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(Alliance News) - Stocks in London are set to open slightly higher on Thursday, as the focus shifts to next week's central bank decisions.
In the meantime, there was a strong flow of UK corporate news. Fraser Group and DS Smith reported strong interim results, while British American Tobacco noted the growth of its New Category business. In The Style launched a strategic review, as the founder returned as CEO.
The economic calendar has the latest consumer price index reading from Ireland at 1100 GMT.
"There appears to be little in the way of significant direction in markets at the moment, hardly surprising given next week's looming central bank decisions, and we will probably continue to see further scratchiness in the upcoming days," said CMC Markets' Michael Hewson.
The US Federal Reserve will announce its latest interest decision on Wednesday next week, with the Bank of England and European Central Bank to follow on Thursday.
The spectre of a 'winter of discontent' looms over the UK, with hundreds of thousands of workers planning to strike over December. These include rail staff, bus drivers, nurses, civil servants and postal workers.
Unions have called on the UK government to engage in "meaningful" pay talks and to stop its "smoke and mirrors" tactics.
In a joint letter to Chancellor Jeremy Hunt, TUC General Secretary Frances O'Grady and the chair of the union public sector liaison group and general secretary of Unison, Christina McAnea, accused ministers of refusing to negotiate in good faith and of "hiding behind" pay review bodies.
"Despite a welcome World Cup bounce for many hospitality businesses, there have been warnings that rail strikes could be as damaging to the sector as the Omicron Covid variant was last year. Some workplaces had been tentatively holding office party bookings until they get closer to the date while they asses potential disruption," commented AJ Bell analyst Danni Hewson.
Here is what you need to know ahead of the London market open:
MARKETS
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FTSE 100: called up 4.2 points, 0.1%, at 7,493.39
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Hang Seng: up 3.3% at 19,434.45
Nikkei 225: closed down 0.4% at 27,574.43
S&P/ASX 200: closed down 0.8% at 7,175.50
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DJIA: closed up just 1.58 points at 33,597.92
S&P 500: closed down 7.34 points, or 0.2%, at 3,933.92
Nasdaq Composite: closed down 56.34 points, or 0.5%, at 10,958.55
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EUR: higher at USD1.0513 (USD1.0506)
GBP: higher at USD1.2203 (USD1.2194)
USD: higher at JPY136.73 (JPY136.56)
GOLD: higher at USD1,786.25 per ounce (USD1,783.10)
OIL (Brent): higher at USD78.19 a barrel (USD78.00)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 GMT Ireland consumer price index
16:30 EST US federal discount window borrowings
16:30 EST US foreign central bank holdings
08:30 EST US unemployment insurance claims report
08:30 EST US weekly export sales
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Fewer foreign workers, labour shortages, and people being more hesitant to take up new jobs amid heightened economic uncertainty has led to sharp drops in the number of workers available for recruiting firms in the UK, according to a new report. The number of people placed into permanent jobs by recruitment agencies fell for the second consecutive month in November, the Recruitment and Employment Confederation found in its report with audit giant KPMG. This marks a shift from the recent upward trend of employers increasing hiring, indicating that businesses are having a harder time filling permanent vacancies. However, companies hiring temporary roles lifted slightly, suggesting that employers are taking on staff on a more flexible, short-term basis rather than hiring permanent positions.
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Demand for homes in the UK rental sector is continuing to rise as home buyer activity drops off, according to surveyors. This is contributing to an upward pressure on rental prices, at a time when house prices have been falling month-on-month, the findings from the Royal Institution of Chartered Surveyors indicate. A net balance of 35% of property professionals saw a pick-up in rental demand in November, while a balance of 27% reported a decline in landlord instructions. The mismatch between demand and supply continues to drive rents higher, with a net balance of 43% of contributors anticipating rental prices moving higher over the coming three months.
