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(Alliance News) - Stocks in London are set to open slightly lower on Monday, as oil prices advance while the dollar falls back.
Locally, there is an upcoming speech from UK Prime Minister Rishi Sunak on the state of the nation's finances, ahead of Wednesday's autumn statement from Chancellor Jeremy Hunt.
Another key catalyst this week will be the latest minutes from the Federal Open Markets Committee on Tuesday, which will provide insight into the US Federal Reserve's thinking behind its most recent meeting.
"[The minutes] will likely emphasize that the Fed's decision to pause rate hikes was influenced by the rise in US long-term yields in October. With the subsequent decrease in yields, interpretations may vary, either signalling Fed caution due to falling yields or a belief that inflationary pressures have subsided, leading to a halt in rate hikes," said Swissquote Bank's Ipek Ozkardeskaya.
The dollar pulled back in early exchanges in Europe. Meanwhile, oil prices rose on reports that Saudi Arabia is preparing to prolong production cuts into next year, and Opec+ is weighing further reductions.
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 8.0 points, 0.1%, at 7,496.25
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Hang Seng: up 1.7% at 17,751.18
Nikkei 225: closed down 0.6% at 33,388.03
S&P/ASX 200: closed up 0.1% at 7,058.40
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DJIA: closed little changed at 34,947.28
S&P 500: closed up 0.1% at 4,514.02
Nasdaq Composite: closed up 0.1% at 14,125.48
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EUR: up at USD1.0918 (USD1.0881)
GBP: up at USD1.2480 (USD1.2421)
USD: down at JPY149.14 (JPY149.77)
GOLD: flat at USD1,981.50 per ounce (USD1,981.88)
OIL (Brent): up at USD81.35 a barrel (USD79.74)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 CET EU construction output
10:00 EST US leading indicators
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UK Prime Minister Rishi Sunak is expected to use a speech to paint a more positive picture of the economy ahead of the autumn statement. Sunak will hail having last week hit his pledge of halving inflation as he gives an update on the state of the nation's finances in London on Monday morning. Chancellor of the Exchequer Jeremy Hunt has heightened expectations that he will cut taxes on businesses in a bid to boost growth with his autumn statement but downplayed chances of reducing income tax. Hunt persistently warned against changes that could fuel inflation, dampening speculation that taxes on work could be reduced as he seeks to avoid prices spiralling again. He suggested during a round of broadcast interviews ahead of Wednesday's financial package that the personal tax burden will not come down "overnight". Hunt made clear that his "priority is backing British business" after promising an "autumn statement for growth".
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BROKER RATING CHANGES
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Berenberg raises London Stock Exchange target to 10,400 (10,000) pence - 'buy'
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RBC raises Currys to 'outperform' (sector perform) - price target 7,000 (6,000) pence
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Goldman Sachs raises Standard Chartered to 'buy' (neutral) - price target 868 (879) pence
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COMPANIES - FTSE 100
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Following its recent promotion to London's large-cap index, Diploma reported a year of double-digit growth. The supplier of technical products and services said revenue in the year ended September rose 19% year-on-year to GBP1.20 billion from GBP1.01 billion, or 8% on an organic basis - ahead of its own forecasts of 7%. Meanwhile, pretax profit rose 20% to GBP155.6 million from GBP129.5 million. Adjusted operating profit rose 24% to GBP237.0 million, which was ahead of company-compiled analyst consensus expectations of GBP230.9 million. It raised its total dividend to 56.5 pence per share from 53.8p, which fell slightly short of expectations of 59.8p. "We've had an excellent year with strong, volume-led organic growth; great margin progression; and continued double-digit [earnings per share] growth, all at strong returns," said Chief Executive Johnny Thomson. Looking ahead, it expects growth in financial 2024 to be in line with its financial model "albeit with stronger margins", anticipating organic revenue growth of around 5%.
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Ashtead Group said it is expecting to report "record results" for its half-year period ended October 31, but revised its expectations for its full year downwards. The industrial equipment rental company said it expects interim rental revenue growth of 13%, and adjusted pretax profit growth of 5% to around USD1.31 billion. However, it noted revenue late in its second quarter was hit by lower emergency response activity, due to a quieter hurricane season and fewer naturally occurring events. It also noted the hit from the actors' and writers' strikes on its Film & TV arm, which persisted for longer than expected. Both factors have continued into the third quarter, it added. Consequently, it expects group and US rental growth between 11% and 13% in its full year, compared to prior guidance of 13% to 16%, which will drag Ebitda down to 2% to 3% below market expectations. Additionally, it expects a further bottom-line hit from a depreciation charge of around GBP2.12 billion and a net interest cost of around GBP540 million. "Despite these one-off events impacting the current financial year, our end markets in North America remain robust, supported in the US by an increasing number of mega projects and recent legislative acts," Ashtead said.
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London Stock Exchange Group said it has appointed Michel-Alain Proch as chief financial officer. Proch is currently CFO at Publicis Groupe, and has previously held CFO positions at Igenico and Atos. "I'm delighted to welcome Michel-Alain to LSEG. His deep experience across global, financial infrastructure and IT data solutions firms will be invaluable as we deliver against the next stage of our strategic growth," said CEO David Schwimmer.
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COMPANIES - FTSE 250
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High tech component and system manufacturer Senior reported it was trading in line with its expectations, reiterating its annual guidance. In the ten-month period to October, it saw revenue growing 15% in constant currency from the prior year. "Both our Aerospace and Flexonics divisions contributed to the year-on-year improvement, reflecting the strength in our core markets and our positioning on key growth platforms across both divisions. The group benefitted from robust growth in commercial aerospace, land vehicle and power & energy markets," Senior said.
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OTHER COMPANIES
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Sabre Insurance announced the death of its non-executive chair, Andy Pomfret, following an illness. "Andy joined the board in 2018 and became chair in September 2020. He provided valuable advice and insight to the executive team both through its infancy as a listed company and then as a chair in supporting the delivery of Sabre's strategy. Everyone associated with Sabre would like to express their deepest sympathy to his family," the company said. Senior Independent Director Rebecca Shelley will become acting chair.
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musicMagpie confirmed reports that it is in early-stage discussions with both BT Group and Aurelius Group about a possible takeover offer. "Discussions between the parties are ongoing and remain at a very early stage. Accordingly, there can be no certainty that any offer for the company will be made from either of the parties, nor as to the terms of any such offer," the used-technology reseller said.
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Sustainable fuels technology company Velocys said it has received a non-binding all-cash takeover offer from a consortium led by Lightrock LLP and Carbon Direct Capital Management LLC. The offer forms part of ongoing discussions with potential strategic investors over long-term funding for the business. The consortium has offered 0.25 pence per share, valuing the firm at GBP4.1 million. The price represents a substantial discount, 63%, to the firm's closing price on Friday of 0.68p. The consortium has indicated its intention to provide "significant additional funding" to meet growth capital needs, as well as any near-term funds needed to complete the proposed takeover. "The evaluation of the proposal by the board and its advisers is ongoing and the board recognises that it should assess the proposal as a whole in light of the company's very near-term funding requirements and significant long-term funding needs...The board is continuing engagement and discussions with the consortium and its advisers with a view to progressing and recommending the proposal," Velocys said.
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By Elizabeth Winter, Alliance News deputy news editor
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