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(Alliance News) - London is expected to stage a slight recovery on Tuesday, after Monday's global sell-off.
The global stock sell-off has fuelled calls for the US Federal Reserve to lower interest rates swiftly and decisively, with some analysts now calling for it to make an emergency cut before its September rate decision.
Fed Chair Jerome Powell signalled last week that the first rate cut could come "as soon as" September.
But some analysts fear that may not be soon enough, as the markets have responded in dramatic fashion to last week's below-target US jobs report, which raised fears that the US was entering a recession.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 1.1% at 8,097.50
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Hang Seng: down 0.1% at 16,680.43
Nikkei 225: closed up 10% at 34,675.46
S&P/ASX 200: closed up 0.4% at 7,680.60
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DJIA: closed down 1,033.99 points, 2.6%, at 38,703.27
S&P 500: closed down 3.0% at 5,186.33
Nasdaq Composite: closed down 3.4% at 16,200.08
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EUR: up at USD1.0947 (USD1.0946)
GBP: up at USD1.2766 (USD1.2753)
USD: sharply higher at JPY145.88 (JPY142.41)
GOLD: down at USD2,403.10 per ounce (USD2,418.90)
OIL (Brent): up at USD77.11 a barrel (USD75.60)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
08:30 EDT Canada trade balance
09:30 EDT Canada composite PMI
09:30 CEST eurozone construction PMI
11:00 CEST eurozone retail sales
09:30 CEST France construction PMI
09:30 CEST Germany construction PMI
09:30 CEST Italy construction PMI
08:30 CEST Switzerland retail sales
09:30 BST UK construction PMI
08:30 EDT US trade balance
08:55 EDT US Redbook index
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UK retail sales recovered in July after falling in June, boosted by higher food sales, figures showed. According to the BRC-KPMG retail sales monitor, retail sales rose 0.5% year-on-year in July, compared with a fall of 0.2% in June. In July 2023, retail sales increased 1.5%. The latest reading was above the 3-month average growth of 0.3% and below the 12-month average growth of 1.4%. BRC Chief Executive Helen Dickinson said: "Retail sales returned to growth, driven by an increase in food purchases. The late arrival of British sunshine led to a better month for summer clothing and health & beauty products as shoppers prepared for days out with friends and holidays away. However, as consumers spent on holidays and entertainment, sales of indoor goods, such as furniture and household appliances, were squeezed out. This left non-food once again in negative growth, particularly for in-store sales."
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Ireland's service sector extended its winning streak to almost three-and-a-half years, but the pace of expansion ebbed last month, numbers on Tuesday showed. The AIB services business activity index faded to 53.6 points in July, from 54.2 in June. Falling closer to the 50 mark which separates growth from the decline, the data suggests the Irish service sector grew at a slow pace last month. "The pace of expansion was slightly below the trend for 2024 so far (53.9), and even weaker than the long-run series average since 2000 (55.1). The current expansionary sequence was extended to three years and five months, although the rate of growth has weakened three times in the past four months," S&P Global said. "Demand for services in Ireland continued to rise in July, extending the current sequence of demand growth that began in March 2021. New business was linked to new customers, new projects and acquisitions. Moreover, the rate of growth accelerated in the latest period, returning to the long-run trend." The composite purchasing managers' index reading, which also factors in last week's manufacturing data, picked up to 52.2 points in July from 50.1 in June.
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BROKER RATING CHANGES
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Deutsche Bank raises Intermediate Capital to 'buy' (hold) - price target 2,550 pence
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Deutsche Bank cuts Polar Capital to 'hold' (buy) - price target 510 (635) pence
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COMPANIES - FTSE 100
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InterContinental Hotels reported that revenue in the first half of the year rose to USD2.32 billion, up 4.3% from USD2.23 billion. Pretax profit fell 17% to USD472 million from USD567 million. InterContinental paid out an interim dividend per share of 53.2 US cents, up 10% annually from 48.3 cents. it said it remains on track to return over USD1 billion to shareholders in 2024. Chief Executive Elie Maalouf said: "We continue to strengthen our enterprise to position IHG as first choice for guests and owners, further improving and growing our brands, driving loyalty contribution, rolling out new hotel technology and increasing our ancillary fee streams. Our cash generation and strong balance sheet continue to support further investment in growth, and we are confident in capitalising on our scale, leading positions and the attractive, long-term demand drivers for our markets.”
