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(Alliance News) - Stocks in London are set to open slightly higher on Thursday, ahead of a slew of services PMI data, including for the UK, while reacting to the latest data from China.
The services PMI for the UK will be released at 0930 GMT. Survey data will also be released for the EU and Germany this morning, followed by the US in the afternoon.
Investors are also digesting the latest minutes from the Federal Reserve, which have somewhat tempered the market's lofty expectations for interest rate cuts this year.
"The release of [Federal Open Market Committee] minutes delivered an unwelcome update that appeared both hawkish and cautious on the macroeconomic front," said SPI Asset Management analyst Stephen Innes.
Federal Reserve officials concluded that interest rate cuts are likely in 2024, although they deemed it would be appropriate to maintain a restrictive stance "for some time", according to minutes of December's meeting.
In UK corporate news, Next raised its full-year profit outlook on improved sales in November and December, while JD Sports said recent revenue growth had been slightly behind its 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 up 0.1% at 7,693.13
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Hang Seng: up 0.1% at 16,655.15
Nikkei 225: closed down 0.5% at 33,288.29
S&P/ASX 200: closed down 0.4% at 7,494.10
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DJIA: closed down 284.85 points, or 0.8%, at 37,430.19
S&P 500: closed down 38.02 points, or 0.8%, at 4,704.81
Nasdaq Composite: closed down 173.73 points, or 1.2%, to 14,592.21
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EUR: up at USD1.0942 (USD1.0915)
GBP: up at USD1.2690 (USD1.2646)
USD: up at JPY143.19 (JPY143.50)
Gold: up at USD2,049.38 per ounce (USD2,038.89)
Oil (Brent): up at USD78.71 a barrel (USD78.13)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
10:00 CET EU services PMI
09:55 CET Germany services PMI
14:00 CET Germany CPI
09:30 GMT UK services PMI
09:30 GMT UK mortgage approvals
08:30 EST US initial jobless claims
10:30 EST US EIA weekly natural gas storage report
08:15 EST US ADP jobs report
09:45 EST US services PMI
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Federal Reserve officials concluded that interest rate cuts are likely in 2024, although they deemed it would be appropriate to maintain a restrictive stance "for some time," according to minutes of December's meeting. "In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves," the minutes stated. Officials "reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably." The minutes indicated increased optimism among participants about the path of inflation, noting "clear progress." The committee expressed a willingness to cut the benchmark lending rate in 2024 should that trend continue, though the timing of such a move remained uncertain. "In their submitted projections, almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024," the minutes stated.
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COMPANIES - FTSE 100
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Retailer Next said full price sales during November and December were better than it anticipated. In a trading update covering the nine weeks to December 30, Next said full price sales were up 5.7% from a year earlier, which was GBP39 million than its previous guidance of a 2.0% rise for the period. Next upped its full-year pretax profit guidance by GBP20 million, or 4.0% to GBP905 million compared to last year, saying GBP17 million of the lift comes from the sales beat to date and GBP3 million from an upgraded forecast for full price sales in January.
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JD Sports said organic revenue was up 6.0% in the 22 weeks that ended December 30 on a constant currency basis from a year earlier, with like-for-like growth of 1.8%. This was slightly behind its expectations. The retailer expects organic revenue growth of around 8% for the year ending February 3. The gross margin rate for the period is in line with last year, JD Sports said, lower than its expectations due to the elevated level of promotional activity during the peak trading period. As a result, it now expects full-year gross margin rate will be slightly lower than last year. Chief Executive Officer Regis Schultz said: "Our key markets have seen increased promotional activity during the peak trading season, driven by a more cautious consumer, but we continue to grow market share. We are confident in our strategy and we continue to invest in our supply chain, systems and stores, supported by our strong cash generation and healthy balance sheet."
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COMPANIES - FTSE 250
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Tritax EuroBox agreed a new five-year lease at the first phase of its two-unit development in Rosersberg, a prime logistics location near Stockholm, Sweden. The letting is for the 5,007 square metre unit at its 13,611 square metre two-unit development close to Arlanda airport. The five-year green lease has been secured with an unnamed "leading Scandinavian photovoltaic company", beginning in March with a 100% consumer price inflation indexation. This will be reviewed annually and includes a further five-year extension option. The rent has been agreed at 3% above the estimated rental value as of September and 20% above the underwrite level. Tritax EuroBox Asset Management Director James Charlesworth said: "This letting successfully demonstrates our strategy of both identifying good speculative development opportunities and attracting strong customers to our high-quality, sustainable buildings, developed close to major population centres and with good transport connections. Securing this lease above ERV and rental guarantee levels to a new customer in a growing sub-sector, underlines the attractiveness of our assets."
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OTHER COMPANIES
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Topps Tiles said sales in the 13 weeks ended December 30 were down 4.0% from a year earlier, with like-for-like sales down 7.1%. The retailer said trading in the first quarter reflected the ongoing challenges to discretionary consumer spending, particularly those impacting on businesses serving the repair, maintenance and improvement sector. It said its cost base remains "well controlled", despite ongoing inflationary pressures, and that cash flow remains "strong". Topps Tiles expects its full-year profits to be weighted towards the second half, based on a number of factors including the timing of the holiday pay accrual, higher energy usage in the first half and general trading in the first half. It said: "The group remains well-positioned to respond to market conditions and we expect to have gained further market share in the first quarter, driven by our world-class customer service, market-leading brands and specialist expertise, and supported by our strong balance sheet. We remain excited about the opportunities for Topps Tiles over the medium term."
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By Greg Rosenvinge, Alliance News senior reporter
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