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(Alliance News) - London's FTSE 100 is set to open in the green, clawing back some of the losses it has suffered in a three-day losing streak so far this week.
"Markets remain stuck in a bit of a rut after another subdued day on Wednesday, as Fed minutes and UK CPI passed without making waves. A quiet data docket once more lies ahead today," Pepperstone analyst Michael Brown commented.
The theme of pauses was a prevailing narrative on Wednesday. Hotter-than-forecast UK inflation data means the Bank of England could decide against a cut at its next meeting. Minutes from the Federal Reserve's most recent decision suggested the central bank will stand pat for a little longer.
The European Central Bank is approaching a point where it might pause too, board member Isabel Schnabel told the Financial Times on Wednesday.
In early UK corporate news, Lloyds Banking Group announced another motor finance provision, Anglo American reported a swing to loss, while Wood Group said it has won a deal extension with Shell.
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 0.2% at 8,729.43
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Hang Seng: down 1.5% at 22,592.21
Nikkei 225: down 1.2% at 38,678.04
S&P/ASX 200: down 1.2% at 8,322.80
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DJIA: closed up 71.25 points, up 0.2%, at 44,627.59
S&P 500: closed up 0.2% at 6,144.15
Nasdaq Composite: closed up 0.1% at 20,056.25
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EUR: up at USD1.0431 (USD1.0409)
GBP: up at USD1.2598 (USD1.2572)
USD: lower at JPY150.16 (JPY151.62)
Gold: up at USD2,952.14 per ounce (USD2,925.48)
(Brent): down at USD76.19 a barrel (USD76.41)
(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 GMT eurozone construction output
15:00 GMT eurozone consumer confidence
11:00 GMT Ireland CPI
13:30 GMT US initial jobless claims
13:30 GMT US Philadelphia Fed manufacturing index
19:30 GMT US Federal Reserve Vice Chair Michael Barr speaks
22:00 GMT US Federal Reserve Governor Adriana Kugler speaks
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Keir Starmer backed Volodymyr Zelensky in a phone call on Wednesday after Donald Trump claimed the Ukrainian president was "a dictator without elections". In the call, the UK prime minister gave Zelensky his support "as Ukraine's democratically elected leader" and said it was "perfectly reasonable to suspend elections during war time as the UK did during World War Two", according to a Downing Street spokesperson. The call followed a war of words between Trump and Zelensky, with the US president criticising his Ukrainian counterpart for postponing elections and incorrectly claiming Ukraine started the war with Russia. Zelensky was elected as president of Ukraine in May 2019.
Elections were previously scheduled to go ahead in 2024, but they were not held as a result of martial law being in place. Trump repeated his attacks on Zelensky when he spoke at the Future Investment Initiative Forum, an organisation run by Saudi Arabia's sovereign wealth fund, in Miami on Wednesday.
"He refuses to have elections, he's slow. And the real Ukrainian polls, I mean, how can you be high when every city is being demolished? It's hard to be," he said. "Somebody said, 'oh no, his polls are good'. Give me a break. Every city is being demolished. They look like a demolition site. Every single one of them… in the meantime, we're successfully negotiating an end to the war with Russia."
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Consumer sentiment in the UK continued to deteriorate in February, with expectations for the economy reaching their lowest level since July 2024, according to the latest British Retail Consortium-Opinium Consumer Sentiment monitor. The survey, conducted between February 4 and 7, found that consumer expectations for the economy over the next three months fell to minus 37, down from minus 34 in January. This marks the fifth consecutive month of declining confidence. Expectations for personal finances also worsened, dropping to minus 11 from minus 4 a month earlier. However, consumers reported a slight improvement in their outlook for retail spending, with expectations rising to minus 5 from minus 9 in January. BRC Chief Executive Officer Helen Dickinson said: "People's expectations of the economy reached a new low, having fallen almost 40 points since July 2024. Even Gen Z, the most upbeat generation regarding the economy and their own finances, saw a drop in optimism. There was also a widening gender divide, with women more pessimistic than men about both the economy and their finances by 13 and 17 points, respectively."
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A third of small businesses are planning to axe jobs amid worries over soaring staff costs, while new employment rights are also set to see firms rein in hiring and trim their workforces, according to new figures. A poll of nearly 1,400 firms by the Federation of Small Businesses in the final quarter of last year revealed that 33% expect to reduce their workforces, up from 17% in the previous three months.
A separate survey of 1,270 small companies also found that over two thirds – 67% – would curb hiring in the face of the incoming employment rights bill, with nearly a third – 32% – planning to reduce the number of employees they have before the new measures come into effect. It found that three quarters – 75% – of small employers flagged worries over new laws relating to unfair dismissal changes, while 74% raised worries about changes to sick pay. Tina McKenzie, FSB's policy chair, said: "The figures speak for themselves – plans to allow employees to sue their employers on their first day on the job will wreak havoc on our already fragile economy, while changes to Statutory Sick Pay will make employers think twice about their hiring plans." She added: "If taking on staff becomes a legal minefield, businesses will simply stop."
