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(Alliance News) - Stocks in London were set to open lower on Wednesday as markets looked ahead to an anticipated pause in interest rate hikes by the US Federal Reserve, with the decision due after the European market close.
The Fed announces its latest monetary policy decision at 1900 BST on Wednesday. A press conference with Chair Jerome Powell follows at 1930 BST.
Tuesday's cooler-than-expected US headline inflation number boosted expectations that the central bank will hold interest rates steady on Wednesday.
Markets now see a 90% chance of rates staying where they are, according to the CME FedWatch Tool. Last week, markets saw just a 73% chance of this outcome.
In the UK, figures from the Office for National Statistics showed that the UK economy is estimated to have grown slightly in the three months to April.
In early corporate news, Shell announced a share buyback. Victrex warned that continued sector headwinds will likely see its full-year revenue decline.
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 14.08 points, or 0.2%, at 7,580.70
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Hang Seng: down 0.7% at 19,388.23
Nikkei 225: closed up 1.5% at 33,502.42
S&P/ASX 200: closed up 0.3% at 7,161.70
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DJIA: closed up 145.79 points, 0.4%, at 34,212.12
S&P 500: closed up 0.7% at 4,369.01
Nasdaq Composite: closed up 0.8% at 13,573.32
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EUR: lower at USD1.0788 (USD1.0795)
GBP: higher at USD1.2613 (USD1.2609)
USD: unchanged at JPY140.04 (JPY140.05)
Gold: higher at USD1,946.16 per ounce (USD1,944.33)
(Brent): higher at USD74.57 a barrel (USD73.98)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CEST EU industrial production
09:30 BST UK business finance review
07:00 EDT US MBA weekly mortgage applications survey
08:30 EDT US producer price index
14:00 EDT US interest rate decision
14:30 EDT US Federal Reserve press conference
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The UK economy is estimated to have grown 0.1% in the three months to April. Figures from the Office for National Statistics showed that real gross domestic product is estimated to have grown by 0.2% in April, after shrinking by 0.3% in March. Looking at the broader picture, GDP grew by 0.1% in the three months to April. Separately, the ONS reported that the UK's industrial production declined in April. The UK's monthly production output is estimated to have declined by 0.3% in April, following an increase of 0.7% in March. Markets had expected monthly production to fall 0.1% in April, according to FXStreet-cited consensus.
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US Secretary of State Antony Blinken and Chinese Foreign Minister Qin Gang held a telephone call, the highest-level talks in a recent flurry of diplomatic activity between the countries. Tensions have risen sharply between the world's two largest economies in recent years, especially over Taiwan, the self-governing democracy that Beijing claims and has not ruled out seizing by force. Blinken is due in Beijing on Sunday for talks aimed at calming nerves, after a previous planned visit was abruptly cancelled in February. But in their call, which took place Wednesday Beijing time, Qin warned that relations between the two countries had faced "new difficulties and challenges" since the beginning of the year. "It's clear who is responsible," Qin said, according to a Chinese foreign ministry readout of a phone call between the two high-ranking diplomats.
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The EU and Argentina want to strengthen the supply chains for raw materials, leaders of the EU and the South American country agreed on Tuesday. EU Commission President Ursula von der Leyen and Argentina's President Alberto Fernández signed a declaration of intent to this effect at a meeting in Buenos Aires on Tuesday. "We will both benefit from this," said von der Leyen. "We want to jointly build value chains that go beyond the mere exploitation of raw materials." Argentina has especially great potential in renewable energies and raw materials.
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BROKER RATING CHANGES
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Bernstein raises Centrica price target to 155 (135) pence - 'outperform'
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UBS raises Wizz Air to 'buy' (neutral) - price target 4,300 (3,400) pence
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Jefferies raises Aston Martin to 'hold' (underperform) price target 300 (160) pence
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COMPANIES - FTSE 100
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Shell announced a USD5 billion share buyback for the second half of 2023, subject to board approval. It also said it will raise its dividend per share by an expected 15% from the second quarter of 2023. "We are investing to provide the secure energy customers need today and for a long time to come, while transforming Shell to win in a low-carbon future. Performance, discipline, and simplification will be our guiding principles as we allocate capital to enhance shareholder distributions, while enabling the energy transition," said Chief Executive Wael Sawan.
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Ladbrokes-owner Entain said it has raised GBP600 million through a placing and retail offer of new shares. It placed a total of 48.3 million shares at a price of GBP12.30 each and said retail investors subscribed for 486,010 shares at the same price. The proceeds will be used to partly fund the acquisition of STS, Poland's leading sports-betting operator. The remainder of the proceeds will be used to fund further near-term acquisitions. Late on Tuesday, Entain said Entain Holdings (CEE), its Central and Eastern Europe operation, alongside its joint venture partner, has agreed to wholly acquire STS. Entain said it will fund 75% of its acquisition, while EMMA - CEE's joint venture partner - will fund the remaining 25%, in proportion to both companies' current shareholdings in STS.
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COMPANIES - FTSE 250
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Victrex said that the headwinds seen in the wider chemical sector are likely to continue over the summer and "at least" to the end of its financial year in September. These headwinds saw Victrex volumes in the first half of its financial year decline by 14% against the year prior amid ongoing macroeconomic weakness and industrial customer destocking. Year-to-date revenue is tracking down by a mid-single digit percentage date as a result, the company said. If this were to continue, full-year revenue would be down between 6% and 10% year-on-year. The polymer solutions company said with no step up in demand going into the final quarter currently visible, its full-year adjusted pretax profit is expected to be between GBP80 million and GBP85 million.
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OTHER COMPANIES
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Motorpoint swung sharply to an annual loss in the year ended March 31, despite a slight rise in revenue. The second-hand car retailer swung to a pretax loss of GBP300,000 from a profit of GBP21.5 million the previous year. Revenue ticked up to GBP1.44 billion from GBP1.32 billion. Motorpoint said the swing to a loss was influenced by rising financing costs, limited stock availability and the fall in the value of electric vehicles, along with the increased investment of GBP6.1 million relating to the delivery of its strategic objectives. Chief Executive Mark Carpenter said: "Whilst the impact of higher interest rates and inflation will continue into FY24, new car registrations have been steadily increasing, with the fleet market driving much of the growth, which will in turn benefit used vehicle supply. This, coupled with continued market share gains and progress on our key initiatives, will enable Motorpoint to emerge from the current environment in a strong position to more aggressively pursue profitable market leadership."
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By Heather Rydings, Alliance News senior economics reporter
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