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(Alliance News) - Stocks in London were set to open lower on Thursday, as investors concern continued to mount about the health of the US banking sector after another largely lower finish in New York.
Also likely to hold back early buying on Thursday are two key pieces of economic data from the US due in the London afternoon at 1330 BST: the weekly unemployment claims report and US GDP data.
Markets are expecting annual economic growth to slow to 2.0% in the first quarter of the year from 2.6% a quarter earlier.
"A negative surprise in US GDP could further boost the [US Federal Reserve] doves and pull the rate hike expectations lower," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The Fed will announce its next interest rate decision on Wednesday next week.
In London early Thursday, lender Barclays boasted double-digit returns in the first quarter of 2023. Drug maker AstraZeneca posted only a slight dip in first quarter revenue, despite a decline in Covid-19 medicines.
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 18.84 points, or 0.2%, at 7,833.80
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Hang Seng: up 0.3% at 19,810.03
Nikkei 225: closed up 0.2% at 28,457.68
S&P/ASX 200: closed down 0.3% at 7,292.70
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DJIA: closed down 228.96 points, 0.7%, at 33,301.87
S&P 500: closed down 0.4% at 4,055.99
Nasdaq Composite: closed up 0.5% at 11,854.35
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EUR: higher at USD1.1054 (USD1.1046)
GBP: unchanged at USD1.2470 (USD1.2472)
USD: higher at JPY133.77 (JPY133.54)
Gold: higher at USD2,000.68 per ounce (USD1,995.53)
(Brent): lower at USD78.01 a barrel (USD80.29)
(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 EU economic sentiment indicator
08:30 EDT US unemployment insurance weekly claims report
08:30 EDT US GDP
10:00 EDT US pending home sales index
16:30 EDT US foreign central bank holdings
16:30 EDT US federal discount window borrowings
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The long-awaited gambling White Paper setting out UK government proposals to make regulation of the sector "fit for the digital age" is expected to be published on Thursday. Campaigners are hopeful it will include plans for affordability checks and the introduction of a statutory levy on gambling operators to pay for research, education and treatment of problem gambling. Other measures hoped to feature include a reduction in stakes for online slot games to match those found in land-based gambling and the creation of a gambling ombudsman to deal with customer complaints. However, reports suggest that the majority of measures, including the exact level of stake limits of online slot machines and curbs on digital marketing such as "free" bets or bonuses, will be subject to further consultation, signalling even more delay to long-awaited changes.
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Japan's prime minister ordered his government to begin work on increasing the number of women executives in major companies to 30% or more by 2030. Women represented only 11.4% of executives in major listed companies in Japan in 2022, according to a cabinet office survey, although the figure has been rising in recent years. "We seek to have the ratio of women among executives at 30% or more by 2030 in companies that are listed on the Tokyo Stock Exchange's Prime Market," Fumio Kishida told officials at a meeting on gender equality. The Prime Market is the stock exchange's leading sector.
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BROKER RATING CHANGES
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Berenberg raises Reckitt Benckiser price target to 7,840 (7,575) pence - 'buy'
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Barclays raises Smith & Nephew price target to 1,200 (1,100) pence - 'underweight'
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HSBC cuts Smith & Nephew to 'hold' - price target 1,350 pence
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COMPANIES - FTSE 100
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Barclays said all three of its businesses performed well in the first quarter of 2023, with high-quality income growth and double-digit returns. The bank reported pretax profit of GBP2.60 billion, up from GBP2.23 billion a year prior. Total income amounted to GBP7.24 billion, up from GBP6.50 billion. Barclays' return on tangible equity was 15.0%, compared with 11.5% in the same quarter a year prior. Its CET1 ratio was 13.6% at the end of March, down from 13.9% at the end of December. The bank said it remains on track to deliver is 2023 targets, with all its performance metrics in line with or ahead of guidance at the first quarter.
