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(Alliance News) - London's FTSE 100 is called to open a touch higher, while the dollar saw little impetus from the announcement of reciprocal tariffs from US President Donald Trump.
Trump announced plans Thursday for sweeping "reciprocal tariffs" that could hit both allies and competitors.
Speaking in the Oval Office, Trump said he had decided to impose reciprocal duties, telling reporters that US allies were often "worse than our enemies" on trade.
Pepperstone analyst Michael Brown commented: "That announcement, after almost a week of delay, finally came yesterday, with Trump signing a presidential memorandum (importantly, not an executive order), to bring in said measures, albeit with a delay, as said measures won't commence until the start of April. The threat of those reciprocal tariffs, plus apparent upcoming announcements on further tariffs on cars, chips, and pharmaceutical products will thus hang over proceedings like the 'sword of Damocles' for a while yet.
"On the other hand, there being so much time before tariffs kick in, also gives plenty of time for negotiations with countries around the world, to prevent said tariffs being implemented at all."
In early UK corporate news, NatWest earnings beat expectations, while Wood Group said it has extended cost cuts.
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 0.1% at 8,769.52
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Hang Seng: up 3.2% at 22,520.00
Nikkei 225: down 0.8% at 39,211.81
S&P/ASX 200: up 0.2% at 8,555.80
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DJIA: closed up 342.87 points, 0.8%, at 44,711.43
S&P 500: closed up 1.0%, to 6,115.07
Nasdaq Composite: closed up 1.5% at 19,945.65
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EUR: higher at USD1.0465 (USD1.0439)
GBP: higher at USD1.2568 (USD1.2535)
USD: lower at JPY152.59 (JPY152.97)
GOLD: higher at USD2,932.61 per ounce (USD2,917.47)
(Brent): higher at USD75.39 a barrel (USD75.10)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
10:00 GMT eurozone GDP
13:30 GMT US retail sales
14:15 GMT US industrial production
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The UK government faces questions on how it will respond to US President Trump's latest trade announcement, which threatens to impose tariffs as a retaliation for charging VAT on US goods. Trump announced on Thursday that he would impose "reciprocal tariffs" on all other countries, charging the same amount as levies imposed on American exports, claiming it was "fair to all". The impact of the announcement on the UK was not immediately clear, but the policy published by the White House included VAT as a target for reciprocal tariffs. On Thursday evening, senior minister Pat McFadden said the government would not "overreact" but "wait and see" whether the tariffs "actually come to pass".
The chancellor of the Duchy of Lancaster told Sky News: "Sometimes tariffs are announced, a couple of days later, they are unannounced." Saying there were still "a lot of unanswered questions" about the extent of the tariffs, he went on: "We took the decision… that we wouldn't breathlessly chase every headline that was coming out over the last month. "I think that's the right decision."
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David Lammy is set to meet G7 allies on Friday as the West reels from Trump's telephone conversation with Vladimir Putin. The UK foreign secretary will travel to the Munich Security Conference, where he is expected to attend a G7 meeting and a dinner with his counterparts from the US, France, Italy and Germany – the so-called "Quint". But while he may have expected to discuss the Middle East and migration as well as European security, it will be Ukraine that features at the top of the conference agenda as Europe responds to Trump's discussion of a peace deal with the Russian president. The US president reversed American policy on Wednesday, announcing he had spoken to Putin and agreed to "work together, very closely" to end the conflict in Ukraine that began with the Russian invasion three years ago. Although he had initially appeared non-committal about involving Ukraine in talks about its future, Trump said on Thursday that it would have a seat at the table. But in comments to journalists in the Oval Office, he insisted that he could "trust" Putin and said he would like to see Russia readmitted to the G7. The country was kicked out of the then-G8 in 2014 over its invasion of Crimea. Western leaders, including Prime Minister Keir Starmer, had insisted throughout Thursday that Ukraine must be fully involved in any peace negotiation, with Ukrainian President Volodymyr Zelensky saying he could not accept "any agreements (made) without us".
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BROKER RATING CHANGES
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Peel Hunt raises Harbour Energy to 'buy' (add) - price target 310 (260) pence
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COMPANIES - FTSE 100
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Lender NatWest said it exceeded its annual outlook during a "strong financial performance in 2024". NatWest said total income in 2024 fell 0.3% to GBP14.70 billion in 2024 from GBP14.75 billion. Pretax profit, however, rose 0.3% to GBP6.20 billion from GBP6.18 billion. Total income topped consensus of GBP14.59 billion, and pretax profit beat consensus of GBP6.07 billion. Net interest income alone rose 2.0% to GBP11.28 billion in 2024 from GBP11.05 billion in 2023. Chief Executive Paul Thwaite said: "NatWest Group delivered a strong performance in 2024 with income excluding notable items of GBP14.6 billion and a return on tangible equity of 17.5%, exceeding our upgraded guidance. Throughout the year, we made good progress against our strategic priorities by growing all three of our customer businesses, improving productivity and actively managing our capital. This performance is grounded in the support and services we provide to over 19 million customers, whether buying or refinancing their homes, helping them to invest or growing their businesses. Alongside this, we were also pleased to see an accelerated reduction in the government's shareholding." NatWest lifted its final dividend by 35% to 15.5 pence per share, from 11.5p a year prior. It brings the total dividend to 21.5p per share, up 26%. NatWest added: "For our shareholders, we generated attractive returns and distributed GBP4.0 billion through a combination of dividends and buybacks, with dividends per share increasing by 26%. We have also confirmed that we intend to increase our ordinary dividend payout ratio from 40% to 50% from 2025." Looking to 2025, it expects a return on tangible equity in the range of 15-16%. In 2024, it delivered a RoTE of 17.5%. Income excluding notable items to be in the range of GBP15.2-15.7 billion is expected. Looking to 2027, it expects a RoTE greater than 15%. A separate filing showed the UK government's stake in NatWest has fallen below 7% as of Thursday, from just under 8% previously.
