(Alliance News) - Stocks in London look set to recover some of the week's lost ground at Friday's market open.
Locally, investors will be focusing on the latest UK retail sales data for December. According to the Office for National Statistics, retail volumes saw their largest monthly fall since January 2021, amid Covid-19 restrictions. This will come as a shock to the market, which had been expecting only a slight decline.
"Households still reeling from the cost-of-living crisis and soaring mortgage rates decided against opening the purse strings this December and turned away from the usual Christmas splurge," said Phil Monkhouse, country manager at global financial services firm Ebury.
"Global general elections, recession fears and economic volatility stemming from market expectations of rate cuts are setting retailers up for a rocky 2024 so preparation and agility will be key."
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 49.6 points, 0.7%, at 7,508.69
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Hang Seng: down 0.7% at 15,283.71
Nikkei 225: closed up 1.4% at 35,963.27
S&P/ASX 200: closed up 1.0% at 7,421.20
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DJIA: closed up 201.94 points, 0.5%, at 37,468.61
S&P 500: closed up 0.9% at 4,780.94
Nasdaq Composite: closed up 1.4% at 15,055.65
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EUR: up at USD1.0883 (USD1.0867)
GBP: down slightly at USD1.2683 (USD1.2687)
USD: up at JPY148.70 (JPY148.11)
GOLD: up at USD2,023.31 per ounce (USD2,015.55)
OIL (Brent): up at USD78.97 a barrel (USD78.61)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
World Economic Forum annual meeting in Davos, Switzerland continues
10:00 EST US existing home sales
10:00 EST US Michigan consumer sentiment index
16:15 EST US San Francisco Fed President Daly speaks
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UK retail sales figures for the final month of 2023 came in much weaker than expected, official data on Friday showed. According to the Office for National Statistics, retail sales volumes dropped 2.4% year-on-year in December. This followed a 0.2% rise in November, which was upwardly revised from a 0.1% increase. The December reading also came in worse than expected, with market forecasts of a 1.1% increase, according to FXStreet-cited consensus. Sales volumes were at their lowest level since 2018, the ONS noted. Retail sales fell 3.2% in December from November, coming in well below market consensus. A monthly decline of 0.5% was forecast, according to FXStreet. In November, retail sales had risen 1.4% from October, revised from a previous 1.3% rise.
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The UK "won't stand by" while international shipping is under attack, the government vowed as Iran-backed Houthi rebels said they would continue targeting vessels – including those from Britain. Transport Secretary Mark Harper held crisis talks with the shipping industry to say the UK will not allow international maritime trade to be "held to ransom". Prime Minister Rishi Sunak said the situation remained "concerning" as attacks persisted despite RAF airstrikes on Houthi positions.
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UK Chancellor Jeremy Hunt has dropped further hints about a tax-cutting budget as the Tories gear up for the general election. The chancellor said "the direction of travel" was for the UK to emulate successful low-tax economies. Hunt, who will deliver his budget on March 6, said low-tax countries were "more dynamic" and "more competitive". Speaking at the World Economic Forum in Davos, Switzerland, he said: "In terms of the direction of travel we look around the world and we note that the economies growing faster than us in North America and Asia tend to have lower taxes, and I believe fundamentally that low-tax economies are more dynamic, more competitive and generate more money for public services like the NHS. "That's the direction of travel we would like to go in but it is too early to say what we are going to do."
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BROKER RATING CHANGES
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Jefferies raises Kingspan to 'hold' (underperform) - price target 72.50 (54.50) EUR
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COMPANIES - FTSE 250
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4imprint said it made "excellent progress" over 2023. Revenue is expected to be USD1.33 billion, which will be a 16% year-on-year increase to USD1.14 billion in 2022. Pretax profit is expected to be no less than USD140 million, which is up from USD104 million, and slightly above the upper end of the market consensus range. The group said it is also "very well funded" entering 2024, with cash and bank deposits at USD105 million at the end of 2023, up from USD87 million a year before.
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OTHER COMPANIES
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Custodian Property Income REIT and abrdn Property Income Trust said they have agreed on the terms of an all-share merger. Under the proposed deal, Custodian Property will acquire all shares in abrdn Property Income, with the latter's shareholders to receive 0.78 of a new Custodian share for each abrdn Property Income share."The CREI board and the API board believe that the merger would bring together two complementary portfolios to create a differentiated REIT with enhanced diversification and share liquidity and a fully covered and sustainable dividend for the combined group's shareholders," the companies said. The combined portfolio would have around 200 assets and a property value in excess of GBP1.0 billion as at December 31.
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Wiltshire, England-based logistics firm Wincanton said it has agreed on the terms of a recommended cash takeover offer from CEVA Logistics, a subsidiary of France's CMA CGM. The offer is for 450 pence a share, valuing Wincanton at GBP566.9 million on a fully diluted basis, with an entreprise value of around GBP764.9 million. The offer price represents a 52% premium to Wincanton's closing price of 297p on Thursday. The intended acquisition of Wincanton represents an attractive growth opportunity that is in line with Ceva's expansion strategy. It is a unique opportunity to expand Ceva's offering in the UK, and to acquire complementary grocery and consumer expertise," the firms said.
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Germany's BASF said its performance in 2023 was largely below market expectations and its own forecasts. In its preliminary figures for the 2023 full year, the Ludwigshafen, Germany-based chemical company said it expected EUR68.90 billion in sales, below its previous forecasts of between EUR73 billion and EUR76 billion. This marks a 21% drop from the EUR87.33 billion the group recorded in 2022. BASF expects to swing to EUR225 million in net income from a EUR627 million loss in 2022, though still below Vara analyst estimates of EUR2.25 billion net income. The 2022 figures were impacted by non-cash-effective impairments on Russia-related assets of Winteshall Dea, the Norwegian gas and oil company. Earnings before interest, tax and depreciation before special items is also expected to fall to EUR3.81 billion from EUR6.88 billion, below BASF's previous expectations of between EUR4.0 billion to EUR4.4 billion.
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By Elizabeth Winter, Alliance News deputy news editor
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