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BROKER RATING CHANGES
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Shore Capital downgrades HSBC to 'hold' from 'buy' - unchanged 975 pence fair value
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COMPANIES - FTSE 100
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Lloyds Banking Group announced a new share buyback and said it set aside an extra GBP700 million in its final quarter for potential remediation costs relating to motor finance commission arrangements in the UK. The extra provision followed a Court of Appeal finding in the so-called Hopcraft case which sided with consumers. "The provision reflects a probability weighted scenario based methodology incorporating a number of inputs. Clearly significant uncertainty remains around the final financial impact. In this context we welcome the expedited Supreme Court hearing at the beginning of April," Lloyds said. The lender's pretax profit in 2024 fell 20% to GBP5.97 billion from GBP7.50 billion. Total income fell 3.2% to GBP34.28 billion from GBP35.41 billion, with a 7.7% decline in net interest income to GBP12.28 billion hurting its top line. Lloyds reported a banking net interest margin of 2.95% for 2024, down from 3.11% in 2023. It had expected a banking NIM outcome of "greater than 290 basis points". For 2025, it expects underlying net interest income of around GBP13.5 billion, which would be a 5.1% improvement from GBP12.85 billion in 2024, Underlying net interest income last year had fallen 6.7% from GBP13.77 billion. It expects a 2024 return on tangible equity of around 13.5%, before of a rise of "greater than 15%" in 2026. The RoTE in 2024 fell to 12.3%, from 15.8%, but would have sat at 14.0% were it not for motor finance commission arrangement. Lloyds lifted its final dividend by 15% to 2.11 pence per share final dividend, giving a 3.17p per share total payout, up 15%. It also plans a GBP1.7 billion share buyback, down 15% from GBP2.0 billion a year ago. "Looking forward, we are building momentum as we enhance our franchise and deliver differentiated outcomes for our customers. Our strategy is transforming our capabilities, enabling us to deepen relationships with our customers, grow in high value areas and drive cross-group collaboration. We are confident of generating more than GBP1.5 billion of additional income from our strategic initiatives by 2026 as we build towards higher, more sustainable returns," Chief Executive Charlie Nunn said.
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Anglo American reported a swing to an annual loss, a decline in revenue and lowered its dividend, though the "fast-transforming" miner looked to the future with confidence. It reported a a pretax loss of USD924 million for 2024, swinging from profit of USD3.60 billion. Revenue fell 11% to USD27.29 billion from USD30.65 billion. It booked "special items are remeasurements" of USD5.36 billion, rising from USD2.78 billion a year prior. The items included a USD2.9 billion impairment at De Beers and a USD1.6 billion impairment at the Woodsmith polyhalite fertiliser mine in Yorkshire, UK. "We are fast transforming Anglo American into a far higher margin and more valuable mining company focused on exceptional copper, premium iron ore and crop nutrients assets and significant growth optionality. 2024 saw us transform our performance, with strong operational and cost delivery, USD1.3 billion of costs removed on a run rate basis in 2024 with a further USD500 million to come by the end of 2025, and major progress with our portfolio simplification," CEO Duncan Wanblad said. "We are making excellent progress with our portfolio simplification. We have agreed the sale of our steelmaking coal
business for up to USD4.8 billion in gross cash proceeds and have this week agreed the sale of our nickel business for cash consideration of up to USD500 million. The demerger of Anglo American Platinum is expected in June and we intend to retain a 19.9% interest in AAP to help manage flowback post demerger and which we expect to exit responsibly over time. All of the above will deliver a step-change in our balance sheet flexibility." Anglo lowered its final dividend by 46% to USD0.22 per share. Its total dividend was lowered by a third to USD0.64 per share. In addition, it reported a new deal with Chilean state-owned mining company Codelco. Anglo American Sur, which the miner owns just over 50% of, will implement a joint mine plan with Codelco for the adjacent copper assets of Los Bronces and Andina. "The joint mine plan will increase copper production with minimal additional capital required, helping to unlock the full value of this world-class mining district and generating an expected NPV uplift of at least USD5 billion pre-tax over the period of the agreement, to be shared equally," Anglo said. "A new operating company, jointly owned and controlled by AAS and Codelco, will coordinate the execution of the joint mine plan and optimise the use of the processing capacity of the two operations. The resulting copper production and value generated, as well as any costs and liabilities from the joint mine plan, will be shared equally between AAS and Codelco. AAS and Codelco will retain full ownership rights of their respective assets, such as mining concessions, plants, and ancillary assets and will continue to exploit their respective concessions separately."
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Rio Tinto reported a rise in annual profit, and looked to 2025 with optimism as it looks to close the Arcadium Lithium acquisition. The mining firm said 2024 said pretax profit rose 13% to USD15.62 billion from USD13.79 billion in 2023. Diluted earnings per share were 707.2 US cents, compared to 616.5 cents in 2023. However, revenue declined 0.7% to USD53.66 billion from USD54.04 billion. A USD1.21 billion boost from gains on consolidation and disposal of interests in businesses lifted its bottom line. Rio Tinto lowered its ordinary dividend by 7.6% to 402 cents from 435 cents. "Our strong balance sheet enables us to pay a USD6.5 billion ordinary dividend, maintaining our practice of a 60% payout, the ninth consecutive year at the top end of our payout range, as we continue to invest with discipline," Chief Executive Jakob Stausholm said.
