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(Alliance News) - Stocks in London are expected to open lower on Wednesday, as investors assess weaker Chinese economic data, and look ahead to the release of the latest US Federal Reserve meeting minutes.
Financial markets in the US were closed on Tuesday for Independence Day.
In Asia on Wednesday, sentiment was hurt by the latest PMI data, which suggested China's economic recovery was weakening, which helped to drive oil prices lower.
The Caixin services purchasing managers' index eased to 53.9 points in June from 57.1 in May. Falling closer to the 50-point no-change mark, it shows growth slowed in the sector.
"There are fresh concerns about the global economy powering down as data from China's service sector underlines how tepid the post-pandemic recovery has become, just as trade tensions between Beijing and Washington ramp up," Hargreaves Lansdown analyst Susannah Streeter commented.
There will be the minutes from the latest Federal Open Market Committee meeting released at 1900 BST.
Swissquote Bank senior analyst Ipek Ozkardeskaya predicted: "There will clearly be a couple of hawkish sentences that will hit the headlines, given that the Fed officials paused their rate hikes in their June meeting, but their dot plot showed two more interest rate hikes before a real and a longer pause."
Meanwhile, in early UK company news, Keller Group said it expects profit to outperform consensus. Supreme also said profit in its new financial year would be ahead of expectations, and announced a big contract win in vaping distribution.
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 18.2 points, 0.2%, at 7,501.52
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Hang Seng: down 1.6% at 19,098.03
Nikkei 225: closed down 0.3% at 33,338.70
S&P/ASX 200: closed down 0.4% at 7,253.20
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Financial markets in the US were closed on Tuesday for Independence Day.
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EUR: down at USD1.0876 (USD1.0900)
GBP: down at USD1.2702 (USD1.2728)
USD: up at JPY144.68 (JPY144.46)
GOLD: down at USD1,922.16 per ounce (USD1,927.60)
OIL (Brent): down at USD75.93 a barrel (USD76.13)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:30 CEST EU EuroCOIN indicator of economic activity
10:00 CEST EU services PMI
10:00 CEST EU ECB consumer expectations survey results
11:00 CEST EU PPI
09:55 CEST Germany services PMI
11:00 IST Ireland unemployment
09:30 BST UK services PMI
09:30 BST UK narrow money and reserve balances
10:00 EDT US IBD/TIPP economic optimism index
14:00 EDT US Federal Open Market Committee meeting minutes published
16:30 EDT US API weekly statistical bulletin
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Ireland's services sector continued to grow in June, but the rate of expansion slowed slightly from May, according to survey data, The AIB services purchasing managers' index posted at 56.8 points in June, down from 57.0 in May. Remaining above the 50-point no-change mark, it shows the sector remains in expansion. "The robust performance reflected strong demand in the sector. This was evidenced by another very solid increase in new business volumes at Irish services firms, driven by ongoing strength in both domestic and external demand," said Oliver Mangan, AIB chief economist. The composite PMI - which measures services and manufacturing - fell to 51.4 points in June, from 51.9 in May.
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BROKER RATING CHANGES
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Liberum cuts Naked Wines to 'sell' - price target 80 pence
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COMPANIES - FTSE 100
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Legal & General said its "confidence" in achieving its five-year ambitions are unchanged. It said a transition to a new accounting method will not hurt its "strategy, solvency or dividends". The IFRS 17 accounting standard for insurers was ushered in at the start of 2023. "It only impacts the reporting of our annuity and protection businesses, changing the timing of recognition of earnings from these products but not the quantum," Legal & General said. It said it is on track to generate GBP8 billion to GBP9 billion of capital for the period between 2020 to 2024. L&G said it has transacted GBP6.8 billion worth of pension risk transfer transactions year-to-date. The company added: "There has been a step-up in the number of pension schemes approaching the insurance market, alongside an increase in GBP1 billion+ transactions, with several more such pension schemes intending to complete transactions this year. The pipeline for 2023 is the largest we have seen and we are on track for one of our busiest years ever."
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An "irresponsible" tweet by Entain's Ladbrokes has been banned for featuring Jake Paul, a YouTuber and professional boxer who is a favourite among teenagers. The Advertising Standards Authority said: "We...considered that Jake Paul had strong appeal to under-18s...For those reasons, we considered that the ad was irresponsible and breached the code." Ladbrokes said the ad was published after the fight between Jake Paul and Tommy Fury and did not include any "calls to action", promotional offers or links back to its site.
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COMPANIES - FTSE 250
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Keller Group said it expects its full-year underlying operating profit to be "materially ahead" of market expectations, though the increase in earnings will be moderated by the latest interest rate hikes. "Trading in the first half has remained strong and we anticipate a record performance in the period," the geotechnical engineering firm said. Due to the timing and phasing of certain contracts, it expects profit to be more evenly weighted between the first and second half. Operational improvements in its North American foundations business have helped to recovery operating margins, and Suncoast is expected to deliver an improved performance despite lower production volumes. Keller did note challenges from the "recessionary backdrop" in Europe, however, which is causing margin erosion and delays to some projects.
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Redde Northgate reported double-digit interim growth in its financial year ended April 30. The commercial vehicle hire firm said revenue jumped 20% year-on-year to GBP1.49 billion from GBP1.23 billion, as pretax profit leapt 35% to GBP178.7 million to GBP132.7 million. "Our integrated mobility platform has helped to drive growth and offers significant efficiencies for ourselves and customers. Vehicle supply is improving but remains below the high levels of customer demand; our financial strength provides an ability to react quickly to supply opportunities as they arise," said CEO Martin Ward. In the new year, the firm is enjoying "robust" demand, and boasts a "healthy" business pipeline. It raised the final dividend by 10% to 16.5 pence, bringing the annual total to 24.0p, up from 21.0p a year before.
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OTHER COMPANIES
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Bidstack said it has received an email with nine letters "purporting to be" from Interactive Investor Services Nominees, Hargreaves Lansdown (Nominees) and Lawshare Nominees on behalf of investors holding a 5.3% stake. The letters request that Bidstack convene a general meeting, and consider resolutions to remove Chief Strategy Officer Lisa Hau and Non-Executive Director Glen Calvert as directors, and appoint Nicholas Hargrave as a director. The in-game advertising firm said it intends to comply with its obligations to call a general meeting within 21 days.
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Supreme reported a year of robust trading in the 12 months to March 31, and raised its expectations for the current year. The Manchester-based firm that manufactures and distributes battery, lighting and vaping products said revenue rose 19% year-on-year to GBP155.6 million from GBP130.8 million, though pretax profit fell 11% to GBP14.4 million from GBP16.3 million. The revenue growth was boosted by an "outstanding" performance from its Vaping division, where revenue nearly doubled to GBP76.1 million. It plans to pay out a final dividend of 2.2p, bringing the annual total to 3.0p - down from 6.0p a year before. Supreme also announced a "significant" vaping distribution agreement. It has been selected as the master distributor for the UK vape brands, ElfBar and Lost Mary. Supreme expects the deal to generate between GBP25 and GBP30 million in revenue in financial 2024. The company now expects trading in the year to be "significantly ahead" of market consensus of GBP159 million in revenue, and adjusted Ebitda of GBP22.6 million.
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By Elizabeth Winter, Alliance News senior markets reporter
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