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GSK welcomed a jury verdict in the Joiner case in Illinois state court finding in GSK's favour. "This outcome is consistent with the scientific consensus that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer, supported by 16 epidemiological studies looking at human data regarding the use of ranitidine. GSK will continue to vigorously defend itself against all other claims," GSK said. Zantac was a heartburn drug that was pulled off the market in 2020 at the request of the US Food & Drug Administration, after low levels of a "probable carcinogen" were found in samples. The carcinogen, known as NDMA, is not harmful in very small amounts. However, tests showed that there were excessive quantities of NDMA in ranitidine, otherwise known as Zantac. Multiple litigations have followed.
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Rightmove said that its contract with OpenRent will terminate on September 1, as conditions for OpenRent's ongoing Rightmove membership could not be agreed. Rightmove reiterated its full year outlook, despite the contract loss. "OpenRent is classified as an online lettings agent within Rightmove's Estate Agency (Lettings) sub-segment and represents approximately 700 branch equivalents, with less than 8% of Rightmove's lettings listings in July 2024. As has been seen recently, market dynamics - within lettings in particular - are fluid," it explained. Whilst it said it remains confident in its revenue and margin outlook, it warned that the precise mix of membership and average revenue per advertiser may vary.
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COMPANIES - FTSE 250
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abrdn reported that in the first half of 2024 net operating revenue fell 7.5% annually to GBP667 million from GBP721 million. However, it swung to pretax profit of GBP187 million from a loss of GBP19 million. Net capital generation more than doubled to GBP104 million from GBP50 million. Assets under management and administration edged up by 2.2% to GBP505.9 billion from GBP494.9 billion. abrdn left its dividend unchanged at 7.3p. Looking ahead, abrdn said it is on track to realise GBP150 million of annualised cost savings by end of 2025. "Each of our three core businesses have made progress against their strategic objectives in the first half, and our focus on returning to profitable and sustainable growth is showing some early signs of success. However, while we have seen an improvement in market conditions in the first half, the outlook for global financial markets remains uncertain," it added. Meanwhile, the Financial Times reported that abrdn finance chief Jason Windsor is poised to replace Stephen Bird as CEO. The FT said the firm is expected to announce new head next week after abrupt departure of former chief.
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Domino's Pizza reported that revenue in the first half of the year fell 1.8% to GBP326.8 million from GBP332.9 million a year earlier. Pretax profit plummeted GBP59.4 million from GBP91.5 million. Domino's upped its interim dividend by 6.1% to 3.5p from 3.3p. It also announced a new GBP20 million share buyback. CEO Andrew Rennie said: "Following a slow start to the year, we now have good momentum in the business with our strategic initiatives gaining traction and our trading performance accelerating steadily against strong comparatives from last year. In Q2 we grew orders, with a notable improvement from the middle of May and importantly have halted the trend of declining delivery orders. These are now returning to growth and this momentum has continued through June and July, helped by a good performance through the Men's Euro Football tournament."
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OTHER COMPANIES
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YouGov reported that financial 2024 results are expected to be slightly ahead of revised guidance. Revenue is expected to be between GBP327 million and GBP330 million, up from GBP258.3 million in financial 2023. Adjusted operating profit is expected to be between GBP43 million and GBP46 million, down from GBP48.3 million in financial 2023. The results are better than guidance released in June. "Our Research division saw strong growth in Custom Research, offset in part by declines in Data Services as expected, resulting in the division recording mid-single-digit growth on an underlying basis for the full year. The CPS business is continuing to perform well, in line with expectations and the integration is progressing well. Revenue in our Data Products division was in line with the prior year on an underlying basis, given stable renewal rates and the addition of several new client wins, and we expect to return to growth through a focussed sales approach in FY25," YouGov explained. Separately, the company announced the acquisition of Yabble, a New Zealand-based company focused on the use of generative AI to deliver audience insights. The company has 13 employees and has been developing generative AI-powered tools for the research industry since 2019. YouGov CEO Steve Hatch says: "Generative AI is transforming the insight landscape and with the acquisition of Yabble, YouGov is strongly positioned to take advantage of this change."
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By Sophie Rose, Alliance News senior reporter
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