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(Alliance News) - Stock prices in London opened slightly higher on Tuesday, ahead of an inflation reading from the US that comes a day before the US Federal Reserve announces its next interest rate decision.
The US will publish the November consumer price index at 1330 GMT. The data comes before the Federal Open Market Committee announces its interest rate decision on Wednesday at 1900 GMT. The two-day FOMC policy-making meeting starts on Tuesday.
"It is important to remember that however today's numbers come out they are unlikely to alter the calculus for a rate hike of 50bps tomorrow. They will however offer important clues as to what next year might bring. If inflation continues to slow, the choices for January could well see 25bps become a base case scenario, while a stronger number is likely to see 50bps become a base case scenario," said CMC Market's Michael Hewson.
In China, Hong Kong announced it will no longer require residents to use a scanning app to enter venues and that overseas arrivals could now visit bars and restaurants from the moment they land in a further easing of Covid restrictions.
The move comes a day after authorities in mainland China said they were retiring an app used to track travel to areas with Covid-19 cases, a milestone in the country's rapid turn away from its zero-tolerance coronavirus strategy.
Here is what you need to know at the London market open:
MARKETS
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FTSE 100: up 3.47 points at 7,449.44
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Hang Seng: up 0.7% at 19,607.68
Nikkei 225: closed up 0.4% at 27,954.85
S&P/ASX 200: closed up 0.3% at 7,203.30
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DJIA: closed up 528.58 points, 1.6%, at 34,005.04
S&P 500: closed up 56.18 points, 1.4% at 3,990.56
Nasdaq Composite: closed up 139.12 points, 1.3% at 11,143.74
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EUR: higher at USD1.0552 (USD1.0538)
GBP: higher at USD1.2286 (USD1.2267)
USD: lower at JPY137.46 (JPY137.54)
Gold: higher at USD1,786.01 per ounce (USD1,782.67)
(Brent): higher at USD79.27 a barrel (USD78.33)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
11:00 CET Germany ZEW indicator of economic sentiment
10:30 GMT UK BoE's financial stability report
08:30 EST US CPI
08:55 EST US Johnson Redbook retail sales index
10:00 EST US IBD/TIPP economic optimism index
16:30 EST US API weekly statistical bulletin
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The UK Office for National Statistics said UK unemployment in the August to October period was 3.7%. In October, average weekly earnings were up 6.1% from a year before, both with and without bonuses.
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Consumer price inflation in Germany remained in double-digits in November, data from Destatis confirmed. The inflation rate in Germany, as measured by the year-on-year change in the consumer price index, stood at 10.0% in November, slowed from a 10.4% increase in October. On a monthly basis, consumer prices were down 0.5% in November from October. Both the month-on-month and year-on-year prints were in-line with market consensus, as cited by FXStreet. Energy and food prices in particular have increased considerably, Destatis said. This was due to the war in Urkaine and delivery bottlenecks, it explained.
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The US Department of Energy is expected to announce that its researchers have achieved a "major scientific breakthrough" regarding nuclear fusion, a technology seen as a possible revolutionary alternative power source. Scientists have been working for decades to develop nuclear fusion – touted by its supporters as a clean, abundant and safe source of energy that could eventually allow humanity to break its dependence on the fossil fuels driving a global climate crisis. The Energy Department has refused to give any specific details about what it will announce Tuesday, but a Financial Times report over the weekend has set the scientific community abuzz. If the achievement is confirmed, "that is a true breakthrough moment which is tremendously exciting," said physicist Jeremy Chittenden with Imperial College London.
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BROKER RATING CHANGES
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Credit Suisse cuts Reckitt Benckiser to 'neutral' from 'outperform' - price target 6,200 (6,600) pence
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UBS cuts Rio Tinto to 'sell' from 'neutral' - price target 5,000 (4,600) pence
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OFFO BHF cuts easyJet to 'underperform' from 'neutral' - price target 300 (500) pence
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COMPANIES - FTSE 100
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Shell said that efforts have continued to "focus" its Malaysian portfolio, as it announced the sale of two offshore production sharing contracts in the Baram Delta. Sarawak Shell Bhd, a subsidiary of the London-based oil major, has agreed to sell its stake in both contracts to Petroleum Sarawak Exploration & Production Sdn Bhd. The base consideration of the sale is USD475 million, with additional payments of up to USD50 million between 2023 and 2024, contingent on commodity prices. The contracts are both non-operated interests, namely a 40% holding in the amended 2011 Baram Delta EOR PSC, and 50% in the SK307 PSC. The operator of both assets, Petronas Carigali Sdn Bhd, a subsidiary of Malaysian government-owned Petronas Bhd, holds the remaining interests.
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InterContinental Hotels has appointed Michael Glover as chief financial officer, with effect from March 20. Glover has been with InterContinental Hotels for 18 years and currently serves as CFO of the Americas and group head of Commercial Finance. He succeeds Paul Edgecliffe-Johnson who had announced his intention to retire back in October. Edgecliffe-Johnson will step down as CFO on March 19.
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COMPANIES - FTSE 250
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Chemring reported a double-digit rise in annual revenue and said its full-year results exceeded its initial expectations. In the financial year that ended October 31, the defence technology firm's revenue rose to GBP442.8 million from GBP393.3 million the previous year, while pretax profit climbed to GBP51.8 million from GBP48.8 million. The company's order intake was GBP521.5 million, up 28% from GBP431.0 million. Its order book stood at GBP650.9 million, up 30% from GBP500.8 million a year before. Chemring declared a dividend of 5.7 pence, up from 4.8p the year prior. Chemring added that trading since the start of its new financial year has been in-line with expectations. As a result, its outlook for its financial 2023 remains unchanged.
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Synthomer agreed to sell its laminates, films and coated fabrics businesses to Surteco North America Inc for an enterprise value of USD255 million. Synthomer expects the proceeds from the sale to total USD245 million and added that they will be used to repay debt. The sale is subject to regulatory approvals, with completion expected in the first quarter of 2023. "This divestment is consistent with our recently announced strategy to increase the specialty weighting of our portfolio and focus on higher value, higher growth markets where we have strong and sustainable leadership positions. The proceeds represent excellent value for our shareholders and the transaction is a significant step in the deleveraging of the group," said Chief Executive Michael Willome.
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OTHER COMPANIES
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Keywords Studios announced it acquired Milan-based PR and communications agency LabCom for an initial cash consideration of EUR1.0 million, in addition to the issue of up to 12,412 shares, three years following the acquisition date. Keywords explained that LabCom predominantly focuses on the video game sector in Italy. It will join the creative service provider's marketing businesses in the Engage service line. "This transaction broadens our reach in PR and communications services, and supports our strategy of building out a complete marketing offering for our clients," Chief Executive Bertrand Bodson said.
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Disgraced cryptocurrency tycoon Sam Bankman-Fried was arrested on Monday in the Bahamas at the request of the US, according to US officials seeking to charge him after the spectacular collapse of his FTX Trading Ltd platform. The arrest comes on the eve of Bankman-Fried's scheduled appearance at a US Congress hearing in which he was to testify under oath about the crypto exchange's overnight demise. The 30-year-old had in recent weeks defied legal advice and multiplied media appearances offering his version of his company's sudden failure, usually by video link from the Bahamas where his company is headquartered. "Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US government, based on a sealed indictment filed by the southern district of New York," said a tweeted statement from Damian Williams, lead prosecutor for the district. "We expect to move to unseal the indictment in the morning and will have more to say at that time," he added.
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By Heather Rydings, Alliance News senior economics reporter
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