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(Alliance News) - Stocks in London opened higher on Thursday, ahead of the next interest rate decision from the European Central Bank, and following unemployment data in the UK.
According to the Office for National Statistics, average regular earnings growth in the UK dropped to 5.7% in the three months to May. The ONS estimated that the rate of unemployment remained unchanged at 4.4% in the three months to May.
Meanwhile, in Europe, the European Central Bank will deliver its announcement on the eurozone's key interest rates, with most economists expecting no change.
In early corporate news, Frasers celebrated a "break-out year" for future growth, after posting an increase in annual adjusted pretax profit.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.9% at 8,258.85
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Hang Seng: up 0.5% at 17,822.80
Nikkei 225: closed down 2.4% at 40,126.35
S&P/ASX 200: closed down 0.3% at 8,036.50
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DJIA: closed up 243.60 points, 0.6%, at 41,198.08
S&P 500: closed down 78.93 points, 1.4%, at 5,588.27
Nasdaq Composite: closed down 512.42 points, 2.8%, at 17,996.92
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EUR: up at USD1.0937 (USD1.0934)
GBP: up at USD1.3011 (USD1.3008)
USD: down at JPY156.09 (JPY156.60)
Gold: up at USD2,468.70 per ounce (USD2,464.08)
(Brent): up at USD85.45 a barrel (USD84.80)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 CEST eurozone construction output
14:15 CEST eurozone interest rate decision
08:00 CEST Switzerland trade balance
08:30 EDT US Philadelphia Fed manufacturing index
10:00 EDT US Conference Board leading index
10:30 EDT US EIA natural gas stocks
19:45 EDT US Federal Reserve Governor Michelle Bowman speaks
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According to the Office for National Statistics, average regular earnings growth in the UK dropped to 5.7% in the three months to May – down from 6% in the previous three months and the lowest level since the quarter to September 2022. The ONS estimated that the rate of unemployment remained unchanged at 4.4% in the three months to May. But it flagged further signals that the employment sector is cooling, with 30,000 fewer vacancies at 889,000 in the quarter to June. Liz McKeown, ONS director of economic statistics, said: "Earnings growth in cash terms, while remaining relatively strong, is showing signs of slowing again. However, with inflation falling, in real terms it is at its highest rate in over two-and-a-half years."
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The European Parliament will vote on Thursday on a second term for Ursula von der Leyen, reported DPA. A German member of the centre-right European People's Party, the current president of the European Commission will need to give a speech encouraging EU legislators to back her before the start of the debate and vote. Von der Leyen needs to get a majority of at least 361 votes in the 720-seat chamber to be re-elected, which is theoretically possible, given that on paper, she holds a majority with a 401 seat coalition from three groups. However, defections are possible under the vote's secret ballot.
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Also on Thursday, the European Central Bank will deliver its announcement on the eurozone's key interest rates, with most economists expecting no change. Currently, the main refinancing rate stands at 4.25%. The deposit rate, which banks receive for funds parked at the ECB, is 3.75% in the 20-country common currency area. The consensus among economists is that the ECB will keep rates stable and then reduce them at the next decision in September.
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US President Joe Biden tested positive for Covid with mild symptoms on Wednesday, shortly after conceding he would consider dropping his re-election bid if doctors diagnosed him with a serious medical condition, reported AFP. The infection comes at a critical moment for Biden's campaign, with the president seeking to show he is up to the job after a debate against rival Donald Trump sparked concerns about his health. Biden was forced to cancel a speech to a union representing Latino workers who will be crucial for his election bid.
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Trump's running mate, JD Vance, delved into his personal history for a speech at the Republican convention on Wednesday. Vance, who famously chronicled his difficult upbringing in best-selling memoir 'Hillbilly Elegy', reflected on how his Ohio hometown had been blighted by closed factories and addiction. Of his grandmother, he said: "When we went through her things we found 19 loaded handguns...They were stashed all over her house – under her bed, in her closet, in the silverware drawer...this frail old woman made sure that no matter where she was, she was within arm's length of whatever she needed to protect her family."
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Japan's exports rose for the seventh month in a row in June, supported by demand for chip-making machines, nonferrous metals and plastics, according to data from the Ministry of Finance. Exports rose 5.4% in June from a year earlier, compared with a 13.5% increase in May and consensus estimates of a 7.2% increase. Regionally, shipments to the US gained 11%, halving from May's growth rate, while the increase in exports to China slowed to 7.2% from 17.8%. Meanwhile, imports rose 3.2% in June from the year before, compared with a 9.6% gain estimated by analysts. Accordingly, trade surplus came to JPY244 billion, marking Japan's first time in the black for three months, from a deficit of JPY1.22 trillion in May.
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BROKER RATING CHANGES
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Goldman Sachs raises Experience price target to 4,750 (4,350) pence - 'buy'
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Berenberg cuts Babcock International to 'hold' ('buy') - target 565 (510) pence
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Berenberg raises Craneware price target to 2,700 (2,600) pence - 'buy'
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COMPANIES - FTSE 100
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Frasers celebrated a "break-out year" for building future growth, after posting adjusted pretax profit of GBP544.8 million for the twelve months ended April 28, up 13% from GBP481.8 million a year prior. This result, Frasers reflected, was at the top of its guidance range. Meanwhile, pretax profit from continuing operations fell 21% to GBP507.0 million from GBP638.0 million, while revenue fell 0.9% to GBP5.54 billion from GBP5.59 billion. Retail gross margin was 41.8%, up from 41.5%. Looking ahead, the retailer expects adjusted pretax profit for financial 2025 of between GBP575 million and GBP625 million.
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COMPANIES - FTSE 250
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International Distributions Services posted total revenue of GBP3.26 billion for the three months to June 3, up 8.2% from GBP3.01 billion a year prior. The firm noted an improved performance for Royal Mail, with the postal service's volume of total parcels up 11% to 315 million from 283 million a year prior, as it noted a 50% jump in the deliveries of postal vote returns for the 2024 general election compared to the 2019 election. Royal Mail's volume of domestic parcels was also up, rising 7% to 268 million from 250 million. GLS volume rose 5% to 229 million from 219 million. Looking ahead, the group is now eyeing a return to adjusted operating profit between 2024 and 2025. On Thursday, EP Corporate noted 30.9% valid acceptances so far for its planned takeover of IDS, and said it expects its takeover of IDS to be declared unconditional in the first quarter of next year. EP Corporate, led by Czech billionaire businessman Daniel Kretinsky, aims to buy IDS in a deal valuing it at around GBP5.28 billion.
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By Holly Beveridge, Alliance News senior reporter
Comments and questions to newsroom@alliancenews.com
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