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(Alliance News) - Stocks in London are expected to start the week on a cautious note, as investors nervously look ahead to two key interest rate decisions.
The economic calendar for this week has the US Federal Reserve announcing its latest interest rate decision on Wednesday at 1900 GMT, followed by the Bank of England on Thursday at 1200 GMT. Both central banks are expected to keep rates on hold.
Oil prices have spiked following the latest escalations in the Middle East, which has seen a drone attack kill three American troops and wound more than 30.
In early corporate news, Ferrexpo said it has lost a USD125 million court case in Ukraine, but will appeal the decision. Superdry confirmed that it is working with advisers, in hopes of making cost saving measures.
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 slightly at 7,633.90
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Hang Seng: up 0.5% at 16,038.25
Nikkei 225: closed up 0.8% at 36,026.94
S&P/ASX 200: closed up 0.3% at 7,578.40
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DJIA: closed up 60.30 points, 0.2%, at 38,109.43
S&P 500: closed down 3.19 points, 0.1% at 4,890.97
Nasdaq Composite: closed down 55.13 points, 0.4%, at 15,455.36
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EUR: down at USD1.0846 (USD1.0866)
GBP: down at USD1.2708 (USD1.2721)
USD: down at JPY147.91 (JPY147.92)
Gold: up at USD2,028.10 per ounce (USD2,018.76)
(Brent): up at USD83.11 a barrel (USSD81.36)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 GMT Ireland retail sales
10:30 EST US Dallas Fed manufacturing business index
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The UK construction sector is facing an "immensely difficult period" after 4,370 construction companies went bust over the past year, according to new data. The sector has experienced the highest number of bankruptcies of any industry in the UK for the past three years, according to auditing firm Mazars. In the year to the end of November, 4,370 companies went insolvent compared to 4,086 in 2021/22 and 2,481 in 2020/21. This reflected a 7.0% increase in insolvencies from 2021/22 and 76% in 2020/21 due to high material and labour costs.
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London has led a rebound in fresh home buyer demand in the first weeks of 2024 – indicating that the tide may be turning for the housing market in the capital, according to a property website. The rebound in London is uniform across the inner city, the suburban outer area and the core commuter areas around the capital, Zoopla said. The website defines "demand" as would-be buyers contacting estate agents to inquire about and arrange viewings for a specific property listed on Zoopla. The East of England has also experienced a relatively strong rebound in demand as 2024 gets under way, Zoopla said, with the increase in buyer demand across most other regions being in line with or slightly ahead of this time last year. The property website's January report said: "This could reflect a turn of fortunes for the London housing market."
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BROKER RATING CHANGES
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Berenberg raises IMI to 'buy' (hold) - price target 1,950 (1,605) pence
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Jefferies raises Intertek to 'buy' (hold) - price target 5,300 (4,300) pence
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RBC cuts Kingfisher to 'sector perform' (outperform) - price target 235 pence
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COMPANIES - FTSE 100
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GSK said the European Commission has granted marketing authorisation for Omjjara, a once-a-day, oral JAK1/JAK2 and activin A receptor type 1 inhibitor. GSK said Omjjara is the first authorised medicine in the EU for disease-related splenomegaly or symptoms in adult patients with moderate to severe anaemia who have primary myelofibrosis, post polycythaemia vera myelofibrosis or post essential thrombocythaemia myelofibrosis and who are Janus kinase inhibitor naive or have been treated with ruxolitinib. Nina Mojas, senior vice president, of Oncology Global Product Strategy at GSK, said: "The challenges of living with myelofibrosis can be burdensome, and symptomatic patients can experience spleen enlargement, fatigue, night sweats and bone pain. Until now, there have been no options specifically indicated to treat these symptoms in patients who also experience anaemia. The authorisation of Omjjara brings a new treatment option with a differentiated mechanism of action to these patients in the EU." It also said that the European Medicines Agency has accepted the its regulatory application to expand the use of its adjuvanted recombinant respiratory syncytial virus vaccine to adults aged 50-59 who are at increased risk for RSV disease. Arexvy is currently approved in Europe in adults aged 60 and over.
