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(Alliance News) - London's FTSE 100 is called to open lower on Tuesday, continuing a lacklustre start to the week, after tepid trade in New York overnight.
While the US jobs market remains the focus of the week, services purchasing managers' index readings in Europe will be in focus this morning.
Data from China showed the service sector there picked up speed. The Caixin China general services business activity index rose to a three-month high of 51.5 points last month, from 50.4 in October.
Elsewhere, Australia's central bank left its key interest rate on hold but noted the path towards a cooler inflation rate has been "looking slower than earlier forecast".
The Reserve Bank of Australia left its cash rate unchanged at 4.35%, having raised the rate by 25 basis points to a 12-year high in October. The decision came in line with market consensus cited by FXStreet.
In early UK corporate news, FTSE 100-listed Ashtead reported half-year earnings growth and raised its payout. AIM listing tinyBuild, a video game publisher, warned on its annual revenue and said it will part with USD3.5 million amid a legal settlement.
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 7,476.26
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Hang Seng: down 2.2% at 16,285.93
Nikkei 225: down 1.4% at 32,775.82
S&P/ASX 200: down 0.9% at 7,061.60
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DJIA: closed down 41.06 points, 0.1%, at 36,204.44
S&P 500: closed down 0.5% at 4,569.78
Nasdaq Composite: closed down 0.8% at 14,185.49
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EUR: lower at USD1.0809 (USD1.0817)
GBP: lower at USD1.2612 (USD1.2620)
USD: lower at JPY146.94 (JPY147.02)
GOLD: up at USD2,031.95 per ounce (USD2,025.87)
(Brent): down at USD78.15 a barrel (USD78.53)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
09:00 GMT EU services PMI
10:00 GMT EU PPI
08:55 GMT Germany services PMI
09:30 GMT UK services PMI
1445 GMT US services PMI
15:00 GMT US ISM services PMI
15:00 GMT US job openings & labour turnover survey
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UK consumers appear to be sticking to plans for a budget Christmas this year with retail spending remaining weak despite Black Friday, figures showed. Total UK retail sales increased by just 2.7% in November, a significant weakening on last November's 4.2% uplift despite a push from retailers around Black Friday deals, according to the British Retail Consortium-KPMG monitor. Furthermore, the figures are not adjusted for inflation, masking a likely drop in volumes once higher prices are taken into account. Food and drink, health, personal care and beauty products continued to drive growth, while jewellery and watches saw the biggest decline in sales on the high street, suggesting consumers are abandoning expensive presents in favour of more budget-friendly gifting.
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BROKER RATING CHANGES
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Goldman Sachs raises Land Securities to 'buy' (neutral) - price target 690 (580) pence
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Goldman Sachs raises British Land to 'neutral' (sell) - price target 350 (290) pence
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COMPANIES - FTSE 100
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Equipment rental firm Ashtead reported growth in first-half earnings and said demand in North America is strong, despite it cutting guidance last month after being hurt by actors' and writers' strikes. Ashtead said revenue in the half-year ended October 31 increased 16% on-year to USD5.57 billion from USD4.80 billion. Pretax profit rose 5.5% to USD1.25 billion from USD1.19 billion. Ashtead raised its interim dividend to 15.75 cents from 15 cents. The company said it was a record first-half outturn helped by "robust end markets". Chief Executive Brendan Horgan said: "On 20 November we issued a trading update lowering our revenue growth and earnings guidance for the full year to reflect the lower level of emergency response activity related to natural disasters in North America in late Q2 and into Q3 and the longer than anticipated actors' and writers' strikes, impacting both the Film & TV business and adjacencies within our Canadian, US and UK businesses." Ashtead last month said revenue late in the second quarter and into the third was hit by lower emergency response activity, due to a quieter hurricane season and fewer naturally occurring events like wildfires. Also in both quarters, its Film & TV business was impacted by the recent actors' and writers' strikes. Ashtead consequently revised its full-year guidance downwards last month. It now expects group and US rental growth between 11% and 13%, compared to prior guidance of 13% to 16%.
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Qatar's wealth fund is offloading almost half of its shares in Barclays, according to Bloomberg on Monday. The report said it was a surprise move from one of the UK bank's long-standing backers that comes as the lender's executives mull a strategic overhaul. Qatar Holding, which is owned by the Qatar Investment Authority, is selling 361.7 million shares in the British firm, according to terms of the offering seen by Bloomberg News. The sale could see the Qatari vehicle raise as much as GBP517 million. The Middle East state invested about GBP4 billion in Barclays during a series of sales in the 2008 financial crisis, becoming one of its largest backers. It had a 5% stake at the end of 2022, according to a US regulatory filing in January. Monday's accelerated bookbuild reflects about 45% of that position.
