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(Alliance News) - Stocks in London are expected to make gains at Friday's market open, as investors assess the latest economic data from the UK, US and China.
In early local news, the UK economy grew by slightly more than expected in November, amid a strong outturn in the services sector.
Global equity markets largely seemed to shake off the impact of the hotter-than-expected US inflation print on Thursday, and continued to pencil in the first interest rate cut from the Federal Reserve in March.
Investors were also considering the latest economic data from Asia's largest economy. Official figures from China revealed deflation continued for the third month in a row, while imports and exports struggled in 2023.
Meanwhile, oil prices climbed following the latest escalations in the Middle East. On Friday, US and British air strikes pounded targets in rebel-held Yemen. This follows weeks of disruptive attacks on Red Sea shipping by Iran-backed Huthi forces acting in solidarity with Hamas.
"Inflationary risks are front and centre again... amid warnings from major companies that shipping delays could see prices ramp up. There are concerns that the current chaos could last for many months, which will be a huge headache for companies around the world, with 20% of shipping already disrupted," said Susannah Streeter, head of money & markets, Hargreaves Lansdown.
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 32.8 points, 0.4%, at 7,609.39
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Hang Seng: down 0.6% at 16,205.18
Nikkei 225: closed up 1.5% at 35,577.11
S&P/ASX 200: closed down 0.1% at 7,498.30
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DJIA: closed up 15.29 points higher at 37,711.02
S&P 500: closed down 3.21 points, 0.1%, at 4,780.24
Nasdaq Composite: closed little changed at 14,970.18
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EUR: up at USD1.0977 (USD1.0945)
GBP: up at USD1.2775 (USD1.2703)
USD: down at JPY145.12 (JPY146.07)
Gold: up at USD2,035.38 per ounce (USD2,017.55)
Oil (Brent): up at USD79.21 a barrel (USD78.92)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
08:30 EST US PPI
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The Office for National Statistics said the UK's gross domestic product grew 0.3% on a monthly basis in November, having contracted by 0.3% in October. The market had been expecting 0.2% growth, according to FXStreet-cited consensus. The ONS explained that growth in services was the main contributor to the monthly growth in GDP. Services output rose 0.4% in November, after a 0.1% contraction in October. Within services, the largest contributor was information & communication, which grew 1.5% after falling 0.9%. Production output grew 0.3%, after falling 1.3%. Construction output fell 0.2%, after falling 0.4%.
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The ONS reported trade data for November. The trade in goods and services deficit widened slightly by GBP400 million to GBP9.3 billion in the three months to November, but has been "broadly stable" over much of 2023, the ONS noted. Total imports fell 1.1% to GBP219.9 billion, while exports fell 1.4% to GBP210.6 billion. The trade in goods deficit widened by GBP300 million to GBP47.8 billion, while the trade in services surplus narrowed by GBP200 million to GBP38.5 billion.
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BROKER RATING CHANGES
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Goldman Sachs reinitiates Glencore with 'buy' - price target 530 pence
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Goldman Sachs reinitiates Rio Tinto with 'buy' - price target 7,300 pence
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RBC cuts Ceres Power to 'underperform' (sector perform) - price target 150 (600) pence
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COMPANIES - FTSE 100
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Burberry reported weaker trading in its financial third quarter ended December 30. Retail revenue fell 6.6% to GBP706 million from GBP756 million, or by 2% in constant currency. It cut its forecast for adjusted operating profit for financial 2024 to GBP410 to GBP460 million. Back in November, it guided for profit towards the lower end of the consensus range at that time of GBP552 million to GBP668 million. The luxury fashion brand blamed the slowdown in demand within the luxury sector. It also expects a currency headwind of around GBP120 million to revenue and around GBP60 million to adjusted operating profit. "We remain confident in our strategy to realise Burberry's potential as the modern British luxury brand, and we are committed to achieving our GBP4 billion revenue ambition," the company said.
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COMPANIES - FTSE 250
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Vistry announced leadership changes alongside a trading update for 2023. The housebuilder said it now expects adjusted pretax profit for 2023 to be in line with 2022's GBP418.4 million, which is ahead of its previous guidance. Completions fell "only" 5.4% over the year to 16,124 units from 17,038 in 2022, which Vistry said represents a significant outperformance to its peers, and reflects "the resilience of [its] Partnerships model". Forward sales at year end were up 12% from the prior year at GBP4.5 billion, it added. Vistry also said Non-Executive Chair Ralph Findlay will step down at its annual general meeting in May, with CEO Greg Fitzgerald to succeed him, taking on the roles of chair & CEO. Vistry said it has begun a search for an experience senior director to provide additional oversight on governance matters.
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OTHER COMPANIES
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London Tunnels announced its intention to float in the Main Market of the London Stock Exchange this month. "The company plans to restore, adaptively reuse and bring back to life the Kingsway Exchange Tunnels in Central London, originally built in the early 1940s, and designed to shelter people during the London Blitz," the company said. The project will target collaboration with "major technological and entertainment companies" as well as partners, museums and universities in the area. The project aims to enable "up to two million visitors a year to explore and discover the heritage and history of London during WW2 and the Cold War while offering a cultural, beautifully designed, multi-sensory, digital experience across the world of the arts, nature and sciences". London Tunnels said it has raised around GBP10 million from investors, and plans to admit its shares at a price of GBP2.00. It is expected to have a market capitalisation of around GBP123 million on admission. Following this, it will commence a post-admission placing for up to GBP30 million at GBP2.00 a share.
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By Elizabeth Winter, Alliance News deputy news editor
Comments and questions to newsroom@alliancenews.com
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