(Alliance News) - Stocks in London are set to open lower on Wednesday, as sentiment in global equities takes a hit amid doubts over the timing of US interest rate cuts following continued robust economic data.
"Rising oil and commodity prices fuelled inflation expectations while further strength in the US economic data boosted worries that the Federal Reserve may not cut the interest rates as much as wished this year. Yesterday's data showed faster-than-expected recovery in factory orders, though job openings fell more than expected," said Swissquote Bank analyst Ipek Ozkardeskaya.
"The market now prices less than three rate cuts from the Fed this year, below the three rate cuts plotted by the Fed members at last month's [Federal Open Market Committee] meeting. And even though Fed's Mary Daly and Loretta Mester said that three rate cuts look appropriate this year – God knows why – Mester added that 'it's a close call' on whether fewer rate cuts will be needed. She was certainly referring to robust economic data and up-ticking inflation."
In early corporate news, budget airlines Wizz Air and Ryanair both reported March passenger number growth, while food packaging company Hilton Food posted an annual profit surge.
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 7,908.49
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Hang Seng: down 1.2% at 16,724.82
Nikkei 225: closed down 1.0% at 39,451.85
S&P/ASX 200: closed down 1.3% at 7,782.50
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DJIA: closed down 396.61 points, 1.0% at 39,170.24
S&P 500: closed down 37.96 points, 0.7%, at 5,205.81
Nasdaq Composite: closed down 156.38 points, 1.0%, to 16,240.45
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EUR: down at USD1.0768 (USD1.0771)
GBP: up at USD1.2571 (USD1.2564)
USD: up at JPY151.63 (JPY151.60)
Gold: up at USD2,282.54 per ounce (USD2,266.55)
(Brent): up at USD89.00 a barrel (USD88.11)
(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 BST eurozone CPI
10:00 BST eurozone unemployment
13:15 BST US ADP jobs report
14:45 BST US S&P Global composite PMI
15:00 BST US ISM services PMI
15:45 BST US Fed Governor Michelle Bowman speaks
18:10 BST US Fed Chair Jerome Powell speaks
22:30 BST EDT US Fed Governor Adriana Kugler speaks
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UK Foreign Secretary David Cameron wants to encourage Nato allies to "step up and spend more on defence" in the face of Russian aggression. As the alliance celebrates 75 years since its founding, Cameron is expected to reinforce that Nato has never been stronger, more united, or more relevant than it is today. At a Nato foreign ministers' meeting on Wednesday, the former prime minister hopes to sign allies up to British-led initiatives to buy Nato standard missiles and munitions for the Ukrainian armed forces. Cameron said: "Seventy five years after its creation, we are celebrating a Nato that has never been stronger or more important, especially following Sweden's accession last month. "With Ukraine closer to Nato than ever, we must sustain the critical support Ukraine needs to win the war. "Allies need to step up and spend more on defence in the face of continued Russian aggression and a more dangerous world."
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Sadiq Khan has pledged to create more than 150,000 high-quality jobs by 2028 if he is re-elected as London mayor. The Labour mayor will set out a path to a "new era of prosperity" during a visit to King's Cross on Wednesday. Khan's London growth plan will focus on growing sectors such as artificial intelligence, financial tech, climate tech and life sciences. Labour said it aims to offer opportunities to young Londoners, particularly those from lower income households, and will be developed in collaboration with councils, businesses and trade unions. With next month's election approaching, Shadow Chancellor Rachel Reeves said a Labour government and Labour London mayor would reset the relationship between national government and the capital city.
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BROKER RATING CHANGES
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Barclays raises Segro to 'overweight' (underweight) - price target 1,000 (775) pence
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COMPANIES - FTSE 250
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Budget airline Wizz Air said it carried 4.8 million passengers in March, up 12% from 4.3 million a year earlier, with a load factor of 90.8%, down from 92.2%. Wizz Air said the load factor was impacted by one-directional visual flight rules traffic during the Easter period. On a rolling 12-month basis, passenger numbers were up 21% to 62.0 million from 58.2 million, with a load factor of 90.1% versus 87.8%. March capacity was up 14% to 5.3 million seats from 4.6 million, while on a rolling 12-month basis, it was up 18% to 68.8 million from 58.2 million. Wizz Air said it restarted flights from Tel Aviv, Israel, with the initial relaunch of operation from six bases. Throughout April, May and June, it said further routes from its network will resume operations.
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Food packaging firm Hilton Food reported growth in annual profit and lifted its dividend, hailing a "successful turnaround". Pretax profit in 2023 surged 64% to GBP48.6 million from GBP29.6 million in 2022, while revenue rose 3.7% to GBP3.99 billion from GBP3.85 billion. It proposed a final dividend of 23.0 pence per share, up 1.8% from 22.6p, taking the total annual dividend to 32.0p, a rise of 7.7% from 29.7p. Chief Executive Officer Steve Murrells commented: "Over the past year we've remained focused on executing our strategy which has resulted in a good performance against a challenging market. I am particularly pleased with the results in our seafood category, returning to full year operating profitability following a successful turnaround. Our core meat category performed strongly and we worked closely with customers to offer the highest quality and most relevant food products to consumers." Looking ahead, Hilton Food said 2024 trading has started in line with board expectations. "The group's financial position remains strong, with improving leverage and headroom at comfortable levels, and we continue to explore new growth opportunities with existing partners, wider geographic expansion and complementary M&A," the company said.
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OTHER COMPANIES
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Budget airline Ryanair said it carried 13.6 million passengers in March, up 7.9% from 12.6 million a year earlier, with an unchanged load factor of 93%. On a rolling 12-month basis, it carried 183.7 million passengers, up 9.0% from 168.6 million, with an increased load factor of 94% from 93%. Ryanair operated over 77,000 flights in March, noting almost 950 flights were cancelled due to the Israel/Gaza conflict.
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Alpha Group International intends to apply for admission of its shares onto the Main Market in London and, in turn, cancel its listing on AIM. It expects this to take place next month, no earlier than May 2. The financial services firm explained: "Our business is growing in size, becoming more global, and gaining interest from increasingly larger clients. We believe that a Main Market premium listing will serve to further enhance our reputation and support our market penetration as we move into additional countries and engage larger clients. At the same time, premium listing standards will align with Alpha's commitment to providing higher levels of governance and disclosure, both of which we know will continue to be well-received by our clients, banking partners and investors alike." Admission is not expected to be conditional on shareholder approval, while Alpha Group International said it will make a further announcement on the status of its application in "due course".
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By Greg Rosenvinge, Alliance News senior reporter
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