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(Alliance News) - Stocks in London opened higher on Thursday, after Federal Reserve Chair Jerome Powell suggested that the US central bank could ease its pace of interest rate hikes "as soon as" December.
"The time for moderating the pace of rate increases may come as soon as the December meeting" of the Federal Open Market Committee, Powell said in a speech at the Brookings Institution think tank on Wednesday.
Powell added that it remains "very plausible" for the US economy to reach a soft landing despite a series of aggressive moves to cool demand and bring down prices.
"I do continue to believe that there's a path to a soft or softish landing," he said at an event in Washington, referring to a scenario where unemployment rises but the US avoids a severe recession.
In China, Vice Premier Sun Chunlan said the Omicron variant was weakening and vaccination rates were improving, according to the state-run Xinhua news agency.
Sun – a central figure behind Beijing's pandemic response – said this "new situation" required "new tasks" while speaking at the National Health Commission on Wednesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 7,595.15
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Hang Seng: up 1.5% at 18,868.19
Nikkei 225: closed up 0.9% at 28,226.08
S&P/ASX 200: closed up 1.0% at 7,354.40
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DJIA: closed up 737.24 points, 2.2%, at 34,589.77
S&P 500: closed up 122.48 points, 3.1%, at 4,080.11
Nasdaq Composite: closed up 484.22 points, 4.4%, at 11,468.00
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EUR: up at USD1.0451 (USD1.0295)
GBP: up at USD1.2096 (USD1.1907)
USD: down at JPY136.07 (JPY139.54)
Gold: up at USD1,779.27 per ounce (USD1,753.29)
Oil (Brent): up at USD86.60 a barrel (USD85.44)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
10:00 CET EU manufacturing PMI
11:00 CET EU unemployment
09:55 CET Germany manufacturing PMI
09:30 GMT UK manufacturing PMI
09:30 GMT UK BoE decision maker panel data
07:30 CST US Fed Dallas President Lorie Logan speaks
08:30 EST US unemployment insurance claims report
08:30 EST US export sales
11:00 EST US manufacturing PMI
12:00 EST US retail chain store sales index
16:30 EST US Foreign Central Bank holdings
16:30 EST US federal discount window borrowings
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Annual UK house price growth slowed to 4.4% in November from 7.2% in October. Month-on-month prices fell by 1.4% - the biggest fall since June 2020 - following a 0.9% drop in October. Nationwide Chief Economist Robert Gardner said the fallout from the UK government's mini-budget continued to impact the market. "While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum. Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation," Gardner said, adding that the market looks set to remain subdued in the coming quarters.
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China's manufacturing sector shrank in November but by less than in October. The Caixin manufacturing purchasing manager's index was 49.4 points last month, up from 49.2 in October.
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Japanese factory activity slowed in November. The au Jibun Bank Japan manufacturing PMI fell to 49.0 points from 50.7 points in October.
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The AIB Ireland manufacturing PMI swung into contraction territory at 48.7 points in November, down from 51.4 points in October
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The US House of Representatives moved urgently to head off the looming nationwide rail strike on Wednesday, passing a bill that would bind companies and workers to a proposed settlement. The proposed settlement was reached in September but rejected by some of the unions involved. The measure passed by a vote of 290-137 and now heads to the Senate. If approved there, it will be signed by President Joe Biden, who urged the Senate to act swiftly. "Without the certainty of a final vote to avoid a shutdown this week, railroads will begin to halt the movement of critical materials like chemicals to clean our drinking water as soon as this weekend," Biden said. "Let me say that again: Without action this week, disruptions to our auto supply chains, our ability to move food to tables and our ability to remove hazardous waste from gasoline refineries will begin." Business groups including the US Chamber of Commerce and the American Farm Bureau Federation have warned that halting rail service would cause a devastating USD2 billion dollar per day hit to the economy.
