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(Alliance News) - Stocks are called lower in London on Thursday, after hawkish minutes from the US Federal Reserve once again gave rise to interest rate fears.
Wednesday's minutes from the Federal Reserve's June meeting showed the central bank was committed to raising interest rates further, despite pausing last month.
Fed officials signalled they plan to resume rate rises believing more tightening is required to tame inflation in the world's largest economy.
"Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate," minutes from the June meeting of the Federal Open Market Committee showed.
"The minutes came to confirm how serious the Fed is in further tightening monetary conditions, and boosted the Fed hike expectations," Swissquote Bank senior analyst Ipek Ozkardeskaya.
In early UK company news, bank chiefs are meeting Financial Conduct Authority officials to discuss concerns over savings rates lagging behind the cost of mortgages. abrdn said the outlook for customer growth in 2023 is "subdued" due to market conditions. Jet2 swung to profit and announced the departure of Executive Chair Philip Meeson.
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 33.1 points, 0.4%, at 7,409.00
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Hang Seng: down 2.9% at 18,561.15
Nikkei 225: closed down 1.7% at 32,773.02
S&P/ASX 200: closed down 1.2% at 7,163.40
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DJIA: closed down 129.83 points, 0.4%, at 34,288.64
S&P 500: closed down 0.2% at 4,446.82
Nasdaq Composite: closed down 0.2% at 13,791.65
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EUR: down at USD1.0852 (USD1.0876)
GBP: down at USD1.2708 (USD1.2718)
USD: down at JPY143.72 (JPY144.53)
Gold: down at USD1,919.59 per ounce (USD1,924.40)
Oil (Brent): down at USD76.40 a barrel (USD76.54)
(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 retail trade
09:30 BST UK construction PMI
09:30 BST UK BoE decision maker panel data
07:30 EDT US Challenger job-cut report
08:15 EDT US ADP national employment report
08:30 EDT US unemployment insurance weekly claims report
09:45 EDT US S&P Global services PMI
10:00 EDT US ISM services PMI
10:00 EDT US labor turnover survey
16:30 EDT US foreign central bank holdings
16:30 EDT US federal discount window borrowings
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A Conservative MP has urged the Bank of England to have "patience" and allow inflation to fall instead of continuing to raise interest rates in light of mounting market pressures. Robert Syms used an adjournment debate in the Commons to raise concerns over the "pernicious effect" of money printing and inflation in the British economy. Warning the Bank of England against succumbing to pressure, he said: "My concern is that most of the impact of raising interest rates on the economy hasn't been felt yet and the bank every now and again will feel pressured. "Particularly, at a time when financial markets test the bank, and indeed have a 24-hour news cycle, the pressure will be to keep raising rates.
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The UK Financial Conduct Authority warned that asset managers must control their liquidity levels better as a failure to do so could bring "serious risks for investors and to wider market stability". The watchdog called on asset managers to "review liquidity management in funds". "As things stand, gaps observed in liquidity management could lead to a risk of investor harm," the FCA said. "While some firms demonstrated very high standards, with the review highlighting good practices seen, there was a wide disparity in the quality of compliance with regulatory standards and depth of liquidity risk management expertise."
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BROKER RATING CHANGES
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JPMorgan raises Smurfit Kappa to 'overweight' (neutral) - price target 36 (38) eur
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JPMorgan raises Mondi to 'overweight' (neutral) - price target 1,355 (1,606) pence
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RBC raises Smiths to 'sector perform' (underperform) - price target 1,775 (1,650) pence
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COMPANIES - FTSE 100
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abrdn outlined its ambition to "build a leading position in the UK's personal wealth market", alongside some financial targets. The investor and asset manager is targeting mid-single digit compound annual growth rate in total customer base over the next five years, but said its outlook in 2023 is "subdued" due to market conditions. The Edinburgh-based firm said it is looking to grow its market share of trading transactions, which will be driven by "expanded customer numbers and pipeline of new trading services and proposition enhancements".
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Bank chiefs are meeting Financial Conduct Authority officials on Thursday to discuss concerns surrounding interest rates for savers lagging behind the cost of mortgages. Bosses from HSBC, NatWest, Lloyds and Barclays are expected to attend. According to data from Moneyfactscompare.co.uk, the average easy access savings rate on offer on Wednesday was 2.48%. Average two- and five-year fixed-rate mortgage rates recently broke through the 6% mark for the first time this year, having previously been above 6% during the market volatility that followed last autumn's mini-budget. The Bank of England base rate is currently 5.00%, having increased 13 times in a row as the Bank tries to subdue stubbornly high inflation.
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COMPANIES - FTSE 250
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Electronics retailer Currys reported a "very mixed year". In the financial year ended April 29, its annual profit came in at the top end of guidance, with adjusted pretax profit of GBP119 million, down 38% from a restated figure of GBP192 million. On a statutory basis, it swung to a pretax loss of GBP450 million from GBP126 million profit, which was due to a goodwill impairment of GBP511 million related to the Dixons Carphone merger in 2014. Revenue fell 6.2% to GBP9.51 billion from GBP10.14 billion, with revenue falling across UK & Ireland and Nordics, but growing in Greece. It declared no final dividend for the year, after paying out 2.15p a year prior. Currys said it is planning GBP80 million capital expenditure in financial 2024, down 25% from the previous year amid lower "transformation" spend. It also expects net exceptional costs of around GBP50 million, due to additional property costs and restructuring. Trading at the start of the year has been consistent with its expectations, the company said.
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OTHER COMPANIES
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Leisure travel group Jet2 reported a strong year of trading, as well as the departure of its executive chair. In the 12 months to March 31, revenue jumped multiplied year-on-year to GBP5.03 billion from GBP1.2 billion, and was also 40% ahead of financial 2020. It swung to a pretax profit of GBP371.0 million from a loss of GBP388.8 million a year before, also more than doubling profit from financial 2020. It declared a final dividend of 8.0 pence, having paid nothing a year before. "We continue to believe that the end-to-end package holiday is a resilient and popular product, particularly during difficult economic times," the firm said. It noted margins are holding up despite higher costs, thanks to robust pricing for its package holidays and flight-only products. In addition, Jet2 announced Executive Chair Philip Meeson will step down from the board. "Philip bought the business in 1983, when it was a small cargo airline and distribution company serving the Channel Islands. The company subsequently listed in November 1988," Jet2 said. Meeson will move to non-executive chair later this year, and remain in the role until a successor is appointed.
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By Elizabeth Winter, Alliance News senior markets reporter
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