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COMPANIES - FTSE 250
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Engineering firm Wood Group has won a USD120 million contract extension with Shell. Wood Group is to continue providing brownfield engineering, procurement and construction work for the oil major at onshore and offshore assets across the UK. "The two-year, cost-reimbursable contract extension, centres on providing brownfield EPC services, as well as subsea and integrity management, at the Shell UK-operated St Fergus and Mossmorran onshore terminals and the Nelson, Gannet and Shearwater offshore assets. New to the contract scope, Wood is also providing EPC services on the Penguins FPSO," Wood said. Wood Group had said after the market close on Wednesday that Chief Financial Officer Arvind Balan has resigned with immediate effect after it emerged that his professional qualifications had been incorrectly described in public statements. Balan admitted to an "honest oversight" in referring to himself as a chartered accountant rather than a certified practicing accountant. He said his decision to step down was intended to "minimise distraction at this very pivotal time with our investors and lenders." John Wood said an announcement on his successor and interim cover will be made in due course. Last week, Wood said it was implementing further cost-cutting measures and considering refinancing options to offset cash outflows and mounting liabilities. The company expects negative free cash flow of between USD150 million and USD200 million in 2025 and plans to raise up to USD200 million through asset disposals. Additionally, it is targeting USD85 million in annualised cost savings from 2026, alongside previously announced USD60 million in reductions for 2025.
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OTHER COMPANIES
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Ceres Power Holdings said Robert Bosch plans to discontinue some work in the solid oxide fuel cells space and exit its minority holding in the London listing. Clean energy technology developer Ceres said Bosch's move is due to a "broader revised strategic decision" at group level. "The result of this is that Bosch will discontinue its operations relating to the industrialisation and preparation for production of decentralised power-supply systems based on solid oxide fuel cells," Ceres said. "Bosch has informed Ceres that it will seek to end its partnership with Ceres in an orderly way, while continuing to meet its contractual obligations." Bosch plans to sell its just over 17% stake in Ceres "in an orderly manner". Uwe Glock, a Bosch representative who sat on the Ceres board as a non-executive, is stepping down from the position immediately. "The impact of bosch's decision does not change Ceres' consensus expectations for the year ending 31st December 2025," Ceres said. CEO Phil Caldwell added: "Whilst Ceres is disappointed that Bosch will discontinue its operations relating to the industrialisation and preparation for production of decentralised power-supply systems using Ceres' solid oxide technology, we recognise that this decision is part of a broader revised strategic direction from Bosch and does not reflect its confidence around Ceres or our technology."
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Indivior said it rounded off 2024 with a better-than-expected final quarter, but warned of competitive pressures to come in 2025. The maker of medicines to treat substance use disorders swung to a pretax loss of USD43 million for 2024, from profit of USD1 million in 2023. Net revenue rose 8.7% to USD1.19 billion from USD1.09 billion. "Indivior ended 2024 with a better-than-expected fourth quarter performance that put our FY 2024 results ahead of our October guidance," CEO Mark Crossley said. "While we delivered 20% year-on-year NR growth in Sublocade, our 2024 performance was impacted by previously disclosed transitory items and competition in the US long-acting injectable category. As shared in our Q3 results, we have narrowed our strategic focus to meeting opioid use disorder patients' unmet needs with Sublocade, Opvee and a strong pipeline of phase II assets. As a result, we streamlined our cost base and identified savings exceeding USD100 million of which approximately USD50 million will be reinvested behind Sublocade and our OUD-focused pipeline and over USD50 million will help protect our adjusted operating profit." For 2025, it predicts net revenue between USD955 million and USD1.03 billion, a decline of 17% at the mid-point. The CEO added: "Total company NR is expected to decline 17% at the midpoint due primarily to an expected decrease in Suboxone film NR of greater than 50% from intensified generic pricing activity along with the potential for a fifth generic entrant. Our FY 2025 guidance reflects these dynamics."
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One of Britain’s biggest accountancy firms is considering a GBP300 million-plus flotation in a potential boost to London’s under-pressure stock market, the Times said. MHA, the UK arm of Baker Tilly International, is understood to have hired advisers at investment bank Cavendish to look at a possible listing on the junior AIM market, the Times said. A transaction could raise as much as GBP125 million, including between GBP30 million and GBP50 million of new money, City sources told the Times. A valuation of more than GBP300 million is being targeted. A spokesman for the accountancy firm said: "Like any well-run professional services firm, the leadership of MHA is continually evaluating strategic options for the future of our business, whether it be maintaining the status quo, taking private equity investment or exploring the possibility of a public market listing."
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By Eric Cunha, Alliance News news editor
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