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(Alliance News) - Stocks in London are set to open lower on Wednesday as investor looked ahead to the release of the US Federal Reserve's September meeting minutes later in the day.
The minutes are being released against what Swissquote Bank analyst Ipek Ozkardeskaya described as a "growing choir of Federal Reserve members singing the doveish tune".
On Monday, two senior Fed officials warned that the US central bank should be careful when deciding whether or not to hike interest rates further to bring down inflation.
Meanwhile, another senior official said the Fed is on track to tackle US inflation without pushing the country into a damaging recession.
"We feel like we're on track for a soft landing," Minneapolis Fed President Neel Kashkari told a conference in North Dakota, using a popular term to describe tackling inflation while avoiding a recession.
In early UK corporate news, GSK said it has reached a confidential settlement in Zantac litigation in California and discoverIE said it is on track to deliver full year underlying earnings in-line with its recently upgraded expectations.
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 10.91 points, or 0.1%, at 7,617.30
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Hang Seng: up 1.5% at 17,923.11
Nikkei 225: closed up up 0.6% at 31,936.51
S&P/ASX 200: closed up 0.7% at 7,088.40
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DJIA: closed up 134.65 points, 0.4%, 33,739.30
S&P 500: closed up 0.5% at 4,358.24
Nasdaq Composite: closed up 0.6% at 13,562.84
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EUR: flat at USD1.0605 (USD1.0606)
GBP: higher at USD1.2287 (USD1.2270)
USD: higher at JPY148.91 (JPY148.74)
Gold: higher at USD1,860.48 per ounce (USD1,859.73)
(Brent): higher at USD87.75 a barrel (USD87.50)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
08:30 EDT Canada building permits
10:00 CEST EU ECB consumer expectations survey results
07:00 EDT US MBA weekly mortgage applications survey
08:30 EDT US PPI
09:15 EDT US FRB New York President John Williams speaks at Central Banking Seminar
14:00 EDT US Federal Open Market Committee meeting minutes published
16:30 EDT US API weekly statistical bulletin
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German banks are likely to see profits boosted thanks to higher interest rates, yet lag behind their international counterparts according to consulting firm McKinsey. In an analysis published on Wednesday, the management consultancy McKinsey assumes an increase in the average return on equity after taxes to 5.4% - up from 3.88% the year before. The return on equity is the relationship between profit and the equity capital employed. It shows how efficiently a company has used this money. Despite the increase, the figure for German banks is reported to remain below the European average of 7%, and well below the global industry average, which McKinsey expects to be 13% for the current year.
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BROKER RATING CHANGES
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JPMorgan raises Croda International to 'neutral' (underweight) - price target 4,400 (5,000) pence
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RBC cuts Morgan Advanced Materials price target to 330 (370) pence - 'outperform'
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Berenberg cuts Atalaya Mining to 'hold' (buy) - price target 380 (420) pence
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COMPANIES - FTSE 100
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GSK said it has reached a confidential settlement in the Cantlay/Harper case filed in California state court. The litigation related to its heartburn medication Zantac, also known as ranitidine. The case, which was set to begin trial on November 13, will be dismissed. The company said it has also settled the three remaining breast cancer bellwether cases in California, with GSK being dismissed from the case. The pharmaceutical company said the settlements reflect its desire to "avoid the distraction related to protracted litigation". The company does not admit any liability in the settlements and confirmed that it will continue to defend itself in all other Zantac cases. Zantac is the subject of numerous lawsuits, which allegedly link the heartburn drug with cancer.
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COMPANIES - FTSE 250
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discoverIE said it is on track to deliver full year underlying earnings in-line with its recently upgraded expectations after making good financial and strategic progress in the first half of the financial year ending March 31. The customised electronics manufacturer and designer said sales in the half-year were up 4% against last, comprising of 1% organic growth and 3% from acquisitions. Following this solid performance, and with good orderbook visibility into the second half, discoverIE said it is on track to deliver earnings in line with its full-year expectations.
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PageGroup said it expects to deliver operating profit between GBP125 million and GBP130 million in 2023 following a "resilient" performance in the third quarter of the year despite a "challenging" market backdrop. The recruitment company explained that candidate shortages remain "acute" and salary levels remain "elevated". "These lower offers, combined with lower candidate confidence, led to a further increase in the number of offers rejected by candidates, either through employer buybacks or unwillingness to risk the move for the size of incentive on offer," the company said. As a result, PageGroup said there is a "heightened" degree of uncertainty moving forward in the short-term.
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OTHER COMPANIES
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Oil and gas explorer and producer Kosmos Energy announced an oil discovery in the US Gulf of Mexico at the Tiberius exploration well. Kosmos is operator of the well and has a 33.3% working interest alongside Occidental and Equinor, which both also hold 33.3%. The well encountered around 250 feet of net oil pay in the primary Wilcox target. Kosmos said it will now undertake rock and fluid analysis to confirm the production potential of the reservoir and will work with partners on subsea development options.
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Clay and concrete building products manufacturer Forterra lamented that the signs of market improvement seen in May and June did not continue into the second half of the year. In July, the company guided for full-year earnings before interest, tax, depreciation and amortization with a more balanced split between the first and second half. However, Forterra said it now expecting demand demand to remain at the level it has experienced over the past quarter and, consequently, now expect full-year Ebitda to be below its previous expectations. Looking ahead to 2024, Forterra predicted that demand will be at a similar level to this year, though it expects its 2024 results to benefit from a more stable energy cost environment.
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By Heather Rydings, Alliance News senior economics reporter
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