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COMPANIES - FTSE 250
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Drax Group maintained yearly guidance and talked up its bioenergy with carbon capture and storage offering in Yorkshire. Drax expects its adjusted Ebitda, before the electricity generator levy, for 2023 to be in line with consensus of GBP1.16 billion. CEO Will Gardiner said: "We continue to deliver a strong system support and generation performance, providing dispatchable, renewable power for millions of homes and businesses. Drax Power Station is the UK's single largest provider of renewable energy by output during 2023 and a critical contributor to the country's security of supply. We are excited about the opportunity to deliver BECCS in Yorkshire, which could help the UK meet its net zero targets and continue to support the country's long-term energy security, whilst creating thousands of new jobs across the region."
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Upper Crust owner SSP reported improved annual results and rejoined the dividend list. The operator of food and beverage outlets in travel locations declared a 2.5p per share final dividend for the year ended September 30, its first since the pre-pandemic financial 2019. SSP said annual revenue surged 38% to GBP3.01 billion from GBP2.19 billion. Pretax profit jumped to GBP88.1 million from GBP25.2 million. "While we face into macroeconomic and political uncertainty, we believe that demand for travel will remain resilient and is well set for near and long-term structural growth. In 2024, we are planning for like-for-like sales growth of between 6% and 10%, reflecting the expectation of an ongoing recovery in passenger demand as well as increased spend per passenger including year on year price increases," SSP said. It expects revenue to grow to between GBP3.4 billion and GBP3.5 billion, with underlying pre-IFRS 16 operating profit within the range of GBP210 million to GBP235 million. Pre-IFRS 16 underlying operating profit in the year just gone totalled GBP163.7 million, shooting up from GBP30.3 million.
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OTHER COMPANIES
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E-commerce platform THG said it has struck a deal to acquire skincare brand Biossance for up to USD20 million from biotechnology company Amyris. THG noted Amyris recently commenced voluntary Chapter 11 proceedings. "An auction was held on 30 November 2023 with THG declared as the successful bidder for assets including IP, plus inventory and debtors with a book value of USD29 million," THG added. "Since inception in 2015, Biossance has generated global revenues of USD300 million and is currently stocked in over 1,600 stores globally including Sephora, Harrods, Space NK, Douglas and Selfridges."
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Sustainable fuels technology company Velocys has backed a takeover from a private equity consortium. Madison Bidco, made up of funds advised by Lightrock, Carbon Direct Capital, GenZero and Kibo Investments, will pay 0.25p per Velocys share, valuing the AIM listing at GBP4.1 million on a fully diluted basis. Velocys shares closed at 0.24p on Monday, giving it a market capitalisation of GBP3.9 million. The consortium has agreed to provide up to USD40 million of growth capital to Velocys upon acquisition completion, to "ensure that Velocys and its management have the capital resources needed to deliver against Velocys' medium-term strategic plans". Velocys noted the deal has the support of just under 19% of shareholders so far. Last month, the firm said it received an indicative offer from a consortium, but still had no much-needed binding arrangements in place for short-term funding. According to the firm on Tuesday, however, Carbon Direct has agreed to provide it with a secured bridging loan of GBP3.5 million to bolster its coffers ahead of acquisition completion.
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Video games publisher tinyBuild said it is currently trading below expectations in its fourth quarter, amid an "unusually weak" October, and it added it has agreed to settle a litigation, forking out USD3.5 million. tinyBuild said it now expects 2023 revenue between USD40 and USD50 million, at best a 4.1% decline from the USD52.2 million it achieved in 2022. "Versus Evil continues to underperform with the delay of three out of four games into 2024," it added. tinyBuild announced it would acquire publisher Versus Evil back in November 2021. The founder of Versus Evil made a legal claim against the tinyBuild. Steve Escalante, as well as two other claimants, alleged tinyBuild "breached three material obligations", including not providing Versus Evil with "timely capital contributions" in the 2022 and 2023 financial years. As part of the legal settlement, tinyBuild has agreed to pay the claimants USD3.5 million in cash, in addition to legal costs. "At the end of November, the company had USD5.7 million of cash, which is expected to decline further due to limited cash inflow from October sales, one-off charges as part of the cost reduction plan and underlying software development investments due in December. As a result, the company's cash position at the end of the year is expected to be in the low single digit millions, assuming no large contracts are signed before the year end and including the USD1.5 million upfront cash payment related to the settlement terms." tinyBuild CEO Alex Nichiporchik has shown a "willingness" to underwrite a future equity fundraise of up to USD10 million, the firm added.
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By Eric Cunha, Alliance News news editor
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