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(Alliance News) - Stocks in London are set to higher on Thursday, as earnings from Nvidia, at the heart of an artificial intelligence boom, did not disappoint.
"Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations," Nvidia Chief Executive Jensen Huang said.
Traders also digested the latest meeting minutes from the Federal Reserve. Minutes from January's Federal Open Market Committee meeting released on Wednesday evening showed that officials remained "highly attentive" to inflation risks amid fears the current progress could stall.
At January's meeting, the FOMC unanimously voted to leave interest rates unchanged for the fourth meeting in a row. The key rate is targeted in a range between 5.25% and 5.50%, the highest in nearly 23 years.
Pantheon Macroeconomics analyst Ian Shepherdson commented: "The bottom line, then, is that the FOMC's consensus view that the Fed needs to wait for significantly more data before easing is quite strong, and note that this meeting was held before the release of the very strong January employment report and the overshoots to the CPI and PPI."
In early UK corporate news, Lloyds Banking Group reported surging annual profit and declared a new buyback, though it also set aside GBP450 million as part of a UK probe into historic motor finance arrangements. Rolls-Royce hailed a return to form in 2023, while Hargreaves Lansdown reported a rise in revenue but a decline in half-year profit.
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 0.5% at 7,702.11
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Hang Seng: up 1.1% at 16,690.35
Nikkei 225: up 2.2% at 39,098.68
S&P/ASX 200: closed up just 2.8 points at 7,611.20
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DJIA: closed up 48.44 points, 0.1%, at 38,612.24
S&P 500: closed up 0.1% to 4,981.80
Nasdaq Composite: closed up 0.3% to 15,580.87
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EUR: up at USD1.0850 (USD1.0812)
GBP: up at USD1.2663 ( USD1.2622)
USD: down at JPY150.17 (JPY150.25)
GOLD: up at USD2,030.44 per ounce (USD2,024.88)
(Brent): down at USD82.58 a barrel (USD82.84)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
08:30 GMT Germany flash composite PMI
09:00 GMT eurozone flash composite PMI
09:30 GMT UK flash composite PMI
10:00 GMT eurozone CPI
11:00 GMT Ireland wholesale prices
13:30 GMT US Chicago Fed national activity index
13:30 GMT US initial jobless claims
14:45 GMT US flash composite PMI
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Federal Reserve officials indicated that there was no rush to cut interest rates until there was greater confidence inflation was on track to hit its 2% target. Minutes from January's Federal Open Market Committee meeting released on Wednesday evening showed that officials remained "highly attentive" to inflation risks amid fears the current progress could stall. "Most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2%," the minutes stated. At January's meeting, the FOMC unanimously voted to leave interest rates unchanged for the fourth meeting in a row. The key rate is targeted in a range between 5.25% and 5.50%, the highest in nearly 23 years.
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The UK's speaker of the House of Commons is under pressure over his handling of a debate on Gaza, which resulted in MPs passing Labour's amendment calling for an "immediate humanitarian ceasefire" amid scenes of chaos. The motion was approved but only after Lindsay Hoyle upended parliamentary convention by selecting Labour's bid to amend an SNP motion on the Israel-Hamas war. His decision sparked fury from the Conservative and SNP benches, who accused him of helping Keir Starmer avoid another damaging revolt over the Middle East issue. Hoyle issued an apology after a day of acrimony but continues to face calls to resign.
