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(Alliance News) - Stocks in London are called higher on Thursday, following an upbeat trading session in Asia.
In early economic news, the UK economy returned ever-so-slightly to growth in August, as expected, but the decline in July was slightly worse than previously estimated, according to figures from the Office for National Statistics.
Investors will also be reflecting on the latest minutes from the last Federal Open Market Committee's most recent meeting. A majority of Federal Reserve officials expect one more interest rate increase before the end of the year and signalled monetary policy would remain restrictive for some time, the meeting showed.
Later in the day, there will be US inflation figures. Annual headline inflation is expected to cool to 3.6% in September from 3.7% in August, as core inflation is expected to fall to 4.1% from 4.3%.
"If the weaker trend of slowing core continues in September, the Fed may well look through the stickiness in headline inflation and decide to sit on its hands in November," said CMC Markets' Michael Hewson.
On the company side, the UK competition watchdog said it was investigating the BBC and ITV over the purchase of freelance services in TV production. Dechra Pharmaceuticals reported a swing to an annual loss ahead of its takeover.
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 29.2 points, 0.4%, at 7,649.23
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Hang Seng: up 2.1% at 18,261.30
Nikkei 225: closed up 1.8% at 32,494.66
S&P/ASX 200: closed marginally higher at 7,091.00
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DJIA: closed up 65.57 points, 0.2%, 33,804.87
S&P 500: closed up 0.4% at 4,376.95
Nasdaq Composite: closed up 0.7% at 13,659.68
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EUR: up at USD1.0632 (USD1.0622)
GBP: up at USD1.2325 (USD1.2309)
USD: up at JPY149.07 (JPY149.01)
Gold: up at USD1,879.43 per ounce (USD1,872.58)
Oil (Brent): down at USD85.57 a barrel (USD85.84)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
Germany balance of payments
UK BoE Chief Economist Huw Pill speaks
10:00 CEST EU long term interest rates statistics
13:30 CEST EU ECB meeting minutes
11:00 IST Ireland CPI
09:30 BST UK BoE credit conditions survey
09:30 BST UK BoE's bank liabilities survey
12:30 BST UK NIESR Monthly GDP Tracker
08:30 EDT US CPI
08:30 EDT US unemployment insurance weekly claims report
09:00 CDT US Fed Dallas President Lorie Logan speaks
13:00 EDT US Fed Atlanta President Raphael Bostic speaks
16:30 EDT US federal discount window borrowings
16:30 EDT US foreign central bank holdings
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The ONS estimates that gross domestic product rose 0.2% in August from July, after contracting by a revised 0.6% in July from June. August's reading was in line with FXStreet-cited market consensus. July's decline was downwardly revised from 0.5% shrinkage. The ONS said that services output, which rose 0.4% during the month, was the only positive contributor to growth in August. "The largest drivers of the growth in monthly services output were professional, scientific and technical activities, and education," the statistics body explained. Production output fell 0.7% in August, softening somewhat from the 1.1% contraction in July. Construction fell 0.5% over the month, after a 0.4% decline the month before.
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Younger and low-income workers could be forced to bear the brunt of the nation's high interest rates, according to a member of the Bank of England's decision-making Monetary Policy Committee. Swati Dhingra said inflation, along with weaker spending and job cuts ultimately triggered by higher rates, all affect younger and lower-paid workers the most. "The kinds of price increases that we're seeing, which is energy and food, those will typically impact those people more", she said. "And then the interest rates will also typically impact younger, less educated people more."So… eventually when we come out of all of this, we're going to see that possibly inequality is going to rise," she told the BBC.
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UK mortgage affordability is continuing to affect the property market, with nearly all parts of the country seeing house prices retreat, according to surveyors. The Royal Institution of Chartered Surveyors said its report for September shows the continuation of a challenging market backdrop, with interest rates continuing to hamper mortgage affordability, and the disparity between tightening lettings supply and rising demand causing rental price rises. A net balance of 39% of surveyors reported new buyer inquiries falling rather than rising in September. A balance of 37% of property professionals reported agreed sales falling.
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BROKER RATING CHANGES
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Jefferies raises Big Yellow to 'buy' (hold) - price target 1,170 pence
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Berenberg cuts Johnson Matthey to 'hold' ('buy') - target 1,650 (2,200) pence
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Barclays cuts ITM Power to 'underweight' (overweight) - price target 70 (600) pence
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COMPANIES - FTSE 100
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Dechra Pharmaceuticals updated on its annual results for the financial year ended June 30, ahead of its acquisition. Revenue grew to GBP761.5 million from GBP681.8 million a year before, which was 12% on a reported basis, and 5.5% higher in constant currency. Dechra said this was thanks to growth in EU pharmaceuticals, with its performance in North America taking a hit from US wholesaler de-stocking. The firm swung to a pretax loss of GBP36.1 million from a profit of GBP77.6 million. Dechra said it expects its takeover by EQT, which is a Swedish private equity firm, and Luxinva, which is controlled by the sovereign wealth fund of the United Arab Emirates, to complete in late 2023 or early 2024. Its total dividend amounted to 12.50 pence, down from 44.89p in the previous year, as Dechra decided to forgo the payment of a final dividend given its impending takeover.
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COMPANIES - FTSE 250
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The UK Competition & Markets Authority said it has opened an investigation into broadcasters and production houses including ITV and the BBC. The probe relates to suspected breaches of competition law regarding freelancers and staff used to support the production, creation and broadcasting of television content in the UK. "ITV is committed to complying with competition law and to cooperating with the CMA's inquiries. ITV does not propose to comment further at this stage," ITV responded.
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Oxford Instruments said it expects a "slightly" reduced margin for its half year ended September 30, and warned orders will be slightly behind the prior year due to timing delays. Full year trading will be "towards the lower end of expectations". However, it said revenue is ahead of the prior year period, noting "particularly good growth" in Research & Development, and it expects to report good order book growth for the period.
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OTHER COMPANIES
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The US Internal Revenue Service is asking that Microsoft pay a whopping USD29 billion in unpaid taxes from 2004 to 2013, the company said in an official filing. The case puts further focus on the international tax practices of major multinationals that have been accused in recent years of shifting revenue to lower tax jurisdictions in an effort to avoid higher taxes in their major markets. "We disagree with the proposed adjustments and will vigorously contest the (demand) through the IRS's administrative appeals office and, if necessary, judicial proceedings," the company said in its filing to the US markets authority.
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By Elizabeth Winter, Alliance News senior markets reporter
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