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(Alliance News) - Stocks in London are called higher on Monday, as investors look ahead to the latest US inflation print.
After some hawkish rhetoric from US Federal Reserve officials last week, the market will be paying especially close attention to Tuesday's consumer price index report.
"The uncertainty regarding when the Fed will be done hiking the rates is killing everyone, but even the Fed itself doesn't know when tightening will/should end," said Swissquote Bank's Ipek Ozkardeskaya.
Meanwhile, the deadline for the US government to reach a funding deal to avert a government shutdown is fast approaching.
On Friday, Moody's had cut the outlook on US debt to 'negative' from 'stable', keeping its Aaa rating. The credit ratings agency said it "expects that the US's fiscal deficits will remain very large, significantly weakening debt affordability", noting the absence of "effective fiscal policy measures to reduce government spending or increase revenues" in the context of high interest rates.
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 30.0 points, 0.4%, at 7,390.55
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Hang Seng: up 0.4% at 17,273.13
Nikkei 225: closed up 0.1% at 32,585.11
S&P/ASX 200: closed down 0.4% at 6,948.80
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DJIA: closed up 391.16 points, or 1.2%, at 34,283.10
S&P 500: closed up 1.6% at 4,415.24
Nasdaq Composite: closed up 2.1%, at 13,798.11
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EUR: up at USD1.0692 (USD1.0670)
GBP: up at USD1.2240 (USD1.2200)
USD: up at JPY151.73 (JPY151.49)
Gold: up slightly at USD1,939.26 per ounce (USD1,938.67)
Oil (Brent): down at USD80.91 a barrel (USD81.12)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
Germany balance of payments
UK BoE Deputy Governor Sarah Breeden speaks
UK Rishi Sunak annual foreign policy speech at Lord Mayor's Banquet
10:00 CET EU interest rates statistics
16:05 GMT UK BoE MPC Member Catherine Mann speaks
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UK house prices suffered the chunkiest November loss in five years, numbers showed, though findings suggest 2023 has not been as tough a year for the sector as predicted. According to Rightmove, UK house prices declined 1.7% on a monthly basis this month, the worst November fall since 2018. Sitting at GBP362,143, UK house prices are 1.3% lower on-year. House prices are "heading towards" Rightmove's prediction of a 2% decline for 2023. Contributing to the November price decline, sellers turned to "pricing realism" to attract buyers.
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BROKER RATING CHANGES
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JPMorgan raises M&G to 'neutral' (underweight) - price target 220 (195) pence
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Barclays cuts Dr Martens to 'equal weight' (overweight) - price target 140 (175) pence
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COMPANIES - FTSE 100
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BAE Systems said its recent trading has been in line with its upgraded guidance from its interim results. It is delivering "another year of good sales and earnings growth", as well as "strong cash flow generation". The defence firm points to a strong opportunity pipeline, as well as strong order flow on new and existing programmes, and renewals on incumbent positions. The company still expects sales growth of between 5% and 7% in 2023 from GBP23.26 billion in 2022, and underlying earnings before interest and tax growth between 6% and 8% from GBP2.48 billion the prior year. It noted the regulatory process for its acquisition of Ball Aerospace was "progressing well", and is still targeting a completion date in the first half of next year.
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Telecommunications firm Vodafone said it intends to create a strategic partnership with professional services company Accenture. The goal is to commercialise Vodafone's shared operations "to accelerate growth, enhance customer service and drive significant efficiencies for Vodafone's operating companies and partner markets, as well as create new career opportunities for its people". The partnership will build on Vodafone's shared services unit, Vodafone Intelligent Solutions. Vodafone will retain a majority interest, management control and sourcing decisions, while Accenture will invest EUR150 million for a minority stake. The two parties have signed a memorandum of understanding, and the completion of the partnership is expected next spring.
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COMPANIES - FTSE 250
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Kainos Group reported interim results for the six months to September 30. Revenue rose 7.5% to GBP193.2 million from GBP179.8 million. Within Digital Services, it saw public sector revenue growth of 17%, which was more than offset by an anticipated decrease in healthcare and project scope reductions in some commercial contracts. Its Workday Services division saw 18% revenue growth, and Workday products rose 28%. Pretax profit rose 12% to GBP30.9 million from GBP27.5 million. Interim dividend per share was raised to 8.2 pence from last year's payout of 7.8p. It maintains its positive outlook, and expects the underperformance in healthcare and commercial sub-sectors of its Digital Services division to ease, and return to growth in the near-to-medium term.
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International Distributions Services's Royal Mail arm has been fined GBP5.6 million by the UK communications regulator. Ofcom said the British mail delivery service failed to meet its first and second class delivery targets in the 2022/23 financial year. The regulator said the firm still underperformed against its targets, even after adjusting for industrial action, extreme weather and the Stansted runway closure. "Clearly, the pandemic had a significant impact on Royal Mail's operations in previous years. But we warned the company it could no longer use that as an excuse, and it just hasn't got things back on track since. The company's let consumers down, and today's fine should act as a wake-up call - it must take its responsibilities more seriously. We'll continue to hold Royal Mail to account to make sure it improves service levels," said Ofcom Director of Enforcement Ian Strawhorne.
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OTHER COMPANIES
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London Innovation Underwriters announced the termination of the proposed merger with special purpose acquisition company Financials Acquisition Corp. "Whilst fundamental support for the business combination was strong, with interest expressed from a globally and stylistically diverse set of investors, the level of demand has been insufficient to reach the minimum cash condition," it explained. LIU is a vehicle formed to establish a business combination to deploy funds in the Lloyd's of London insurance market. "The company continues to believe that it offers an optimised structure for accessing the Lloyd's of London insurance market in a capital, cost and fiscally efficient way, however, given the volatile capital markets, it has proven too difficult to fund this through a public offering," it added. FAC said it was unlikely to be able to complete a business combination before the end of the year, and proposed winding up the company.
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By Elizabeth Winter, Alliance News senior markets reporter
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