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Pharmaceutical firm AstraZeneca said it made a "strong start" to 2023 as it posted only a slight dip in first-quarter revenue, despite a decline in takings from Covid-19 medicines. Revenue in the quarter totalled USD10.88 billion, down 4.5% from USD11.39 billion the previous year. AstraZeneca noted that when excluding the sales of Covid-19 medicines, revenue grew by 15% year-on-year. Pretax profit multiplied to USD2.26 billion from USD553 million. Astra said it expects revenue to increase by a low-to-mid single-digit percentage in 2023 and, when excluding Covid-19 medicines, it is expected to increase by a low double-digit percentage.
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Consumer goods firm Unilever noted broad-based growth across all its business groups and geographies in the first quarter of 2023, as it reported turnover totalling EUR14.8 billion, representing a 7.0% increase against the previous year. It noted that underlying sales growth was 10.5% in the quarter. Looking forward, Unilever said it expects to deliver another year of strong underlying growth in 2023, with an improved volume performance compared to 2022. It now expects underlying sales growth for the full-year to be at least at the upper end of its range of 3% to 4%. It maintained its quarterly dividend at EUR0.43.
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COMPANIES - FTSE 250
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Utility supplier Telecom Plus reported "record" growth in the financial year that ended March 31. It said it exceeded its full-year growth targets, with customer increasing to 886,579 and service numbers increasing to 2.8 million. It noted the growth was achieved organically and against the "ongoing headwind of the market stabilisation charge". Consequently, Telecom Plus expects full-year adjusted pretax profit to be slightly above GBP95 million, in-line with previous guidance. It confirmed its intention to pay a total dividend of 80 pence for the year, up from 57p the year prior. Co-Chief Executives Andrew Lindsay and Stuart Burnett said: "The business has delivered an exceptional performance over the last 12 months, with record results on virtually all metrics."
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Inchcape said it made an "excellent start" to 2023, with full-year results expected to be in-line with market consensus, which sees adjusted pretax profit at GBP487 million. The car dealership reported first-quarter revenue of GBP2.7 billion, up 50% against the previous year, benefiting from mergers & acquisitions as well as organic growth across all its regions. Chief Executive Duncan Tait said: "Our first quarter results show a continuation of the trends we experienced at the end of last year, with organic growth underpinned by the improvement in vehicle supply. Growth in the Distribution segment was further accelerated by the significant contribution from new businesses in the Americas - with Derco, Simpson Motors and Ditec all contributing positively."
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OTHER COMPANIES
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PPHE Hotel said it delivered a performance above pre-pandemic levels in its largest market - the UK and the Netherlands - in the first quarter of 2023. The hotel and resort operator reported revenue of GBP68.8 million, up sharply from GBP32.0 million in the previous year and 10% higher than the GBP62.5 million achieved in the first quarter of 2019. Total room revenue amounted to GBP50.4 million, up from GBP22.5 million in the previous year and 16% higher than GBP43.5 million in the first quarter of 2019. Average room rate increased to GBP143.7 from GBP124.1 year-on-year. Against 2019, average room rate increased 25% from GBP115.5. Chief Executive Boris Ivesha said that the momentum experienced in the first quarter is moving into the second quarter. "This affords us great optimism for the rest of the year, with forward bookings for summer and peak season also very healthy," he said.
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The year is off to a stronger start than expected at Deutsche Bank, with first quarter pretax profit growing 12% to EUR1.85 billion. This is the highest quarterly profit result since 2013, the bank said. In releasing its first quarter results, Germany's largest lender announced it wants to drive earnings even higher and so will find way to further cut costs. Deutsche Bank said it plans to enact "workforce reductions in non-client facing staff" and "focused reductions in management layers." It also plans to streamline its construction financing business and further downsize its technology centre in Russia. CEO Christian Sewing said the Frankfurt-based institution is "well on track" to meeting or exceeding its 2025 targets.
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By Heather Rydings, Alliance News senior economics reporter
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