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(Alliance News) - London's FTSE 100 traded higher on Tuesday following the long weekend, as investors react to US data, and look ahead to manufacturing sector readings from Europe later.
US inflation pressure eased ever-so-slightly in February to 2.8% on-year from 2.9% in January, according to the Federal Reserve's preferred indicator, the core personal consumption expenditures index. The data, released on Friday, was in line with consensus cited by FXStreet.
The core data excludes food and energy. The annual headline PCE index, which does not, picked up 2.5% in February, accelerating slightly from 2.4% in January. The February outcome was in line with consensus.
On Monday, two sets of US purchasing managers' index data showed the US manufacturing sector to be in growth territory.
The S&P Global US manufacturing PMI slipped to 51.9 points in March from 52.2 in February. The ISM PMI for manufacturing reading was 50.3 points for March, compared to 47.8 for February and 49.1 for January
But markets in New York fixated on a 3.3% rise in ISM's prices index as compared with February, damping enthusiasm there.
"Once again, the US data suggests that the Federal Reserve should be in no rush to cut the interest rates. The only thing that could pressure the Fed to cut rates sooner rather than later is the end-of-year election, and the popular idea that the Fed may not be able to cut rates this year if it doesn't starts around summer. But besides the election pressure, the economic data shows no sense of emergency for a June cut," said Swissquote Bank analyst Ipek Ozkardeskaya.
In early corporate news, AstraZeneca won a biologics licence application acceptance and drug approval from the US Food & Drug Administration, while HSBC announced it completed the sale of its Canadian arm to Royal Bank of Canada.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,989.92
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Hang Seng: up 2.0% at 16,861.75
Nikkei 225: closed up 0.1% at 39,838.91
S&P/ASX 200: closed down 0.1% at 7,887.90
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DJIA: closed down 240.52 points, 0.6%, at 39,566.85
S&P 500: closed down 10.58 points, 0.2%, at 5,243.77
Nasdaq Composite: closed up 17.37 points, 0.1%, to 16,396.83
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EUR: down at USD1.0726 (USD1.0803)
GBP: down at USD1.2545 (USD1.2640)
USD: up at JPY151.72 (JPY151.29)
Gold: up at USD2,254.20 per ounce (USD2,221.01)
(Brent): up at USD87.93 a barrel (USD86.56)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
08:55 BST Germany manufacturing PMI
09:00 BST Germany CPI
09:00 BST eurozone manufacturing PMI
09:30 BST UK mortgage approvals
09:30 BST UK manufacturing PMI
13:55 BST US Redbook index
15:00 BST US job openings and labour turnover survey
15:00 BST US total new vehicle sales
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UK Prime Minister Rishi Sunak's Tories could be reduced to fewer than 100 MPs at the general election later this year, a new poll has suggested. The 15,000-person poll was used to create a seat-by-seat breakdown, which indicated the Conservatives would be wiped out in Scotland and Wales and hold just 98 seats in England. The survey put Labour on 45% with a 19-point lead over the Tories on 26%. The constituency forecast suggested Keir Starmer's party could be on course for a landslide, winning 468 seats. The poll suggests the Scottish National Party would pick up 41 seats, the Liberal Democrats 22 and Plaid Cymru two.
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UK shop price inflation ebbed to a more than three-year low in March, numbers showed. According to the latest British Retail Consortium-NielsenIQ shop price index, annual shop price inflation eased to 1.3% in March, down from 2.5% in February. The reading was also short of the three-month average inflation rate of 2.2%. "Shop price annual growth is its lowest since December 2021," the BRC said. Non-food inflation fell to 0.2% in March, down from 1.3% in February, below the three-month average rate of 0.9%. Food inflation decelerated to 3.7% in March, down from 5.0% in February.
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UK house prices rose 1.6% in March compared to a year ago, according to the latest Nationwide survey and coming in below FXStreet-cited expectations of a 2.4% rise. In February, this rose by 1.2%. On a monthly basis, prices fell 0.2% in March from February, compared to a 0.7% rise in February from January. The market expected a 0.3% rise.