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A class action trial seeking GBP1.3 billion in compensation from BT Group for more than three million customers is due to begin. Customers could be in line for between GBP300-400 depending on the length of their contract with BT if Collective Action on Land Lines, or Call, founder Justin Le Patourel is successful. After a series of appeals, the case is now proceeding to a full trial at the Competition Appeal Tribunal. In 2017, watchdog Ofcom said that BT had unfairly charged millions of landline customers from 2015 after an investigation. At the time, BT agreed to reduce the price of its landlines. "We do not accept that our pricing was anti-competitive back then, and as such are committed to robustly defending our position at trial,"a BT spokesman said.
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COMPANIES - FTSE 250
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Tritax Big Box REIT said it added GBP7.8 million annual contracted rent in 2023 at a 6.7% yield on cost. It also noted a "resilient" occupational market in line with pre-Covid levels and stabilisation in investment yields. Looking ahead, Tritax Big Box expects to "deliver further income and capital growth" going forward. "This has been another positive year demonstrating our ability to execute on all aspects of our strategy to create value. We are capturing rental growth through our asset management activities, crystalising attractive returns through our disposal programme, and carefully redeploying the proceeds into higher returning opportunities," said Chief Executive Colin Godfrey.
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Ferrexpo said that a Ukrainian court of appeal has confirmed a claim against Ferrexpo Poltava Mining for USD125 million. FPM, which is the company's Ukrainian subsidiary, will file an appeal to the Supreme Court in Ukraine. The claim against FPM relates to loan agreements. "Ferrexpo's operations remain unaffected," the Swiss iron ore pellet producer added.
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OTHER COMPANIES
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A Hong Kong court on Monday ordered the liquidation of battered Chinese property developer Evergrande, dealing another blow to the firm that has become the symbol of a property crisis that has sent shivers through the economy. High Court Judge Linda Chan's decision effectively kickstarts a long process which includes liquidating the developer's assets and replacing its management to assuage concerns of its creditors. The move against what was once China's biggest developer comes as it wallows under more than USD300 billion in liabilities, one of several firms hammered by a years-long government clampdown on the sector. A creditor, Top Shine Global, filed the winding-up petition in Hong Kong against China Evergrande Group in 2022 and the case has dragged on while parties tried to broker a deal. But on Monday, Judge Linda Chan said "enough is enough".
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Dublin-based airline Ryanair said profit after tax in the three months to December 31 fell 93% to EUR15 million from EUR211 million a year before, as higher fuel costs offset revenue gains. While traffic and fares were higher than a year ago, Ryanair said loads and yields during the festive period were "softer than previously expected". This was due to the firm having to lower prices in response to the removal of flights from online travel agency pirate websites in early December, it said. Nevertheless, Ryanair said revenue in the quarter jumped 17% to EUR2.70 billion from EUR2.31 billion a year prior. Looking ahead, Ryanair warned that the full year result was "heavily dependent" on avoiding unforeseen adverse events in the fourth quarter, such as the Ukraine war, the Israel-Hamas conflict and further Boeing delivery delays.
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Clothing retailer Superdry early Monday confirmed it is working with advisors to consider "the feasibility of various material cost saving options". Sky News on Saturday had reported that Superdry is working with PricewaterhouseCoopers on a restructuring plan that could involve store closures and job cuts. The plan could involve a company voluntary arrangement, an insolvency mechanism that enables businesses to reduce their liabilities to creditors, Sky said without citing sources. This would allow Superdry to close underperforming shops and force through rent cuts, it said. Superdry on Monday said the new cost review builds on the cost saving initiatives it has already carried out as part of its turnaround strategy. On Friday, Superdry released its interim results, saying challenging markets and poor weather had hurt earnings. The company also is set to lose another finance chief in March.
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By Sophie Rose, Alliance News senior reporter
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