billion to GBP1.4 billion guidance range for cash generation in 2023. For the interim period, it raised its dividend by 4.8% to 26.0 pence. It will release IFRS financial statements next Thursday. "Our impressive first half performance has enabled the board to declare an Interim dividend that is a 5% year-on-year increase and executing our strategy will support us in delivering a dividend that is sustainable and grows over time," Chief Executive Andy Briggs said.
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Mike Ashley's Frasers Group is in talks with Chinese fast fashion firm Shein to sell online clothing label Missguided, according to Sky News. According to City sources, Shein and Frasers have been in discussions for weeks. Whether the potential deal will come to pass and the timeline for any transaction is "unclear", Sky said. "For UK-listed peers boohoo and Asos, the implications of this potential sale are noteworthy. boohoo was among the other bidders for the Missguided brand when Frasers acquired it from administration. With Shein, a global player in the online fashion retail industry, expanding its presence in the UK market via this acquisition, the competitive landscape is bound to become more challenging," said Shore Capital.
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GSK said Ojjaara, also known as momelotinib, has been approved in the US and the "first and only" treatment indicated for myelofibrosis patients with anaemia. The London-based pharmaceutical maker explained that "nearly all" myelofibrosis patients are estimated to develop anaemia over the course of the disease, with over 30% discontinuing treatment due to anaemia. GSK said, to date, it is the only approved medicine for both newly diagnosed and previously treated myelofibrosis patients with anaemia that addresses the key manifestations of the disease, namely anaemia, constitutional symptoms, and splenomegaly, or an enlarged spleen.
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COMPANIES - FTSE 250
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HgCapital Trust reported a net asset value return of 4.6% across the six months to June 30, as its NAV per share rose to 473.1p at the end of the period, from 456.6p at the end of December. Across the same period, the FTSE All-Share Index saw a return of just 2.6%, it noted. HgCapital Trust proposed an interim dividend of 2.0p, down year-on-year from 2.5p. Looking ahead, the trust said there were signs that "tight capital market conditions" were beginning to "abate somewhat", especially within the sectors and asset types that align with its investment strategy. "With our defensive portfolio of companies and prudent management of the balance sheet, the company is well positioned to take advantage of investment opportunities as they arise," said Chair Jim Strang.
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OTHER COMPANIES
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Wildcat Petroleum said that due to the political situation in Sudan, it is presently unable to sign a production sharing agreement with the Sudanese government. Consequently, it plans to sign a service agreement with the government in the next few weeks with the aim of increasing oil production at the Bamboo oil field. Production at the field is currently around 4,000 barrels of oil per day, down from the 20,000 bopd peak. It is targeting an initial increase in production within a year, and ultimately targeting around 10,000 within three to five years. When the political situation allows, Wildcat said it intends to negotiate a PSA for a 20 to 25-year term. "The field already contains all the surface facilities required to process increased oil production, including access to an export pipeline," it noted.
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Facilities by ADF reported strong growth in the first half of 2023. The provider of production facilities to the UK film and high-end television industry said revenue jumped 73% to GBP21.8 million from GBP12.6 million a year before, while pretax profit reached GBP2.7 million from GBP1.3 million. It supported 46 high-profile productions including The Crown, Star Wars Andor and Sex Education. ADF also cited increased demand for its services from global streaming brands like Netflix, Apple, Disney and Amazon. "Whilst the industrial action has caused a short-term impact, the board is confident that the underlying market drivers will continue to accelerate once the situation normalises and there will be significant levels of pent-up demand for film and HETV productions akin to that seen after the lifting of the lockdowns imposed during the Covid-19 pandemic," said CEO Marsden Proctor.
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By Elizabeth Winter, Alliance News senior markets reporter
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