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BROKER RATING CHANGES
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Exane BNP cuts Pearson to 'neutral' ('outperform'
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JPMorgan raises Auction Technology target to 973 (903) pence - 'neutral'
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JPMorgan raises Fevertree Drinks price target to 1,200 (1,100) pence - 'neutral'
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COMPANIES - FTSE 100
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Spirax-Sarco Engineering confirmed the completion of its acquisition of Durex International, a US-based specialist in custom electric thermal solutions for ultra-high criticality equipment. The thermal energy management and pumping company bought Durex for a total of USD342.2 million on a cash and debt free basis. Durex is now part of Spirax-Sarco's Electric Thermal Solutions business.
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Index provider FTSE Russell late Wednesday confirmed that abrdn, Beazley and Weir Group will join the FTSE 100 on December 19, replacing Dechra Pharmaceuticals, Harbour Energy and Intermediate Capital Group.
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COMPANIES - FTSE 250
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Rotork appointed Dorothy Thompson as independent non-executive director and chair designate, with immediate effect. The industrial flow control equipment provider said Thompson will succeed Martin Lamb as chair when he steps down at Rotork's annual general meeting on April 28, after nine years on the board. Previously, Thompson was chief executive at Drax Group and a senior independent director at the Bank of England.
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Investment platform AJ Bell reported a "strong" financial performance in the financial year that ended September 30, with revenue up 12% to GBP163.8 million against the previous year's GBP145.8 million. Pretax profit climbed to GBP58.4 million from GBP55.1 million, year-on-year. The company proposed a final dividend of 4.59 pence per share, which increases the total payout for the year by 6%. AJ Bell said assets under management increased by 27% in the year to close at GBP2.8 billion at September 30, up from GBP2.2 billion a year prior. It added 57,687 customers in the year, with a customer retention rate of 95.5%, up from 95.0% a year prior. Looking forward, AJ Bell acknowledged short-term headwinds but said the long-term growth potential of the platform market is "significant".
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Essentra announced the acquisition of Wixroyd Holdings, a supplier of industrial parts for the engineering sector, for an initial consideration of GBP29.5 million. The component supplier said this was the first acquisition under its new strategy as a "pure-play" components business. It explained that the acquisition will expand its capabilities in hardware components and creates "significant additional cross-selling opportunities" across a range of Essentra's current end markets. The acquisition is expected to be accretive to adjusted earnings per share in the first full-year of ownership, with the return on invested capital expected to exceed 15% in three years. It will be financed from Essentra's existing cash flow and debt facilities.
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Auction Technology swung to an annual profit in the financial year that ended September 30, as it reported a significant revenue rise. The company swung to a profit of GBP9.3 million from a loss of GBP25.0 million, while revenue surged 71% to GBP119.8 million from GBP70.1 million thanks to growth in gross merchandise value and an additional boost from value-add services. The online auction operator explained that the previous year booked one-off costs relating to its IPO and an acquisition. In regard to its current trading, Auction Technology said it has been "broadly" in line with its performance in the second half of its 2022 financial year. As a result, it is "confident" of a continued strong performance in its 2023 financial year, expecting high single digit to low double digit constant currency revenue growth in the year.
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FTSE Russell said Digital 9 Infrastructure and European Smaller Companies Trust will join the FTSE 250 on December 19, replacing Home REIT and Petrofac.
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OTHER COMPANIES
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James Halstead Chair Anthony Wild said that the firm's current trading has shown the "resilience" of commercial flooring, with "most" markets sales ahead of the same stage last year. Wild added that international shipping rates have started to reduce and noted that the availability of shipping has improved. "We anticipate that shipping rates will remain lower in the near-to-mid term. Moreover, the fall in the value of Sterling has offered a competitive advantage in exports," he said while speaking at the flooring manufacturer's annual general meeting. Wild also noted a significant rise in energy costs, which has more than doubled the costs of energy at its Radcliffe site in the four months ended October 31 against the previous year. "There has obviously been margin erosion and we continue to pass on cost increases, as much as possible," Wild commented, adding he nonetheless remains "cautiously positive" about the company's medium-term prospects.
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By Heather Rydings; heatherrydings@alliancenews.com
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