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(Alliance News) - London's FTSE 100 is called to open lower on Wednesday, after a loftier than expected UK inflation reading, and amid lingering US interest rate worries.
According to the Office for National Statistics, the year-on-year rate of consumer price inflation ebbed to 3.2% in March, from 3.4% in February.
A slowdown to 3.1% was expected, according to FXStreet cited consensus, however. Nonetheless, it was still the tamest rate of inflation since it sat at 3.1% in September 2021.
The ONS said food price growth slowed in March, key to the rate of inflation easing.
The slowdown in March takes the annual rate of consumer price inflation closer to the Bank of England's 2% target. The next BoE interest rate decision is on May 9.
On Tuesday, Federal Reserve Chair Jerome Powell said the US central bank's fight against inflation could take "longer than expected".
In early UK corporate news, bookmaker Entain said its first-quarter went to plan, while miner Antofagasta left its outlook unchanged.
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 0.2% at 7,805.96
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Hang Seng: down 0.3% at 16,193.16
Nikkei 225: down 1.3% at 37,961.80
S&P/ASX 200: down 0.1% at 7,605.60
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DJIA: closed up 63.86 points, 0.2%, to 37,798.97
S&P 500: closed down 0.2% at 5,051.41
Nasdaq Composite: closed down 0.1% at 15,865.25
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EUR: lower at USD1.0626 (USD1.0629)
GBP: higher at USD1.2469 (USD1.2435)
USD: flat at JPY154.53 (JPY154.51)
GOLD: down at USD2,377.50 per ounce (USD2,379.66)
(Brent): down at USD89.62 a barrel (USD90.21)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
10:00 BST eurozone CPI
12:45 BST eurozone European Central Bank president Christine Lagarde speaks
13:15 BST UK Bank of England MPC member Megan Greene speaks
15:15 BST UK Bank of England Deputy Governor Dave Ramsden speaks
17:00 BST UK Bank of England Governor Andrew Bailey speaks
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UK Chancellor of the Exchequer Jeremy Hunt said the "feelgood factor" of interest rate cuts would be stronger in the autumn, in an apparent hint at the timing of the general election. Speaking to Bloomberg TV during a trip to New York, he said: "The feelgood factor as interest rates start to come down, as people start to feel higher real disposable incomes, will be stronger in people's minds come the early autumn than it is now. "And were we to have an October election, as I've said before, it would be possible to have a fiscal event in September, but we would decide much nearer the time whether that was the right thing to do." Prime Minister Rishi Sunak has said he intends to call an election in the second half of the year, with October or November seen by many as the favoured period.
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A contentious bill that aims to eventually phase out smoking in Britain advanced in parliament, as the House of Commons voted in favour of the controversial measure. The bill would ban the selling of tobacco products to anyone born after January 1, 2009 — effectively raising the smoking age by a year each year until it applies to the whole population. The UK parliament kicked off debate on Prime Minister Rishi Sunak's planned flagship legislation, despite opposition from many in his own Conservative Party. In the first vote of the bill, 383 MPs voted in favour with 67 voting against. The bill will need to be adopted by the House of Lords to become law.
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BROKER RATING CHANGES
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Bernstein raises Severn Trent to 'outperform' (market perform) - price target 2,760 (2,740) pence
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Bernstein cuts Pennon to 'market-perform' (outperform) - price target 810 (930) pence
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COMPANIES - FTSE 100
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Rio Tinto reported lower quarterly iron ore shipments and production at its key Pilbara operation. The mining and metals company said that first-quarter iron ore production from the Pilbara assets in Western Australia fell 2% year-on-year to 77.9 million tonnes, and was 11% behind the final quarter of 2023. Pilbara iron ore shipments dropped 5% on-year to 78.0 million tonnes, and were 10% behind the fourth quarter. In addition to the lower production, Rio Tinto blamed the lower shipment volumes on weather disruption at the ports, which led to lower stock draw-down. Rio Tinto left its December guidance for production in 2024 unchanged, expecting Pilbara shipments to be in a range of 323 million to 338 million tonnes - compared to 331.8 million in 2023 overall. Other guidance for 2024 was mostly for ranges that would be slightly lower to somewhat higher than 2023.
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Antofagasta left its annual guidance unchanged as it reported weaker first-quarter copper output, "primarily due to lower grades and increased ore hardness at Centinela". Copper production fell 11% on-year to 129,400 tonnes. Antofagasta said the lower grades at the Centinela asset in Chile was "in line with the mine plan". It also noted maintenance and cleaning activities work at Los Pelambres, also in Chile, "delayed moving concentrate to the company's port facilities". Gold output in the first-quarter was 21% lower, though molybdenum production was 8% higher. Looking ahead, annual copper output of 670,000 to 710,000 tonnes is still expected.