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BROKER RATING CHANGES
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Berenberg raises Moneysupermarket.com to 'buy' (hold) - price target 295 (290) pence
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Goldman Sachs cuts Rio Tinto price target to 7,100 (7,300) pence - 'buy'
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COMPANIES - FTSE 100
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Lloyds Banking Group reported a profit and revenue rise during a "critical year" for the lender, though it set aside GBP450 million following a UK watchdog review into historic motor finance agreements. Lloyds said net income grew 2.7% to GBP17.93 billion from GBP17.47 billion. Included in that top-line rise was a 4.5% increase in underlying net interest income to GBP13.77 billion. Lloyds said pretax profit surged 57% to GBP7.50 billion from GBP4.78 billion. It lifted its final dividend by 15% to 1.80 pence per share from 1.60p. It took the total dividend for the year to 2.76p, a rise of 15% from 2.40p. In addition, it announced a GBP2.0 billion buyback. "In combination, this is a total capital return of up to GBP3.8 billion, or 14% of the group's market capitalisation," it added. Chief Executive Charlie Nunn said: "2023 was a critical year in building towards the ambitious strategy we announced two years ago, as we look to grow our business and deepen relationships with our customers. As demonstrated in our recent strategic seminars, we have made significant progress and are on track to meet our 2024 and 2026 strategic outcomes, helping us build towards higher and more sustainable returns." Lloyds reported remediation costs of GBP675 million for the year, up from GBP255 million a year prior. The latest figure includes a GBP450 million provision following a Financial Conduct Authority review into historical motor finance commission arrangements, Lloyds said.
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Jet engine maker Rolls-Royce hailed a "step-change" in performance last year, though it fell short of returning to the dividend list. Rolls-Royce reported statutory revenue of GBP16.49 billion, up 22% from GBP13.52 billion in 2022. It swung to a pretax profit of GBP2.43 billion from a loss of GBP1.50 billion. It hailed "record" free cash flow of GBP1.29 billion, markedly above the GBP505 million generated in 2022. It predicts free cash flow between GBP1.7 billion and GBP1.9 billion for 2024. "Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives. This step-change has been achieved across all our divisions, despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures," CEO Tufan Erginbilgic said. "We are managing the business differently and our significant performance improvement in the year reflects the hard work and focused actions of all our teams. We are also continuing to invest to drive future sustainable growth. Our strong delivery in 2023 gives us confidence in our 2024 guidance and is a significant step towards our mid-term targets. We are unlocking our full potential as a high-performing, competitive, resilient, and growing Rolls-Royce." Rolls-Royce did not declare a dividend. It ceased dividend payments in 2020. Its last dividend was a final dividend for 2019.
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COMPANIES - FTSE 250
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Fund supermarket Hargreaves Lansdown reported an increase in assets under administration, though net new business growth ebbed in the final six months of 2023. In the six months to December 31, the first half of the firm's financial year, net new business totalled GBP1.0 billion, down 38% from the GBP1.6 billion achieved a year prior. HL explained: "Our gross inflows to the platform were up year on year, however, our outflows were up too, meaning that overall, our net new business came in at GBP1.0 billion." It said outflows were the highest in "products that our clients use for more transient saving and investing". Assets under administration amounted to GBP142.2 billion, a rise of 12% from GBP127.1 billion a year earlier and up 6% since June. Revenue for the half-year amounted to GBP368.2 million, a rise of 5.2% on-year from GBP350.0 million. Pretax profit, however, fell 7.6% to GBP182.5 million from GBP197.6 million. HL lifted its interim dividend by 3.9% to 13.2p from 12.7p. "We are re-iterating our guidance of 4% growth in our ordinary dividend for the full year," it said. "As we begin the second half of the year, we have the all-important tax year end season ahead and whilst the current uncertain economic environment is likely to remain and weigh on investor confidence, we will do all that we can to support our clients to make the most of their tax allowances, improve their financial resilience and achieve their financial goals."
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OTHER COMPANIES
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Galliford Try said it has signed three new infrastructure pacts totalling almost GBP100 million. The construction firm environment business has signed the dotted line on a GBP33 million deal to install a pipeline in South London. The same unit has won a GBP31 million deal to install a pipeline which connects a water treatment works in the east of Guildford, Surrey with a reservoir network to the west. Finally, its Highways business has inked a GBP34 million contract to redevelop the A629 route into central Halifax, West Yorkshire. The deal includes "pedestrianising key access areas and re-routing access to the town's railway station while removing traffic from the centre".
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VH Global Sustainable Energy Opportunities said it has upped the size of its buyback, believing its current share price "materially undervalues the company". It has increased the size of its buyback to GBP10 million, taking it GBP20 million. This is in light of the "persistent disconnect between GSEO's portfolio value and the value inferred by its share price".
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By Eric Cunha, Alliance News news editor
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