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(Alliance News) - Stocks in London opened in a muted fashion on Wednesday, with some unease lingering in equity markets ahead of a US inflation reading later in the week.
"Traders are confident in the upcoming rate cuts. Robust US growth doesn't scare as long as inflation continues to ease. And even the recent rise in inflation doesn't concern much as it is believed to be temporary," said Swissquote Bank analyst Ipek Ozkardeskaya.
"As such, the Fed is expected to cut rates in June for the first time."
The latest core personal consumption expenditures reading, the Fed's preferred inflation gauge, is released on Friday.
Investors also digested some industrial data from China. The yen, meanwhile, tumbled as it continues to struggle despite the Bank of Japan's historic rate hike last week.
In early corporate news, Diploma announced the GBP236 million proposed acquisition of aerospace specialty fasteners distributor Peerless Aerospace Fastener, while AstraZeneca announced two drug approvals in Japan.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,920.80
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Hang Seng: down 1.4% at 16,394.79
Nikkei 225: closed up 0.9% at 40,762.73
S&P/ASX 200: closed up 0.5% at 7,819.60
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DJIA: closed down 31.31 points, 0.1%, at 39,282.33
S&P 500: closed down 14.61 points, 0.3%, at 5,203.58
Nasdaq Composite: closed down 68.77 points, 0.4%, to 16,315.70
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EUR: down at USD1.0827 (USD1.0828)
GBP: up at USD1.2628 (USD1.2626)
USD: up at JPY151.70 (JPY151.50)
Gold: up at USD2,179.73 per ounce (USD2,176.17)
(Brent): down at USD84.78 a barrel (USD85.94)
(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 GMT eurozone consumer confidence
10:00 GMT eurozone economic sentiment index
14:30 GMT US EIA crude oil stocks
22:00 GMT US Federal Reserve Governor Christopher Waller speaks
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The regulator of the UK's oil and gas companies has said that they need to take action to set themselves on a path to reducing emissions and warned it could block developments if they did not take reasonable steps. The North Sea Transition Authority said that a plan it published on Wednesday highlights "the need for action across the board on production decarbonisation". It said that it would work with oil and gas developers, but if they did not take steps it thought necessary it might not approve their applications. Despite falls in recent years, the production of oil and gas in the UK contributes around 3% of the UK's total greenhouse gas emissions. That is not taking into account the emissions produced when that oil and gas is burnt. This comes partly from the energy that oil rigs and other operations use to transport staff and equipment, pump up oil and much else beside. But it also comes from practices such as venting or flaring – the process of either releasing unwanted gas into the atmosphere, or burning it on site without utilising the energy that it could produce.
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The yen hit a 34-year low against the dollar on Wednesday, just over a week after the Bank of Japan announced a much-anticipated interest rate hike in a shift away from years of ultra-loose monetary policy. The unit weakened to JPY151.97 per dollar, its softest since 1990, raising speculation that authorities will intervene in markets to prop up the currency. But its value soon recovered to levels of around JPY151.72. The drop came after a top central bank official suggested it would continue to pursue an accommodative policy for the time being, echoing previous comments from the BoJ.
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BROKER RATING CHANGES
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UBS raises Sainsbury's to 'buy' (neutral) - price target 295 (275) pence
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COMPANIES - FTSE 100
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Diploma announced the proposed acquisition of Peerless Aerospace Fastener, a distributor of specialty fasteners into the US and European aerospace markets, for around GBP236 million. The London-based supplier of specialised technical products and services said it expects the transaction to complete in the next few weeks, following customary regulatory clearances. Diploma Chief Executive Officer Johnny Thomson commented: "Peerless is an excellent acquisition for Diploma, aligned to our strategy of building high quality, scalable businesses for sustainable organic growth...We know and like the aerospace fasteners market and Peerless significantly extends our US capabilities and adds scale in Europe."
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AstraZeneca noted two drug approvals in Japan. In collaboration with Sanofi, the pharmaceutical firm's Beyfortus treatment was approved for the treatment of lower respiratory tract disease caused by respiratory syncytial virus in infants and children. AstraZeneca expects Beyfortus to be available for the upcoming 2024/25 RSV season, in line with existing Japanese guidelines. Meanwhile, its Truqap treatment in combination with Faslodex has also been approved in Japan for the treatment of adult patients with various forms of breast cancer after treatment with hormone therapy.
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COMPANIES - FTSE 250
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Playtech reported profit in 2023 more than doubled, and it said it has made a decent start to 2024. Playtech's pretax profit in 2023 jumped to EUR235.8 million from EUR95.6 million in 2022, as revenue rose 6.9% to EUR1.71 billion from EUR1.60 billion. The Isle of Man-based gambling software development company said its 2023 performance was ahead of expectations and that it is on track to meet its medium-term targets. It did not declare a dividend, unchanged from a year earlier. Chief Executive Officer Mor Weizer commented: "As well as delivering excellent financial results, the group made important strategic and operational progress, including our expansion across the US, opening a third Live Casino facility in Pennsylvania and taking the number of licences granted to 11 with further applications pending." Playtech said it has made a "solid" start to trading in 2024 and that it remains confident in executing on growth opportunities.
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OTHER COMPANIES
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S4 Capital reported a narrowed loss in 2023, though revenue fell as the company grappled with tough economic conditions and "client caution". S4 Capital's pretax loss in 2023 narrowed markedly to GBP13.9 million from GBP159.7 million in 2022, although revenue fell 5.7% to GBP1.01 billion from GBP1.07 billion, while total operating expenses fell 17% to GBP853.0 million from GBP1.03 billion. The London-based digital advertising, marketing and technology services firm also announced the appointment of Jean-Benoit Berty as chief operating officer, effective immediately. Executive Chair Martin Sorrell commented: "After our first four strong net revenue growth years, we had a difficult 2023 reflecting challenging global macroeconomic conditions, fears of recession and high interest rates. This resulted in client caution to commit and extended sales cycles, particularly for larger projects, a difficult year for new business, as well as spend reductions from some regional and smaller client relationships." Sorrell added that like-for-like net revenue for 2024 is to be down on 2023, "with a broadly similar overall level of profit performance to 2023". He added: "We remain confident that our talent, business model, strategy and scaled client relationships position us well for above average growth in the longer term, with an emphasis on deploying free cash flow to boost shareowner returns."
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By Greg Rosenvinge, Alliance News senior reporter
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