(Alliance News) - Stocks in London are tipped for a strong start on Thursday, as global equity markets benefit from optimism ahead of the US inflation print later in the day.
According to FXStreet, the consensus is for the US headline consumer price index to edge up to 3.2% annually in December, from 3.1% in November. However, core inflation - which excludes food and energy - is expected to cool to 3.8% from 4.0%.
"Data in line, or ideally softer than expected, will keep the Federal Reserve doves in charge of the market and could further boost appetite in stocks and bonds," said Swissquote Bank senior analyst Ipek Ozkardeskaya.
Locally, investors will be looking at the latest updates from UK supermarkets after the critical festive trading period for retailers.
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 42.1 points, 0.6%, at 7,693.86
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Hang Seng: up 1.6% at 16,347.24
Nikkei 225: closed up 1.8% at 35,049.86
S&P/ASX 200: closed up 0.5% at 7,506.00
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DJIA: closed up 0.5% at 37,695.73
S&P 500: closed up 0.6% at 4,783.45
Nasdaq Composite: closed up 0.8% at 14,969.65
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EUR: up at USD1.0985 (USD1.0958)
GBP: up at USD1.2771 (USD1.2725)
USD: down at JPY145.43 (JPY145.74)
Gold: up at USD2,034.27 per ounce (USD2,026.60)
Oil (Brent): flat at USD77.37 a barrel (USD77.36)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
14:45 CET Germany current account
08:30 EST US CPI
08:30 EST US initial jobless claims
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The governor of the Bank of England has said further "global shocks" are a major threat to the UK economy as he told MPs he is monitoring the situation in the Red Sea closely amid concerns over oil supplies. Andrew Bailey also said he was hoping to see mortgage costs continue to fall after the Bank paused hiking interest rates. Speaking to a group of MPs during a Treasury Committee session, the Bank chief said he thought there was clearly the "potential for further global shocks" when asked about the top threat facing the UK economy this year. He said the Bank was closely monitoring the situation in the Red Sea. It comes after attacks by Iran-backed Houthi rebels on cargo ships in the critical trade route through the Suez Canal, causing some vessels to have to reroute over safety concerns.
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The UK government announced plans for what it said was the country's "biggest expansion of nuclear power for 70 years to bolster its energy independence and meet carbon emission targets. The Civil Nuclear Roadmap includes exploring the construction of a major new power station, GBP300 million of investment to produce an advanced uranium fuel and "smarter regulation". Taken together, the measures would quadruple UK nuclear power by 2050 to 24 gigawatts, enough to provide a quarter of the UK's electricity needs.
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BROKER RATING CHANGES
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Berenberg starts Land Securities with 'buy' - price target 807 pence
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RBC raises Antofagasta to 'outperform' (sector perform) - price target 1,800 (1,300) pence
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Goldman Sachs cuts Dr Martens price target to 96 (124) pence - 'neutral'
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COMPANIES - FTSE 100
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Marks & Spencer said it sustained "strong sales momentum" over the festive trading period in its financial third quarter, the 13 weeks to December 30. Group sales rose 7.2% to GBP3.86 billion year-on-year in constant currency, with Food leading at 10%, Clothing & Home seeing 4.8% growth, resulting in total UK growth of 8.5%. International sales fell 6.4% to GBP288 million, however. "In Food, we led the market on volume growth every month with a c.7% increase across the quarter, and served more customers than ever before. Core categories grew strongly and renewal stores, which cater to larger basket shops, performed particularly well, as more customers looked to us for more of their full shop," said CEO Stuart Machin. Looking ahead, M&S said it was confident of annual results in line with market expectations. However, more generally, it pointed to uncertainty in terms of economic growth, and consumer and geopolitical risks. It also faces higher costs from the higher-than-expected wage and business rate cost inflation.
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Tesco raised its annual guidance as it reported on its trading over the Christmas period and its third quarter. The grocer's third quarter is the 13 weeks to November 25, while Christmas covers the six weeks to January 6. In the UK & Republic of Ireland, it saw like-for-like sales growth of 7.3% in the third quarter, slowing to 6.4% over the six-week Christmas period. The figures exclude value-added tax and fuel. It cited a strong market share performance in the UK, adding 15 basis points to 27.9% in the four weeks to Christmas, and net switching gains for 10 periods in a row. "Our continued investments across the full breadth of our customer offer have resulted in a stronger trading performance than anticipated," Tesco said. The company upgraded its guidance for the current financial year, now expecting retail adjusted operating profit of around GBP2.75 billion, which is above its previous guidance range of GBP2.6 to GBP2.7 billion.
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Taylor Wimpey said it expects profit to be at the top end of guidance for 2023, as it hopes for a less challenging year ahead. The housebuilder said it anticipates group operating profit to be at the upper end of its GBP440 to GBP470 million range. It said total completions in 2023 dropped to 10,848 from 14,154 a year before, though overall average selling prices rose 3.5%. The company said its order book at year-end stood at GBP1.77 billion, down from GBP1.94 billion a year before. "Whilst too early in the year to gauge customer behaviour, we have seen good levels of enquiries so far this year and it is encouraging to see recent mortgage rate reductions which will improve affordability. We will continue to focus on driving value and sales performance, maintaining tight control on costs and investment in work in progress," Taylor Wimpey said.
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COMPANIES - FTSE 250
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LXi REIT and LondonMetric Property announced they have agreed an all-share merger. LXi REIT shareholders will receive 0.55 new LondonMetric shares for each LXi share held. The deal values LXi REIT at GBP1.9 billion, which is a 9% premium to its undisturbed closing price. LXi REIT shareholders will have 46% of the enlarged company, with LondonMetric shareholders to hold 54%. The enlarged group will have an EPRA net tangible assets of around GBP4.1 billion, and will be the fourth largest UK real estate investment trust.
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OTHER COMPANIES
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Retailer Boohoo has been found to have mislabelled items of clothing made in South Asia as "Made in the UK", according to a BBC investigation. A Panorama investigation found the company removed the original labels on T-shirts and hoodies at the retailer's controversial factory at Thurmaston Lane in Leicester between January and October last year. A spokesperson from Boohoo told the BBC the mislabelling was an "isolated incident" and a result of "human error". "We have taken steps to ensure this does not happen again." Boohoo is considering closing its Leicester factory and relocating operations. The company said less than 100 employees at the Thurmaston Lane factory may be impacted by the closure and it expects "some roles will be relocated". The clothing retailer said the plans to shut the site were not related to the findings of the Panorama investigation, adding that due to "significant investments" at its Sheffield and US distribution centres, it must take steps to ensure it is a "more efficient, productive and strengthened business".
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By Elizabeth Winter, Alliance News deputy news editor
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