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(Alliance News) - Stocks in London were called to open flat on Tuesday, with the market focusing on US monetary policy.
"Today, all eyes and all ears are on Federal Reserve Chair Jerome Powell and what he thinks about the latest set of economic data," said Swissquote Bank's Ipek Ozkardeskaya.
Powell will testify before Congress on Tuesday and Wednesday. Powell's comments come two weeks before the US central bank's next policy decision. The next Federal Open Market Committee meeting is on March 21 and 22.
"Since the latest FOMC meeting, we saw a blowout non-farm payrolls number, an uptick in inflation figures, lower-than-expected decline in the S&P500 earnings, and overall encouraging economic activity data," Ozkardeskaya added.
Halifax data showed UK house prices rose faster than expected last month, but underlying activity points to a general downward trajectory.
UK house prices rose 1.1% in February from the month before, after a 0.2% rise in January from December. They rose 2.1% annually in February, with the rate of growth unchanged from the previous two months.
"Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December. Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend," said Kim Kinnaird, director at Halifax Mortgages.
In early corporate news, miner Fresnillo's annual profit slumped amid cost inflation and volatile metal prices, and John Wood Group said it is "minded to reject" a fourth cash takeover proposal from Apollo Global Management.
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 4.7 points, 0.1%, at 7,934.49
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Hang Seng: down 0.8% at 20,434.74
Nikkei 225: closed up 0.3% at 28,309.16
S&P/ASX 200: closed up 0.5% at 7,364.70
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DJIA: closed up 0.1% at 33,431.44
S&P 500: closed up 0.1% at 4,048.42
Nasdaq Composite: closed down 0.1% at 11,675.74
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EUR: unchanged at USD1.0677 (USD1.0678)
GBP: flat at USD1.2035 (USD1.2031)
USD: flat at JPY135.92 (JPY135.98)
GOLD: down at USD1,847.57 per ounce (USD1,850.32)
OIL (Brent): up at USD86.33 a barrel (USD85.90)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
11:00 GMT Ireland industrial production and turnover
08:55 EST US Johnson Redbook retail sales index
10:00 EST US economic optimism index
10:00 EST US Fed Chair Powell testifies before Congress
15:00 EST US consumer credit
16:30 EST US API weekly statistical bulletin
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Retail sales in the UK held up better than expected in February as consumers proved they are still ready to celebrate events such as Valentine's Day despite the-cost-of living crisis. Total UK retail sales were up 5.2% in February against an increase of 6.7% for the same month last year – below the three-month average of 5.5% and above the 12-month average of 2.4%, according to the British Retail Consortium-KPMG Retail Sales Monitor. Food sales increased by 8.3% over the three months to February and non-food sales were up 3.2% while online non-food sales fell by 3.1% against a decline of 28% last February. BRC Chief Executive Helen Dickinson said: "While the cost-of-living crisis has made customers increasingly price-sensitive, they are still ready to celebrate special occasions.
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Growth in new German factory orders slowed at the beginning of the year, according to official data. According to Destatis, new manufacturing orders climbed 1.0% month-on-month in January, having risen 3.4% in December. The reading was better than the FXStreet-cited market consensus of a 1.0% decline.
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BROKER RATING CHANGES
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SocGen raises IMI to 'hold' (sell) - price target 1,600 (1,100) pence
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Bernstein reinitiates Convatec with 'outperform' - price target 265 pence
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Bernstein reinitiates Smith & Nephew with 'outperform' - 'top pick'
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COMPANIES - FTSE 100
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Anglo-Australian mining firm Rio Tinto will pay a USD15 million penalty to settle a US investigation into payments made to a consultant. The civil penalty will settle an investigation by the US Securities & Exchange Commission into payments made to a former consultant who helped the company acquire rights to massive iron-ore deposits in Guinea. The company agreed to the penalty for alleged violations of the Foreign Corrupt Practices Act without admitting to or denying the SEC's findings. The SEC's investigation uncovered that a consultant, acting as Rio Tinto's agent, offered and attempted to make an improper payment of at least USD822,000 to a Guinean government official in connection with the consultant's efforts to help Rio Tinto retain its mining rights. Furthermore, none of the payments to the consultant was accurately reflected in Rio Tinto's books and records, and the company failed to have sufficient internal accounting controls in place to detect or prevent the misconduct. The mine has not been developed by Rio Tinto.
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Mexican gold and silver miner Fresnillo said its annual results for 2022 were hit by industry pressures, including volatile precious metal prices and rising cost inflation. Silver production edged up 1.2% to 53.7 million ounces, but gold production fell 15% to 635,926 ounces - though both were in line with company guidance. Total revenue fell 10% to USD2.43 billion from USD2.70 billion, as pretax profit slumped 59% to USD248.6 million from USD611.5 million. Fresnillo declared a final dividend of 13.3 cents, bringing the annual total to 16.7 cents. In 2023, it expects attributable silver production expected to be in the range of 57.0 to 64.0 million ounces, including silverstream. Gold production is expected at 590,000 to 640,000 ounces. It expects global macroeconomic and geopolitical factors to continue to affect its performance, and expects cost inflation to persist.
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COMPANIES - FTSE 250
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Bakery chain Greggs reported total sales were up 23% to GBP1.51 billion in 2022 from GBP1.23 billion in 2021. Pretax profit edged up 1.9% to GBP148.3 million from GBP145.6 million. Greggs raised its annual dividend to 59.0 pence from 57.0p in 2021, with a final dividend of 44.0p recommended. Greggs said it opened a record 186 new shops during the year, with 39 closures bringing the net openings to 147. Its estate stood at 2,328 shops at the end of December. In 2023 so far, like-for-like sales in company-managed shops are up 19%, reflecting the impact of the Omicron variant in early 2022. Looking ahead, CEO Roisin Curries said Greggs will continue to keep its strategic growth plan centre stage, and said the firm is well-placed to become a significantly larger, multi-channel business.
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John Wood Group said it has received a fourth proposal for a cash takeover offer from Apollo Global Management worth 237 pence per share. "The board believes this latest proposal continues to undervalue the group and is therefore minded to reject. The board will continue to engage with its shareholders and intends to engage further, on a limited basis, with Apollo," John Wood said. Shares in John Wood closed at 195.72p on Monday. The company had already rejected three proposals, the most recent in January for 230p, or around GBP1.59 billion in total.
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OTHER COMPANIES
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In The Style said it has completed its strategic review, and has conditionally agreed to sell its only operating subsidiary, In The Style Fashion Ltd, for GBP1.2 million cash. The review had explored several options including a potential sale of the entire company, but the firm said any proposals received were not deemed to be deliverable on an acceptable timescale. "None of the proposals involved an offer for the whole company," it said. The offer for its subsidiary came from Baaj Capital, a UK-based private family office, and was deemed to be deliverable. The company will now change its name to Itsum PLC, and become a cash shell. The firm also wants to cancel its shares on AIM after the completion of the sale. Shareholders will be able to vote on all this at a general meeting to be called by the company.
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By Elizabeth Winter, Alliance News senior markets reporter
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