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(Alliance News) - Stocks in London are set to open higher on Tuesday morning, as fresh data revealed UK average pay slowed in last three months of 2022 and saw one of the biggest falls in real terms since records began.
"There's little sign that UK wage growth has reached a peak, and the jobs market looks reasonably healthy," commented ING. "A 25bp rate hike at the March [Bank of England policy] meeting seems likely."
Markets also were looking to US inflation data for January, which is out at 1330 GMT, ahead of the New York open.
"Today's [US] report is expected to act as an important indicator as to how many more 25 [basis point] rate hikes might be in the pipeline as the Fed looks to push inflation back to its 2% target," explained Michael Hewson at CMC Markets.
Markets expect to see consumer price inflation to stand at 6.2% in January, according to FXStreet, down from 6.5% in December.
Hewson said January's numbers "could well go some way to reinforcing the more hawkish commentary we've seen from various Fed officials since the January rate meeting" as well as "upend US stock markets even further".
In Japan, economics professor Kazuo Ueda was nominated as the Bank of Japan's next governor
The respected economist, described as careful and cautious, was a surprise pick for the change of guard after the outgoing governor's deputy reportedly turned down the job.
In addition on Tuesday, government data showed Japan's economy expanded just 0.2% in the last quarter of 2022, a smaller rebound than expected despite the long-awaited reopening of the country to tourists.
In company news, Coca-Cola HBC achieved record annual revenue, and the US's Liberty Global has bought a 4.9% stake in Vodafone.
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 9.90 points, or 0.1%, at 7,957.50
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Hang Seng: down 0.1% at 21,134.69
Nikkei 225: closed up 0.6% at 27,602.77
S&P/ASX 200: closed up 0.2% at 7,430.90
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DJIA: closed up 376.66 points, 1.1%, at 34,245.93
S&P 500: closed up 1.1% at 4,137.29
Nasdaq Composite: closed up 1.4% at 11,891.79
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EUR: up at USD1.0739 (USD1.0718)
GBP: up at USD1.2154 (USD1.2133)
USD: down at JPY131.89 (JPY132.77)
Gold: up at USD1,860.10 per ounce (USD1,853.05)
(Brent): up at USD86.18 a barrel (USD85.82)
(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 EU gross domestic product
11:00 CET EU employment
08:30 EST US consumer price index
08:55 EST US Johnson Redbook retail sales index
10:00 CST US Fed Dallas President Lorie Logan speaks
14:05 EST US Fed New York President John Williams speaks
16:30 EST US API weekly statistical bulletin
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The UK employment rate remained steady in the final three months of 2022, according to data from the Office of National Statistics, while average pay saw one of the biggest falls in real terms since records began. The unemployment rate was 3.7% in the UK in the three months from October to December, unchanged from the September to November period. The jobless rate was in line with market consensus cited by FXStreet. Annual growth in average total pay, including bonuses, was 5.9%. Excluding bonuses, it was 6.7%. In September to November, annual growth in average total pay, including bonuses, and in regular pay, excluding bonuses, both were 6.4%. This means pay continued to lag inflation in the UK. Consumer prices rose by 10.5% in December from a year before. "UK wage growth has come in higher than expected in the latest jobs report, and this will be a concern for the Bank of England's hawks," said ING bank. "The headline year-on-year change in regular pay (measured as a three-month moving average) came in at 6.7%, up from 6.5% and above expectations."
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BROKER RATING CHANGES
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Barclays cuts St James's Place price target to 1,469 (1,507) pence - 'equal weight'
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Barclays cuts Phoenix Group price target to 765 (790) pence - 'overweight'
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Barclays cuts M&G price target to 196 (205) pence - 'underweight'
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COMPANIES - FTSE 100
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Coca-Cola HBC reported a strong year of organic growth, saying this was against a challenging backdrop, achieving record revenue in 2022 of EUR9.20 billion. This represented growth of 28% from EUR7.17 billion the previous year. The soft-drink bottling company posted pretax profit of EUR623.6 million, down from GBP734.9 million, however. The company said this was mainly due to impairment charges relating to its operations in Russia. Looking forward to 2023, Coca-Cola HBC said it expects to generate organic revenue growth above its 5% to 6% target range but cautioned that it remains "attentive" to macroeconomic and geopolitical risk. It said it expects to see organic earnings before interest and taxation movement of between negative 3% and positive 3%.
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Liberty Global late on Monday said it acquired a 4.9% stake in telecommunications firm Vodafone, believing it to be undervalued. Liberty Global Chief Executive Mike Fries said the US company believes Vodafone's share price "does not reflect the underlying long-term value of their operating businesses". Liberty Global bought 1.33 billion shares in Vodafone and will fund the investment through a non-recourse financing. It said it required equity funding of GBP225 million. At current market prices, the stake purchased by Liberty Global is worth GBP1.22 billion.
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COMPANIES - FTSE 250
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Plus500 reported a rise in annual pretax profit and revenue as the London-based contracts-for-difference trading platform announced two share buyback programmes, bringing its total share buyback for 2022 to USD180.2 million. Pretax profit climbed to USD474.3 million in 2022 from USD386.4 million the previous year, while revenue grew 16% year-on-year to USD832.6 million from USD718.7 million. Plus500 said this was "well ahead" of market expectations at the beginning of the year. The company announced a final buyback of up to USD42.4 million and a special buyback of up to USD27.6 million. It also declared a final dividend of USD0.2156 per share and a special dividend of USD0.1078 per share. Chief Executive David Zruia said: "Plus500 continues to outperform, delivering an excellent set of results in 2022, well ahead of market expectations at the beginning of the year. Our performance was again driven by Plus500's unique proprietary technology stack proposition, which underpins our on-going ability to attract and retain higher value customers over the long term."
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OTHER COMPANIES
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Polar Capital Global Financials Trust promoted Simon Cordery to board chair, effective from March 30. Cordery has been a non-executive director of the company since July 2019. Current Chair Robert Kyprianou will step down from the board at the firm's annual general meeting on March 30. Polar Capital's board said: "As chairman, Robert oversaw the successful reconstruction of the company as it approached its end-of-life fixed term in 2020 at the tumultuous onset of Covid, and its subsequent growth...With Simon stepping up to chair the company we now look forward to the next stage in the company's life."
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By Heather Rydings, Alliance News senior economics reporter
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