(Alliance News) - With the US weekly unemployment claims report in focus, stocks in London were set to open lower on Thursday morning.
"Today, investors will mostly spend the session digesting Powell's hawkish testimony, the major shift in US rate expectations, and the strong jobs data. They will also watch the US weekly jobless claims and pray that the February [nonfarm payrolls] print [on Friday at 1330 GMT] doesn't surprise to the upside as did the ADP report," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The US labour market remained strong last month, figures from payroll processing firm ADP showed on Wednesday, strengthening the case for faster interest rate hikes.
According to ADP, the US private sector added 242,000 jobs in February, topping FXStreet-cited expectations of a rise of 200,000. In January, 119,000 jobs were added, upwardly revised from 106,000.
On Thursday, the weekly unemployment claims report will be published at 1330 GMT, providing further insight into the health of the US economy.
On Tuesday, Powell also told lawmakers at a Senate hearing that the labour market remains "extremely tight" as he warned that US interest rates will likely peak at a higher level than previously anticipated.
European Central Bank President Christine Lagarde on Wednesday echoed Powell's hawkish rhetoric, saying she will do whatever it takes to bring down high inflation and restore price stability.
Speaking at the World Trade Organization in Geneva, Lagarde said the ECB will spare no efforts to combat the inflation lashing most of the countries in the eurozone.
In UK corporate news, WANdisco said it discovered "significant, sophisticated and potentially fraudulent irregularities" in its received purchase orders. This will hit 2022 results, and the company asked for its shares to be suspended from trading on AIM while it investigates.
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 22.82 points, or 0.3%, at 7,907.10
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Hang Seng: down 0.4% at 19,969.77
Nikkei 225: closed up 0.6% at 28,623.15
S&P/ASX 200: closed marginally higher at 7,311.10
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DJIA: closed down 58.06 points, or 0.2%, at 32,798.40
S&P 500: closed up 0.1% at 3,992.01
Nasdaq Composite: closed up 0.4% at 11,576.00
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EUR: firm at USD1.0558 (USD1.0553)
GBP: flat at USD1.1857 (USD1.1859)
USD: lower at JPY136.59 (JPY137.14)
Gold: lower at USD1,815.09 per ounce (USD1,818.62)
(Brent): flat at USD82.58 a barrel (USD82.60)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
07:30 EST US Challenger job-cut report
08:30 EST US unemployment insurance weekly claims report
US President Joe Biden announces his budget for fiscal year 2024
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Several Ukrainian cities reported a new barrage of Russian missile strikes early on Thursday morning. Eyewitness reports circulating on social media spoke of violent explosions in Kiev. In the capital, the southern district of Holosiiv was hit, Kiev Mayor Vitali Klitschko confirmed on Telegram. Some 15% of households in the city were currently without electricity, he added. Russian missile strikes targeting the energy infrastructure also caused power cuts in the southern region of Odessa as well as in Kharkiv in eastern Ukraine, according to the local authorities.
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BROKER RATING CHANGES
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Berenberg raises Hiscox price target to 1,285 (1,015) pence - 'hold'
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Jefferies cuts Serco price target to 205 (220) pence - 'buy'
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UBS raises Ferguson price target to 13,300 (12,900) pence - 'buy'
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COMPANIES - FTSE 100
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Aviva announced a GBP300 million share buyback as it announced its full-year results. In 2022, the insurer swung to an IFRS loss of GBP1.14 billion from a profit of GBP2.04 billion the year prior. Its adjusted operating profit from continuing operations, meanwhile, rose to GBP2.21 billion from GBP1.63 billion. Its solvency II return on equity was 16.4%, up from 10.7% last year, while its solvency II shareholder cover ratio was 212%, down from 244%. Looking forward, Aviva said the "positive momentum" seen in 2022 has continued, reinforcing its confidence in its financial targets in 2023. Aviva declared a final dividend of 20.70 pence, up from 14.70p last year. This brought its total payout for the year to 31.00p, up from 22.05p and in-line with prior guidance.
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Betting and gambling firm Entain reported a significantly reduced profit in 2022, but a solid rise in annual revenue. Pretax profit totalled GBP102.9 million, down sharply from GBP393.2 million in 2021. Revenue rose 12% to GBP4.30 billion from GBP3.83 billion. Entain noted that share based payment charges were GBP6.9 million higher than last year, while underlying depreciation and amortisation was 7% higher. In addition, Entain booked a joint venture loss of GBP194.1 million, including a GBP193.9 million loss relating to BetMGM, in-line with expectations. Looking forward, Entain said it continues to face some regulatory headwinds but nonetheless remains "excited" by the opportunities ahead. It added that it has started 2023 with positive underlying momentum, giving it confidence in its long-term prospects.
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Informa announced the acquisition of business-to-business events group Tarsus for USD940 million as it confirmed strong full-year performances across all its businesses, and continued operating momentum into 2023. In 2022, the publishing and events firm reported a pretax profit of GBP168.8 million, up sharply from GBP78.4 million in 2021. Revenue jumped 43% to GBP2.26 billion from GBP1.58 billion. Chief Executive Stephen Carter said Informa was "firmly back in growth". It noted that the progressive removal of Covid restrictions and strong rebound in business activity in China was accelerating Live & On-Demand Events schedule in the country, with full return expected through 2024. Looking forward, it confirmed revenue guidance between GBP2.75 billion and GBP2.86 billion for 2023, with adjusted operating profit between GBP675 million and GBP725 million. In 2022, adjusted operating profit was GBP496.3 million.
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COMPANIES - FTSE 250
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Domino's Pizza Group. In the financial year that ended December 25, pretax profit dropped to GBP98.9 million from GBP109.7 million the previous year, as annual revenue rose to GBP600.3 million from GBP560.8 million. Domino's explained that underlying profit before tax was affected by an additional GBP2.4 million in accelerated amortisation and impairment relating to its technology platforms and an increase in interest cost of GBP4.9 million. It added its earnings were also hurt by the accounting treatment of investment in cloud-based technology platforms and a lower contribution from an unspecified German associate. The increase in revenue was principally as a result of increased food costs, which were passed through to its franchise partners, Domino's explained. The master franchiser proposed a final dividend of 6.8 pence per share, resulting in a total dividend of 10.0p for 2022, up 2.0% against the prior year.
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OTHER COMPANIES
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Alpha Financial Markets Consulting said it is "delighted" with its continuing strong performance and now expects to report full-year results "significantly" ahead of current market expectations, which it did not specify. It explained that positive trading conditions in the second half of 2022 and ongoing client demand have allowed it to deliver double-digit organic net fee income growth compared to the prior year. Adjusted earnings before interest, tax, depreciation, and amortization have has grown well, it said, with margins remaining consistent. Chief Executive Euan Fraser said: " We remain mindful of the inflationary backdrop and geopolitical uncertainties and remain positive that the underlying industry trends and our market leading reputation will continue to drive demand globally for our services."
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WANdisco requested its shares be suspended from trading on AIM while it conducts an investigation into its true financial position. The company explained that, following investigations by its chief financial officer and chief executive officer, it has discovered "significant, sophisticated and potentially fraudulent irregularities" with regard to received purchase orders and related revenue and bookings, as represented by one senior sales employee. Consequently, WANdisco said the irregularities will "significantly impact" its cash position and lead to "material uncertainty" regarding its overall financial position. The firm now expects that financial 2022 revenue could be as low as USD9 million, and not USD24 million as previously expected. In addition, the company said it has "no confidence" in its announced financial 2022 bookings expectations.
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By Heather Rydings, Alliance News senior economics reporter
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