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(Alliance News) - Stocks in London are called to open lower on Wednesday, following some hotter-than-expected consumer price data from the UK.
The ONS said the consumer price index rose by 4.0% annually in December, the pace of inflation notching up from a 3.9% increase in November. The reading came in hotter than market expectations, with consensus having been for price inflation to cool to 3.8%, according to FXstreet.
Overnight, stocks in Asia plummeted as new data showed that the Chinese economy last year grew at one of its slowest rates in more than three decades.
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 1.3% at 7,456.40
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Hang Seng: down 3.8% at 15,259.47
Nikkei 225: closed down 0.4% at 35,477.75
S&P/ASX 200: closed down 0.3% at 7,393.10
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DJIA: closed down 231.86 points, 0.6%, at 37,361.12
S&P 500: closed down 17.85 points, 0.4%, at 4,765.98
Nasdaq Composite: closed down 28.41 points, 0.2%, at 14,944.35
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EUR: down at USD1.0866 (USD1.0894)
GBP: down at USD1.2647 (USD1.2676)
USD: up at JPY147.93 (JPY146.81)
Gold: down at USD2,021.33 per ounce (USD2,038.07)
(Brent): down at USD77.59 a barrel (USD78.10)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CET eurozone CPI
09:30 GMT UK house price index
07:00 EST US MBA mortgage applications
08:30 EST US retail sales
08:30 EST US import and export prices
08:55 EST US Redbook index
09:00 EST US Federal Reserve Vice-Chair for Supervision Michael Barr speaks
14:00 EST US Fed's beige book
15:00 EST US New York Fed President John Williams speaks
World Economic Forum annual meeting in Davos continues
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UK consumer prices unexpectedly heated up in December, according to data from the Office for National Statistics on Wednesday. The ONS said the consumer price index rose by 4.0% annually in December, the pace of inflation notching up from a 3.9% increase in November. The reading came in hotter than market expectations, with consensus having been for price inflation to cool to 3.8%, according to FXstreet. Inflation's recent peak was 11.1% annually in October 2022, which the ONS estimates to be the highest since 1981. Core consumer prices, which exclude energy, food, alcohol and tobacco, rose 5.1% in December annually, having risen by the same amount a month earlier. The reading came in hotter-than-expected, with market consensus expecting core prices to cool to 4.9%.
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Separately, the ONS reported data for producer input prices. On a monthly basis, producer input prices fell by 1.2% in December, following a 0.4% fall a month earlier. November's figure was revised from 0.3% drop. Annually, producer input prices declined by 2.8% in December, a slightly quicker rate than November's 2.7% fall. November's annual data was revised from a 2.6% fall.
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The fate of Rishi Sunak's Rwanda bill is in the balance as a crunch vote looms after two Tory deputy chairmen resigned to join the biggest Conservative rebellion of his leadership. The prime minister is battling to see off another major revolt on Wednesday as MPs decide whether to back the legislation aimed at saving the government's flagship asylum policy. Some 60 Conservatives backed changes to the Safety of Rwanda bill put forward by Tory veteran bill Cash, in a sign of the scale of unease within the party during an election year. MPs voted 529 to 68 to reject the amendment, which aimed to ensure UK and international law cannot be used to prevent or delay a person being removed to Rwanda. But the scope of the revolt would be more than enough to sink the legislation and overturn the government's working majority if it were repeated at the bill's final Commons hurdle expected on Wednesday.
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A new plan will bolster the security of supply chains for key goods from medicines to minerals, the UK government has said. Ministers on Wednesday published a strategy for critical imports and supply chains, which the Department for Business & Trade said would help create a more secure trading environment for businesses. Publication of the plan, which officials have been working on for several months, comes as continuing Houthi attacks on ships in the Red Sea have sparked concerns about the impact on global trade. The government has said that the strategy will make it easier for firms to cope with threats to the global supply chain. Minister for Industry & Economic Security Nusrat Ghani, who will launch the plan at Heathrow Airport later, said it would help make the UK a "truly safe and reliable place to do business".
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BROKER RATING CHANGES
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UBS cuts M&G to 'neutral' (buy) - price target 235 (220) pence
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UBS cuts Admiral Group to 'neutral' (buy) - price target 2,850 (2,750) pence
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UBS cuts Shell to 'neutral' (buy) - price target 2,600 (3,000) pence
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COMPANIES - FTSE 100
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BP named Murray Auchincloss as its permanent chief executive officer. He has been interim CEO of the oil major since September last year, following the shock departure of Bernard Looney. Looney had resigned after less than four years in the role, after admitting that he had not been "fully transparent" about historical relationships with colleagues. Chair Helge Lund said: "Since September, BP's board has undertaken a thorough and highly competitive process to identify BP's next CEO, considering a number of high-calibre candidates in detail. The board is in complete agreement that Murray was the outstanding candidate and is the right leader for BP."
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GSK said it intends to sell around GBP1.00 billion worth of shares in Haleon, as it continues to reduce its shareholding in the Weybridge, Surrey-based consumer healthcare spin-off. Brentford, West London-based pharmaceutical company GSK said it will sell around 300 million shares in Haleon, around 3.2% of its investee's share capital. Following the demerger and listing of Haleon in July 2022, GSK initially retained a 13% stake in Haleon. After disposals in May and October last year, this was reduced to 7.4% through the aggregate sale of 510 million shares. This will now be reduced to around 4.2%, after a placing of shares under disposal to institutional investors.
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COMPANIES - FTSE 250
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Keller Group said 2023 underlying operating profit is expected to be significantly ahead of market expectations. Analyst consensus for underlying operating profit in 2023 is GBP150 million. The positive trading momentum and strong operational performance seen in the first nine of months of the year continued in the fourth quarter, the company said. CEO Michael Speakman said: "We are very encouraged by the group's strong progress in 2023. The combination of management actions to improve operational performance in project execution, commercial agility in the face of a dynamic market, and the one-off benefits in North America will result in Keller delivering a record performance in 2023 that has significantly exceeded our original expectations."
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Safestore reported that revenue in its financial year ended October 31 rose 5.5% to GBP224.2 million from GBP212.5 million a year earlier. However, pretax profit dropped 58% to GBP207.8 million from GBP498.8 million. On the back of the results, Safestore has paid out a final dividend 20.2p, versus 20.4p a year ago. This brings the total dividend up to 30.1p from 29.8p. "Whilst we are fully aware of the current macro-economic environment, our business model has proven to be highly resilient with multiple drivers of demand. We believe the group is strongly positioned to withstand pressures from challenging market conditions," Safestore said.
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OTHER COMPANIES
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Alphabet subsidiary Google confirmed it is eliminating "a few hundred" positions from its global ad team, amid a push to use artificial intelligence for efficiency and creativity. The job cuts to its "large customer" sales team are intended to result in better support for small and medium size businesses advertising on Google's platform, according to the internet giant. Expansion of small business ad teams at Google was expected by the company to result in increased hiring this year. Google made no mention of generative AI, which is disrupting many sectors including advertising.
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By Sophie Rose, Alliance News senior reporter
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