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BROKER RATING CHANGES
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RBC cuts Reckitt price target to 5,000 (7,000) pence - 'outperform'
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COMPANIES - FTSE 100
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HSBC said it sold HSBC Bank Canada and its subsidiaries to Royal Bank of Canada, in a deal that completed before the Easter weekend. The lender will book a USD4.9 billion "estimated gain on sale" in its first quarter, inclusive of the recycling of an estimated USD600 million in foreign currency translation reserve losses. HSBC intends to declare a special dividend of USD0.21 per share in its first quarter earnings, subject to board approval and finalisation of results. This would be in addition to any proposed interim dividend and payable at the same time in June if approved. HSBC Chief Executive Officer Noel Quinn commented: "I am grateful to the team in Canada for their hard work over the last 18 months delivering this transaction. This is a great business with exceptional people and clients, and I have no doubt it will thrive as part of RBC. Completing this deal is another important milestone in HSBC's transformation, and it will provide capital that will enable us to grow our core businesses and reward our shareholders for their loyalty, including through an intended special dividend of USD0.21 per share."
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AstraZeneca and Daiichi Sankyo's biologics licence application for datopotamab deruxtecan has been accepted by the US Food & Drug Administration for the treatment of specific forms of breast cancer, AstraZeneca said. The pharmaceutical firm said the decision was based on the results of the Tropion-Breast01 phase 3 trial in which Dato-DXd "demonstrated a statistically significant and clinically meaningful improvement" in progression-free survival compared to chemotherapy and at least one systemic therapy. The prescription drug user fee act date, the FDA action date for its regulatory decision, is during the first quarter of 2025. Meanwhile, AstraZeneca's Voydeya has been approved in the US to treat extravascular haemolysis in adults suffering from rare blood disease paroxysmal nocturnal haemoglobinuria. The FDA approval comes off the back of positive results from the Alpha phase 3 trial.
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COMPANIES - FTSE 250
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Refractory products for metals processing manufacturer RHI Magnesita said it intends to acquire US-based Resco Group for an enterprise value of up to USD430 million. Resco is a producer of alumina monolithics and wide range of basic and non-basic refractories. The deal is subject to customary closing conditions including merger control authority approval, and is expected to be completed in the second half of 2024. RHI Magnesita has agreed to pay a deposit of USD18 million, which can be offset against the wider transaction amount but is non-refundable if the deal does not complete. It has also agreed to make ticker payments relating to triggering events or completion conditions. RHI added: "Currently approximately 50% of RHI Magnesita's US sales are not produced in the country. The Acquisition will increase RHI Magnesita's local production in the US and Canada by transferring significant volumes of production from non-US plants to the Resco production facilities in the US. Based on customer feedback, we are taking steps to improve supply chain security, reduce production lead times and stabilise working capital. This acquisition continues the group's strategic growth trajectory in alumina-based refractories by providing US customers with an improved product offering."
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OTHER COMPANIES
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Hutchmed jointly announced with Innovent Biologics that their new drug application for the combined fruquintinib and sintilimab treatment for specific forms of advanced endometrial cancer has been granted priority review by the China National Medical Products Administration. Cancer and immunological diseases treatments developer Hutchmed said this was supported by positive data from the Frusica-1 phase 2 study. Hutchmed Head of Research & Development and Chief Medical Officer Michael Shi commented: "This is the first regulatory filing for the combination of fruquintinib and the immune checkpoint inhibitor sintilimab. It also represents an important step closer to reshaping the treatment landscape for this challenging disease in China. Endometrial cancer remains one of the most common gynecological malignancies. We look forward to bringing this much-awaited treatment advancement to endometrial cancer patients to improve their treatment outcome."
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By Greg Rosenvinge, Alliance News senior reporter
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