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HSBC is set to announce USD1.5 billion of yearly cost savings, the Financial Times reported. HSBC is set to unveil the measures next week Wednesday when it announces annual results, the FT noted. The moves will land the lender savings of USD1.5 billion after one-time costs, the FT reported, citing two people familiar with the situation. Back in October, HSBC announced a "simplified organisation structure". From the start of 2025, it will operate through four business lines, it explained back in October. They will be the Hong Kong division, the UK arm, Corporate & Institutional Banking and International Wealth & Premier Banking.
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COMPANIES - FTSE 250
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John Wood Group said it has extended a cost-cutting programme, as it looks to target further annualised savings of USD85 million. The oilfield and engineering services provider said a programme launched in March of last year is on track to deliver annualised savings of USD60 million this year. The programme has been extended to target a further USD85 million from 2026, USD60 million of that being seen in 2025. "In aggregate, these actions will reduce our cost base by USD145 million from 2023 to 2026," it said. "Following these actions, the business will be on a firmer operational footing, but cash generation has yet to materialise and financial strength needs significant improvement." Wood Group said it expects to be free cash flow positive from 2026. CEO Ken Gilmartin said: "This is a difficult announcement amid our transformation. While we have made progress, I am disappointed in our financial performance." In November, the firm said it turned to Deloitte to perform an independent review after exceptional contract write-offs. It updated on Friday: "The company does not expect that the findings of the review will have a material impact on the group's cash position or its ability to generate cash in the future. Following provisional indications from the Review, the company is evaluating the extent of prior year adjustments which the company expects will be required in relation to the projects business unit and their impact on previously reported adjusted Ebitda for FY23 and any prior periods." For 2024, Wood expects to report adjusted earnings before interest, tax, depreciation and amortisation of around USD450 million and USD460 million. Moves were made to "mitigate" against a weaker than expected fourth-quarter, including cancelling executive and employee bonuses. For the new year, it expects double-digit adjusted Ebitda growth. It expects a 2025 negative free cash flow of USD150 million to USD200 million. The CEO added: "We have announced further actions to address the cost base of the business to right size Wood for the future, and have laid out a very clear route to positive free cash flow in 2026. As we look ahead, notwithstanding the challenges today, I am confident the fundamentals of this company remain strong - we are in growing markets, with considerable in-demand engineering skills, trusted client relationships, and we're well positioned to grow the business."
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OTHER COMPANIES
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Soft drink bottler Coca-Cola Europacific Partners reported top line growth but a profit decline, and it announced a new share buyback. CCEP said pretax profit in 2024 declined 12% to EUR1.94 billion from EUR2.20 billion. Revenue rose 12% to EUR20.44 billion from EUR18.30 billion. Selling and distribution expenses rose 5.3% to EUR3.35 billion, while administrative expenses climbed 32% to EUR1.73 billion. "2024 has been another solid year for CCEP with continued robust top and bottom-line growth. Our geographic diversification, reinforced by the Philippines, means we are even more resilient. We've grown share ahead of the market, created value for our customers, delivered underlying volume growth and gains in revenue per unit case through revenue and margin growth management. Actively managing pricing and promotions across our broad pack offering ensures we are relevant to all consumers, while driving profitable revenue growth," CEO Damien Gammell said. "We are well placed for 2025 and beyond in categories that are growing, with strong investment and commercial plans in place to drive growth. We are confident that we have the right strategy, done sustainably to deliver on our mid-term growth objectives." For 2025, the firm expects revenue growth of around 4% on an "adjusted comparable" and currency neutral basis. It also announced a EUR1 billion share buyback over the next 12 months. CCEP transferred to the Equity Shares Commercial Companies category of the Main Market in November. Possible inclusion in the FTSE Index Series is possible from March.
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Totally said a contract with the NHS in England has not been renewed, and the provider of healthcare and wellbeing services now expects earnings for the next financial year to be "at a similar level" to the current one. Totally said the NHS 111 National Resilience support contract was not renewed. The value of the deal was GBP13 million, with GBP12 million being booked in the current financial year, which ends on March 31. "The company was not reliant on the extension of the NHS 111 Contract for the delivery of its FY25 forecast and therefore remains confident of delivering FY25 performance in line with expectations of GBP85 million revenue and GBP3.5 million Ebitda," it said. However, it added expectations for financial 2026 did assume the pact would be renewed, but at a "reduced level". Totally added: "Work will commence to redeploy workforce where possible along with securing new contracts with new providers, although exceptional costs are expected. Based on the current revenue run rate of the company, new contract wins and the current new business pipeline the board now expects the financial performance of FY26 to be at a similar level to that which is expected to be reported for FY25."
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By Eric Cunha, Alliance News news editor
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