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(Alliance News) - Stocks in London are called to open lower on Monday, in a nervy start to the week ahead of US inflation data due on Tuesday.
Trade in Asia was mixed, with shares in Tokyo struggling as a rally for the Nikkei 225 took a breather. Stocks in China climbed, however, following a favourable inflation reading over the weekend.
Official statistics Saturday showed the nation's consumer price index rose 0.7% on-year last month, the first increase since August.
The figure was higher than a 0.3% rise analysts surveyed by Bloomberg had expected and a sharp increase on the 0.8 fall seen in January, their sharpest drop in more than 14 years.
Eyes now turn to US inflation data scheduled for Tuesday.
"The headline inflation is expected to steady near 3.1% on a yearly basis, core inflation is expected to have eased from 3.9% to 3.7%. But the monthly figures could print another strong month. If that's the case, we shall see a softening in dovish Fed expectations. Remember, Fed Chair Powell said last week that the Fed 'can and will' start cutting the rates this year, but he also said that they are in no rush," Swissquote analyst Ipek Ozkardeskaya commented.
In early UK corporate news, Elliott Advisors said it has decided against making an official bid for electricals retailer Currys. Vanquis Banking left its 2023 results expectations unmoved, but it warned income for the new year will be below market expectations.
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 0.5% at 7,620.54
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Hang Seng: up 1.3% at 16,562.49
Nikkei 225: down 2.2% at 38,820.49
S&P/ASX 200: closed down 1.8% at 7,704.20
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DJIA: closed down 68.66 points, 0.2%, at 38,722.69
S&P 500: closed down 0.7% at 5,123.69
Nasdaq Composite: closed down 1.2% at 16,085.11
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EUR: down at USD1.0946 (USD1.0949)
GBP: down at USD1.2847 (USD1.2860)
USD: down at JPY146.88 (JPY147.21)
GOLD: higher at USD2,178.51 per ounce (USD2,174.74)
(Brent): higher at USD81.83 a barrel (USD81.72)
(changes since previous London equities close)
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ECONOMICS
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The UK Financial Conduct Authority said it will stand in the way should recognised investment exchanges choose to create a listed market segment for cryptoasset-backed exchange traded notes. "These products would be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets only," the watchdog said. It added: "With increased insight and data due to a longer period of trading history, the FCA believes exchanges and professional investors should now be able to better establish whether cETNs meet their risk appetite." However, the ban on the sale of cryptoasset-backed exchange traded notes to retail consumers remains in place. The FCA added: "The FCA continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money. The FCA is collaborating with government, international partners and industry to develop the UK's cryptoasset regulatory regime and lead international standards in this space."
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Scrapping national insurance is set to be a key part of the Tory election offer to voters as UK Prime Minister Rishi Sunak suggested a squeeze on benefits could help pay for the plan. The PM said "significant progress" could be made towards the goal of eliminating the tax during the next parliament if his party remains in power. In a Sunday Times interview, Sunak set out his intention to consult on new plans to reduce working-age benefits "to make sure that we can sustainably keep cutting taxes". Chancellor Jeremy Hunt used his budget to set out a 2p cut in national insurance from April with a vague promise to eventually deliver a simpler tax system by eventually getting rid of it altogether. Sunak stressed his commitment to ending the "unnecessarily complex" system of having both income tax and national insurance contributions. The aspiration to end the double taxation of work by scrapping national insurance was attacked as an unfunded promise by Labour, which pointed out it would cost the exchequer about GBP46 billion.
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BROKER RATING CHANGES
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RBC raises Marks & Spencer to 'outperform' ('sector perform') - price target 300 (285) pence
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Macquarie cuts Virgin Money to 'neutral' - price target 220p
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COMPANIES - FTSE 100
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Water companies will invest more than GBP180 million to tackle sewage spills, the UK government has announced. The fast-tracked investment made by several water companies in England will support the effort to roll out storm overflow prevention measures by April 2025. These include artificial intelligence systems, accelerated wetland programmes, installing new in-sewer monitors and recruiting and training specialist staff. The government said it expects the measures to prevent more than 8,000 spills polluting English waterways. Severn Trent will invest GBP41 million, while United Utilities Group PLC will invest GBP39 million.
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COMPANIES - FTSE 250
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Currys suitor Elliott Advisors said it will not make an offer for the electricals retailer, following "multiple attempts to engage" with the FTSE 250 listing's board. The private equity firm said it "is not in an informed position to make an improved offer for Currys on the basis of the public information available to it". Currys in February said it rejected an upgraded takeover offer from Elliott. It said it received proposal worth around GBP750 million or 67 pence per share from Elliott, lifted from a previous tilt of 62p. Before the second Elliott proposal was made, Chinese e-commerce firm JD.com threw its hat in the ring. JD.com, noting press coverage, said it is mulling an acquisition of Currys. The Telegraph newspaper had reported JD.com held early talks with Currys.
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British Land named William Rucker as its next chair following a "comprehensive selection process", a role he currently holds at Marston's. Rucker will leave pub operator Marston's on July 8, "in view of his other increased business commitments". He joins British Land at the conclusion of the property investor's annual general meeting on July 9, replacing Tim Score. Since January 2023, Rucker has been chair of asset manager Intermediate Capital Group PLC. He was formerly chair of housebuilder Crest Nicholson Holdings PLC and developer Quintain Estates & Development PLC. Marston's said Senior Independent Director Octavia Morley is "overseeing a comprehensive search process" to find Rucker's successor.
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OTHER COMPANIES
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Vanquis Banking said its 2023 results expectations are unchanged, and it set out near-term strategy plans as it weathers "short term challenges". The lender expects adjusted pretax profit of GBP25 million for 2023, which would be down markedly from GBP126.6 million for 2022. Looking further ahead, it is targeting an adjusted return on tangible equity "in the mid-teens from 2026". It added: "This significant improvement will be driven by a return to sustainable income growth, together with the benefits of greater efficiency. At its strategy seminar, the group will describe in detail the initiatives already under way to serve a broader, carefully targeted addressable market with a more extensive customer proposition. It will also present a detailed route map to achieve significant payback across the business in 2026 from its technology infrastructure investment." It said it is currently making moves to "redevelop its customer proposition and reset pricing", eyeing a return to "modest lending growth from the start of the second quarter" of this year. It did warn, however, income will be "materially lower than market consensus expectations" of GBP538.3 million for 2024. It plans a final dividend of 1.0p per share for 2023, and expects a payout of the same size for 2024. It had paid a 5.0p per share interim dividend. It eyes "measured progression in 2025" for its payout, and from 2026, it will "revisit the capital allocation policy and reset the level of dividend from which to maintain a progressive policy thereafter".
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Nanoco said it will return GBP33.0 million to shareholders, the bulk of which through a tender offer. The developer and manufacturer of cadmium-free quantum dots and other nanomaterials in January received the second tranche of litigation proceedings from Samsung Electronics. Samsung was alleged to have infringed on Nanoco's intellectual property. Nanoco said: "The board has determined that, in order to provide flexibility and choice to shareholders, the most appropriate means of returning value is to conduct a tender offer to return up to GBP30.0 million to shareholders. In addition to the tender offer, the board also intends to return a further sum of up to GBP3.0 million by way of an on-market share buyback of ordinary shares." The tender offer is being made at 24p per share, a 25% premium to its Friday closing price.
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By Eric Cunha, Alliance News news editor
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