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Ladbrokes owner Entain said its first-quarter performance was in line with expectations, believing it was "successful" during the Super Bowl American football event and the March Madness college basketball tournament in the US. It said UK & Ireland net gaming revenue was lower on-year, however, and "customer-friendly win margins" kept a lid on the success at its BetMGM US joint-venture. Total net gaming revenue, including its 50% share of BetMGM, rose 3% on-year, or 6% at constant currency. UK & Ireland net gaming revenue fell 7% on both a reported and constant currency basis. "We continue to experience the effects of our regulatory implementation," Entain explained. In the US, BetMGM's first-quarter net gaming revenue rose 2% at constant currency, but fell 2% on a reported basis. Entain said: "Continuing iGaming strength [was] offset by customer-friendly win margins across online and retail sportsbooks; adjusting for impact of sports margin estimated Q1 NGR1 would have been high single digit positive." Interim Chief Executive Stella David said: "Our Q1 performance was in line with our expectations, with growth reflecting both strong performances in many of our markets as well as known challenges in others. We are particularly encouraged by the level of customer engagement in the US following a successful Super Bowl and March Madness, as well as our return to growth in Brazil following the changes we implemented. Overall, we are pleased with the progress being made against our plan to accelerate Entain's operational performance. There is still more to do, but the team is fully engaged in delivering operational improvements, product enhancements, as well as greater organisational agility and efficiency."
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COMPANIES - FTSE 250
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Hunting said it made a "positive" start to the year, reporting growth in earnings before interest, tax, depreciation and amortisation. Its first-quarter Ebitda increased around 29% to USD28.9 million from USD22.4 million a year earlier. The maker of parts and technology systems for the oil and gas sector said its first-quarter was "marginally ahead of management's expectations". Chief Executive Jim Johnson said: "2024 is likely to be a further year of growth for the industry driven by geopolitical and macro-economic factors. Therefore, management remains confident of delivering its current Ebitda guidance, given the broad-based strength of the global oil and gas sector." It annual Ebitda guidance ranges between USD125 million to USD135 million.
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OTHER COMPANIES
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Asos reported a revenue decline and narrower loss in its first-half, and it announced Dave Murray will be stepping into the chief financial officer role later this month. The fashion retailer said revenue in the 26 weeks to March 3 fell 18% to GBP1.51 billion from GBP1.84 billion a year earlier. Its pretax loss, however, narrowed to GBP270.0 million from GBP290.9 million. Asos hailed "disciplined inventory and cost management" and noted an improvement in its free cash outflow outcome. It reported a free cash outflow of GBP21.1 million, compared to GBP258.8 million a year prior. CEO Jose Calamonte said: "At the beginning of this year we explained that FY24 would be a year of continued transformation for ASOS as we take the necessary actions to deliver a more profitable and cash generative business. Under our back to fashion strategy, we set out three priorities for the year - to offer the best and most relevant product, to strengthen our relationship with customers and to reduce our cost to serve. We have delivered on each of these in the first half of the year." It reiterated its guidance for a 5% to 15% sales decline for the full-year. Asos said Murray will become CFO from April 29. Interim CFO Sean Glithero will stick around for a handover period but depart the company thereafter. Asos said Murray has "more than two decades' experience across a range of finance roles in the retail and ecommerce industry". He has held positions with grocer Sainsbury's and e-commerce firm Amazon in the UK.
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Just Eat Takeaway.com said it has started the year well, with an acceleration in gross transaction value growth in the UK and Ireland, though the food ordering platform still struggled in the US, where it continues to explore a sale of Grubhub. The weakness in the North America division, comprised of 2021 acquisition Grubhub, meant that total group GTV was down 1.8% in the first quarter of 2024 to EUR6.55 billion from EUR6.67 billion a year before. Excluding North America, GTV was up 4%, or 3% at constant currency, which Just Eat noted is within its guidance range for 2024 of 2% to 6% growth. In Northern Europe, Amsterdam-based Just Eat's largest division, GTV was up 4.6% to EUR2.00 billion from EUR1.91 billion. It was up 4% at constant currency, the company said. The UK and Ireland was the standout region for the company. GTV in that region was up 11% to EUR1.71 billion in the first quarter from EUR1.54 billion a year before. Just Eat on Wednesday said it continues to "actively explore the partial or full sale of Grubhub", repeating similar statements made over the past year. The company also said it has decided to end operations in New Zealand in coming weeks. It said the financial impact of this will be immaterial.
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Liontrust said its assets under management and advice decreased over the course of its financial year, and it suffered GBP1.2 billion worth of net outflows in its final-quarter. Assets under management and advice as of March 31 totalled GBP27.82 billion, down 11% from GBP31.43 billion at the start of the financial year. It suffered GBP6.08 billion worth of net outflows during the year, including GBP1.21 billion during the fourth-quarter. The fourth-quarter outcome was better than the GBP1.66 billion worth of net outflows it reported for the third. Chief Executive Officer John Ions said: "Liontrust has improving investment performance in the short term as well as excellent performance over the long term and it appears the UK and other developed economies have reached peak interest rates. This follows a period in which many of our core investment strategies, notably quality growth, small/mid-caps and UK equities, have been out of favour, impacting both performance and flows."
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By Eric Cunha, Alliance News news editor
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