(Alliance News) - Stocks in London were called to open slightly lower on Wednesday, after UK data pointed to persistent inflationary pressures.
UK consumer price inflation cooled by less than expected in March, remaining above 10%, though producer price inflation slowed by more than forecast, official data showed.
"The UK's inflation data showed once again that inflation is not only sticky but incredibly stubborn, and this means that there is more pressure on the Bank of England," said Naeem Aslam, chief investment officer at Zaye Capital Markets.
"We think that there are strong chances that the BoE will increase interest rates once again, even though many thought that the bank was done raising rates."
The data follows Tuesday's labour market reading, which had shown wage inflation similarly had persisted at higher levels than expected in the three months to February.
The BoE's next interest rate announcement is due on May 11.
In early UK company news, Glencore made a direct appeal to the shareholders of Teck Resources, Antofagasta met its quarterly production guidance, and Just East launched a EUR150 million share buyback programme.
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 10.8 points, 0.1%, at 7,898.64
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Hang Seng: down 1.3% at 20,382.00
Nikkei 225: closed down 0.2% at 28,606.76
S&P/ASX 200: closed up 0.1% at 7,365.50
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DJIA: closed flat at 33,976.63
S&P 500: closed up 0.1% at 4,154.87
Nasdaq Composite: closed flat at 12,153.41
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EUR: soft at USD1.0954 (USD1.0964)
GBP: firm at USD1.2430 (USD1.2424)
USD: up at JPY134.64 (JPY133.96)
Gold: down at USD2,001.57 per ounce (USD2,010.02)
(Brent): flat at USD84.53 a barrel (USD84.56)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:30 BST UK house price index
09:30 BST UK forecasts for the economy statistical release
07:00 EDT US MBA weekly mortgage applications survey
14:00 EDT US Federal Reserve Beige Book
19:00 EDT US Fed New York President John Williams speaks
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According to the Office for National Statistics, the annual rise in UK consumer prices cooled slightly to 10.1% in March from 10.4% in February. This was less of a slowdown than expected, with FXStreet-cited market consensus calling for UK inflation to fall below 10% to 9.8%. Downward movements in transport prices and other divisions were partially offset by price increases in food and non-alcoholic beverages, as well as recreation and culture, ONS said. On a monthly basis, prices edged up 0.8% in March, compared to a 1.1% rise in February. The figure also topped consensus expectations of a 0.5% rise.
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ONS figures also showed annual UK producer input price inflation cooled to 7.6% in March from an upwardly revised figure of 12.8% in February. Market consensus had been expecting a reading of 9.8%. "The largest upward contribution to the annual input inflation rate in March 2023 came from inputs of other parts and equipment...The second-largest contributor to the annual rate came from inputs of home-produced food materials," ONS said. From the previous month, producer input prices rose 0.2%, compared to the revised reading of no change in February. Market consensus had expected a 0.4% fall.
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BROKER RATING CHANGES
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Jefferies reinitiates PayPoint with 'buy' - price target 550 pence
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Jefferies reinitiates WAG Payment Solutions with 'buy' - price target 144 pence
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Bernstein starts Compass with 'outperform' - price target 2,400 pence
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COMPANIES - FTSE 100
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Copper miner Antofagasta said its first-quarter copper production was in line with guidance, at 145,900 tonnes, which was 5.1% higher than the previous year. However, it was 25% lower the previous quarter. This reflects the "expected temporary reduction in throughput at Los Pelambres on lower water availability, and expected lower grades and scheduled maintenance at Centinela", the miner explained. It expects copper production to improve throughout the rest of 2023. Gold production was up 9.9% year-on-year at 42,200 ounces, but 25% lower than the fourth quarter. Antofagasta reiterated annual copper production guidance of 670,000 to 710,000 tonnes, and capital expenditure guidance of USD1.9 billion.
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Glencore published an open letter to shareholders of its takeover target Teck Resources, alleging Teck's board has "consistently refused any engagement" regarding its takeover proposal. The miner said its proposal was a "merger and not a takeover" and is "demonstrably superior" to Teck's own separation plan. It noted its proposal would buy out shareholders of their coal exposure. They would receive either USD8.2 billion in cash or 24% of CoalCo. "Glencore is willing to make an offer directly to Teck shareholders if the proposed Teck separation does not proceed and Glencore believes that this is required where there continues to be no engagement from the Teck board," it said. It is open to considering "making improvements" to the proposal.
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COMPANIES - FTSE 250
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Commercial vehicle rental provider Redde Northgate updated on its financial year ending April 30. Redde said trading is ahead of expectations, noting "strong and resilient demand" for its vehicle rental and accident management services. It noted an improvement to visibility of van supply in UK & Ireland, after seeing constraints for most of the financial year. It now expects annual adjusted pretax profit to be at the top end of the company-compiled consensus range of GBP149.6 million to GBP164.4 million.
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OTHER COMPANIES
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Just Eat Takeaway.com said it plans to repurchase up to EUR150 million worth of its own stock in order to improve earnings per share, while it said its effort to improve overall profitability is "running ahead of plan". The Amsterdam-based food delivery platform said the buyback programme will repurchase, mostly for cancellation, up to 4.2% of its existing shares, based on its closing price on Tuesday in Amsterdam of EUR16.26. Just Eat Takeaway has a market capitalisation of EUR3.48 billion. Meanwhile, Just Eat said total orders in the first quarter of 2023 were down 14% from a year before to 227.8 million from 263.5 million, while gross transaction value fell by 7.7% to EUR6.67 billion from EUR7.22 billion. Looking ahead, Just Eat Takeaway guided for GTV in 2023 to be between down 4% and up 2%, with growth skewed to the end of the year due to comparison with the pandemic boost early last year.
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ASML reported a solid increase in first-quarter income and revenue thanks to the faster installation and earlier acceptance of its systems in the quarter. The Veldhoven, Netherlands-based maker of photolithography machines for the semiconductor industry reported net income of EUR1.96 billion in the first quarter of 2023. This represented growth of 7.6% against the EUR1.82 billion achieved in the final quarter of 2022. Basic earnings per share in the quarter rose to EUR4.96 from EUR4.60. Net sales climbed 4.9% to EUR6.75 billion from EUR6.43 billion, while net bookings dropped sharply to EUR3.75 billion from EUR6.32 billion. Looking forward, ASML said it expects second quarter net sales between EUR6.5 billion and EUR7.0 billion, with a gross margin between 50% and 51%.
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By Elizabeth Winter, Alliance News senior markets reporter
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