(Alliance News) - London's FTSE 100 is called to open lower on Monday, while Asian equities made an underwhelming start to the week, as investors eagerly anticipate Friday's US nonfarm payrolls data.
Friday's US jobs report could spark a 'Santa rally' for equity markets before the end of the year. Hotter-than-expected data could prompt the Federal Reserve to leave interest rates higher for longer, however.
"Investors expect further fall in US jobs openings, less than 200,000 job additions last month with slightly higher pay on month-on-month basis. The softer the data, the better the chances of keeping the Fed hawks away from the market," Swissquote analyst Ipek Ozkardeskaya commented.
Fed Chair Jerome Powell on Friday said it is still "premature" to speculate on when the US central bank will start cutting interest rates.
Gold added some sparkle during the quiet start to the week, meanwhile, hitting a record high.
"The slide in yields along with the weakness in the US dollar has also seen gold prices surge, as the yellow metal pushed to a new record high above USD2,100 an ounce in Asia trading this morning," CMC Markets analyst Michael Hewson commented.
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 0.3% at 7,507.35
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Hang Seng: down 1.1% at 16,650.32
Nikkei 225: closed down 0.6% at 33,231.27
S&P/ASX 200: closed up 0.7% at 7,124.70
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DJIA: closed up 294.61 points, 0.8%, at 36,245.50
S&P 500: closed up 0.6% at 4,594.63
Nasdaq Composite: closed up 0.6% at 14,305.03
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EUR: up at USD1.0864 (USD1.0859)
GBP: up at USD1.2671 (USD1.2659)
USD: down at JPY146.77 (JPY147.37)
GOLD: up at USD2,074.52 per ounce (USD2,055.14)
OIL (Brent): down at USD78.13 a barrel (USD80.73)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
1400 GMT ECB President Christine Lagarde speaks
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Fitch Ratings maintained its negative outlook on the UK's credit rating, amid uncertainty stemming from the nation's final trading relationship with the EU post-Brexit, and high public debt. The 'AA-' rating was maintained, a score which nations including France, Ireland and South Korea also share.
"The UK's ratings reflect a high-income, large, diversified and flexible economy, a credible macroeconomic policy framework, deep capital markets and sterling's international reserve currency status, which provides ample financing flexibility. These strengths are set against high public and external debt, high debt service costs relative to peers and some remaining uncertainty regarding the final form of the UK-EU economic relationship post-Brexit," Fitch said. Moody's lifted the UK's rating outlook to stable in October, believing "policy predictability has been restored" following last year's mini-budget chaos. Fitch fell short of doing the same, however.
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Property portal Rightmove predicted that UK house prices will end the year 1% lower than they started it. Rightmove said the market is continuing to "transition to more normal levels of activity following the frenetic post-pandemic period". "Motivated sellers are likely to have to price more competitively to secure a buyer in 2024, and agents will work even harder to build chains, especially at the bottom end where first-time buyer affordability will remain stretched. Mortgage rates will settle but remain elevated, tempering some buyers' budgets, especially in the lower and middle market sectors," Rightmove added. It had initially predicted house prices would fall 2% over the course of 2023.
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BROKER RATING CHANGES
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Barclays raises DS Smith to 'overweight' (equal-weight') - price target 360 (310) pence
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HSBC raises Softcat to 'buy' ('hold') - price target 1,540 (1,565) pence
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COMPANIES - FTSE 100
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Shell and BP were among the 50 oil firms that pledged to decarbonise their operations by 2050 at the UN's Cop28 climate talks in Dubai. The 50 firms, which make up some 40% of global output, also included TotalEnergies, ExxonMobil, PetroChina and Brazil's Petrobras. They are voluntary commitments unlike the decisions of Cop28, which are taken by consensus between nearly 200 countries under the aegis of the United Nations. Named the Oil & Gas Decarbonization Charter, it is a set of initiatives designed to accelerate the decarbonisation of the global energy industry, prepared in the year leading up to Cop28.
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COMPANIES - FTSE 250
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Wizz Air said passengers numbers were up by almost a third year-on-year last month. The budget carrier said it carried 4.8 million passengers in November, up 29% from a year prior. Capacity for the month was also 29% higher at 5.4 million seats. Its load factor improved on-year to 88.4% from 88.1%. Fellow budget carrier Ryanair, listed in Dublin, said passenger numbers were roughly 4.5% higher at 11.7 million in November. Its load factor was unmoved at 92%.
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OTHER COMPANIES
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ITM Power, a maker of electrolysers to produce green hydrogen, backed annual guidance. It expects half-year revenue of GBP7.5 million, an improvement from GBP2.0 million a year earlier, and leaving it on track to achieve annual guidance of GBP10 million to GBP18 million. It expects an adjusted loss before interest, tax, depreciation and amortisation between GBP22 million to GBP23.5 million, "trending well against lower end" of yearly guidance of a loss between GBP45 million to GBP55 million. It reported a GBP54.1 million adjusted Ebitda loss in the first half of the previous financial year. Chief Executive Officer Dennis Schulz said: "We have been making substantial progress against our 12-month plan, which aimed at providing ITM a strong foundation to build on. The first 6 months of the financial year from May to October already paint the early picture of a new ITM, surpassing the full year revenue of each of the last two years by about 50% in just the first half of this year. We are pleased with the improvements achieved across all areas of the company, many of which have a positive effect on how we manage cash and scrutinise capital spend."
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Capita said it has sold its 75% stake in a joint-venture with the UK Department for Environment, Food & Rural Affairs to FTSE 250-listed Bridgepoint Group. The stake in Fera Science has been sold for an enterprise value of GBP60 million. The UK government department owns 25% of Fera, which was established in 2015 and is focused on the agriculture, farming and food production market. Capita said it will receive cash proceeds of GBP62 million on completion.
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By Eric Cunha, Alliance News news editor
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