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BROKER RATING CHANGES
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UBS cuts London Stock Exchange to 'neutral' (buy) - price target 8,500 (9,000) pence
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JPMorgan cuts Travis Perkins to 'underweight' (neutral) - price target 800 (900) pence
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JPMorgan raises Just Group to 'overweight' (neutral) - price target 95 (80) pence
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COMPANIES - FTSE 100
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British American Tobacco updated on its second half performance. The cigarette maker guided for 2022 revenue growth of between 2% and 4% in constant currency for 2022, and mid-single figure adjusted diluted earnings per share growth at constant currency. It now expects global tobacco industry volume to be around 2% lower in the full year, compared to a previous estimate of a 3% decline, "driven by continued post-Covid recovery in emerging markets". However, US industry volumes in combustibles will reflect "increasing macro-economic pressures" seen in the second half, it said. BAT said its New Category business is seeing strong growth in volume, revenue and market share, becoming a "significant contributor" to the firm's performance. It remains confident of hitting revenue targets of GBP5 billion and profitability for the business by 2025.
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DS Smith reported a strong half-year ended October 31. The packaging firm said revenue rose 28% to GBP4.30 billion from GBP3.36 billion a year before, lifting pretax profit by 82% to GBP322 million from GBP177 million. DS Smith said the performance was driven by focusing on its customers' needs during a period of significant economic volatility. "This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios," said CEO Miles Roberts. DS Smith now expects its full-year performance to be ahead of previous expectations, and the second half to be consistent with the first. It announced an interim dividend of 6.0 pence per share, up 25% from 4.8p a year before.
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Sports Direct-owner Frasers Group said revenue rose 13% to GBP2.64 billion in the six months to October 23, from GBP2.34 billion a year prior, largely due to acquisitions. Excluding acquisitions by the retailer, revenue fell 3.1%, mostly down to a reduction in Game UK and a strong comparator after shops reopened from lockdown in March 2021. Pretax profit jumped 53% to GBP284.6 million from GBP186.0 million. Frasers reiterated its guidance for adjusted pretax profit of GBP450 million to GBP500 million in its full year, noting "strong strategic and trading momentum". It decided not to declare a dividend for the period, but noted it repurchased GBP80.4 million in shares, or 2.5% of its share capital, during its buyback programme in the recent half.
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COMPANIES - FTSE 250
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Hipgnosis Songs Funds reported total revenue of USD91.7 million in the six months to September 30, up 7.5% from USD85.3 million a year before. Its pretax loss widened to USD20.1 million from USD19.2 million. It left its interim dividend of 1.3125p unchanged from the prior year. The music intellectual property investment and song management company said it expects continued annual growth in the global music market, and will benefit from increasing revenue form social media, gaming and lifestyle channels. "Despite all of this positive news, I share the disappointment of shareholders that the true value of our iconic songs is not being reflected in today's share price," said CEO & Founder Merck Mercuriadis. Hipgnosis shares are down 36% over the past 12 months.
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Tullow Oil said interim Chief Financial Officer Richard Miller will be appointed in the role permanently from January 1. "He has been acting as interim CFO since April 2022 and has been with Tullow for over 11 years. During that time Richard led the Tullow Finance team, supporting a number of acquisitions, disposals and capital markets transactions," the oil and gas explorer said.
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OTHER COMPANIES
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On The Beach reported strong revenue growth in its recent financial year, as it swung to an annual profit. In the year to September 30, revenue rose to GBP144.1 million from GBP21.2 million, and also was up 3% from financial 2019. The holiday operator said pretax profit was GBP2.1 million, swung from a loss of GBP36.7 million. "Over the last 6 weeks, there has been a continuation of key trends, including growth across premium, long-haul and B2B expansion areas, set against more subdued trading in sales of 3 star holidays for FY23," OTB noted. CEO & Founder Simon Cooper will step down within the next 12 months, and CFO Shaun Morton will step up to fill the role.
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In the Style launched a strategic review, in light of its low market capitalisation. This may or may not results in a sale of the company, its businesses, or assets. The fashion retailer said it is not in takeover talks, and has not received any offer or approach. ITS said its expectations for full-year adjusted earnings before interest, tax, depreciation and amortisation remain unchanged. It noted "uncertain" consumer sentiment, and guided for direct-to-consumer revenue in the second half to be "similar" to that of the first. Wholesale revenue, which plunged 45% in the first half, is likely to continue to be a challenge, ITS said. In addition, CEO Sam Perkins will step down at the end of December, with founder & former CEO Adam Frisby to return to the helm. Frisby previously served as CEO for nine years until January 2022, when he became chief brand officer.
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By Elizabeth Winter, senior markets reporter
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