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(Alliance News) - Stocks in London were set to open higher on Friday, after a solid session for Asian equities and a strong finish in New York on Thursday.
US stocks were lifted by strong tech earnings. Meta Platforms was the star performer, surging 14% after first-quarter results beat expectations, boosted by a surprise increase in advertising revenue.
Earlier on Thursday, a report showed US economic growth slowed markedly and came in below market expectations in the first quarter.
Numbers from the Bureau of Economic Analysis showed that US gross domestic product grew by 1.1% on an annualised basis in the first three months of 2023, compared to the last three months of 2022, slowing from a 2.6% rise on the same basis in the fourth quarter of 2022.
Economic growth fell short of FXStreet-cited consensus of a 1.9% annualised climb.
In Japan on Friday, the Bank of Japan concluded its first meeting under its new governor, Kazuo Ueda, deciding to leave its ultra-easy monetary policy unchanged.
In London, state-backed lender NatWest reported a rise in first-quarter profit, despite a period of significant macro disruption. City broker Numis accepted a takeover offer from Deutsche Bank. Pearson said its first-quarter results were ahead of expectations.
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 21.92 points, or 0.3%, at 7,853.50
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Hang Seng: up 0.4% at 19,928.15
Nikkei 225: closed up 1.4% at 28,856.44
S&P/ASX 200: closed up 0.2% at 7,309.20
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DJIA: closed up 524.29 points, 1.6%, at 33,826.16
S&P 500: closed up 2.0% at 4,135.35
Nasdaq Composite: closed up 2.4% at 12,142.24
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EUR: lower at USD1.1014 (USD1.1024)
GBP: lower at USD1.2475 (USD1.2492)
USD: higher at JPY135.35 (JPY133.95)
Gold: higher at USD1,985.84 per ounce (USD1,984.30)
(Brent): higher at USD78.69 a barrel (USD78.08)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
11:00 CEST EU gross domestic product
09:55 CEST Germany labour market statistics
14:00 CEST Germany consumer price index
11:00 BST Ireland retail sales
09:45 EDT US ISM Chicago business survey
10:00 EDT US University of Michigan survey of consumers
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The International Monetary Fund urged European central banks to "kill the beast" of inflation by pursuing interest rate hikes. "You need to go and kill that beast" because if rate rises are paused history is "littered" with examples where "you will need to have a second attempt" at bringing down inflation, inflicting more economic pain, the IMF's European department director Alfred Kammer told reporters in Stockholm.
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BROKER RATING CHANGES
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Berenberg reinitiates Rightmove with 'hold' - price target 540 pence
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Numis starts Coats with 'buy' - price target 100 pence
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Berenberg cuts Kerry price target to 116 (120) EUR - 'buy'
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COMPANIES - FTSE 100
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NatWest said it delivered a strong performance in the first quarter of 2023 despite a period of significant macro disruption and uncertainty. The bank reported a profit before impairment losses or releases of GBP1.89 billion, up from GBP1.19 billion a year prior. Pretax operating profit totalled GBP1.82 billion, up from GBP1.22 billion. Total income climbed to GBP3.88 billion from GBP3.00 billion. Its return on tangible equity was 19.8%, compared to 11.3% a year prior. CET1 ratio fell to 14.4% from 15.2%. Chief Executive Alison Rose said: "NatWest Group's strong performance in Q1 2023 is underpinned by our robust balance sheet, our high levels of capital and liquidity and our well-diversified loan book."
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Pearson reported a strong start to 2023, with first-quarter results coming ahead of expectations. The educational materials publisher reported total underlying sales growth of 2% in the first quarter of 2023. When excluding its OPM business, for which it has entered into an agreement to sell, underlying growth was 6%. The strongest underlying growth was seen in English Language Learning which grew by 66%. Chief Executive Andy Bird said: "Pearson has had a strong start to the year with results ahead of our expectations. This ongoing momentum is testament to our increasingly interconnected, consumer-focused, and innovative approach alongside relentless commercial execution. We delivered double-digit sales growth in our enterprise facing businesses, reflecting our strategy to address the upskilling and reskilling opportunity around the world."
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COMPANIES - FTSE 250
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Rotork reported that order intake was ahead by a mid-teen percentage year-on-year on an organic constant currency basis in the period from January 1 to April 2, with all divisions making "encouraging" progress. The industrial valve manufacturer explained that its orders continue to be driven largely by customers' operational spend, with the period seeing a return of a "relatively high level" of large project activity. Revenue in the period grew 18% year-on-year on an organic constant currency basis, against a more supply-chain disrupted comparative period, Rotork said. Sales benefited from both volume and selling price increases, with all divisions and regions ahead year-on-year, the company explained. Rotork noted particularly strong growth in the Americas. Consequently, it now expects 2023 adjusted operating profit to be slightly ahead of its earlier expectations.
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Hikma Pharmaceuticals said it had a good start to the new year, noting a stronger-than-expected start in its Generics business and a continued good performance from its Injectables and Branded businesses. Based on the expectation-beating performance from its Generic business in the year-to-date, Hikma updated its full year guidance for the Generics business. It now expects revenue growth close to 20%, compared with its previous guidance of low double-digit growth. Hikma declared a final dividend of 37 US cents.
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OTHER COMPANIES
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Deutsche Bank reached an agreement with Numis Corp for a takeover offer of the London-based broker and investment bank. Deutsche Bank will pay 350 pence per share, giving Numis a value of GBP410 million. The price represents a 72% premium to Numis's closing price of 204p on Thursday. The price comprises of 339p in cash, an interim dividend of 6p per share for the six months ended March 31, and an additional interim dividend of 5p per share which is conditional on the transaction becoming effective. Numis directors intend unanimously recommend the takeover offer.
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Kingspan said it had a good first quarter despite a challenging environment, and proposed a delisting from the London Stock Exchange. In the quarter it said sales neared EUR2 billion, up 4% against the prior year but down 3% on an underlying basis. It noted that its Americas market was particularly strong, while its Central & Eastern Europe market remained tough. The building materials company said that, following a review of its listing arrangements, it proposes to delist from London, subject to shareholder approval. This is because its current share trading on the LSE is "negligible" as a percentage of total trading, it said. Kingspan added it remains "committed" to its primary listing on the main market of the Euronext Dublin, where the majority of its share trading takes place. Looking forward, the company said it expects to deliver a trading profit of just over EUR400 million for the first half of 2023.
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Kape Technologies noted that its takeover by Unikmind at a price of USD3.60 per share is now unconditional. This comes after Unikmind became interested in around 80% of its existing share capital, therefore satisfying the conditions of its offer. Kape has made an application for the cancellation of its shares to trading on AIM. It is expected that the cancellation will take effect on May 31.
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WANdisco announced that the independent investigation undertaken by FRP Advisory has drawn its conclusions regarding the scope, scale and limits of the irregularities associated with received purchase orders and related revenue and sales bookings by one senior sales employee. The conclusions are that all of the purchase orders associated with the senior sales employee are illegitimate, while all other purchase orders not associated with or secured by the senior sales employee are legitimate. The review also concluded that it was possible to provide a completely definitive conclusion that there has been no unauthorised use of its technology by a third party. WANdisco said this supports its initial view that the irregularities are as a result of the actions of one senior sales employee only.
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By Heather Rydings, Alliance News senior economics reporter
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