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(Alliance News) - London's FTSE 100 index was set to open higher on Tuesday, extending gains from Monday as a the dark cloud from last month's UK mini-budget appears to have cleared from equity markets.
It still hangs over UK Prime Minister Liz Truss, however. Truss will hope openly apologising for "mistakes" in her tumultuous early premiership will pacify restless Tory colleagues as she seeks to fight on for another day in number 10.
Market attention also will be on the Bank of England, after the Financial Times reported the central bank may delay a planned gilt sale even further.
The BoE had already delayed the sale of GBP838 billion worth of gilts bought under its quantitative easing scheme to the end of this month. It had been due to begin earlier in October.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called up 0.9% at 6,984.24
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Hang Seng: up 1.4% at 16,842.09
Nikkei 225: closed up 1.4% at 27,156.14
S&P/ASX 200: closed up 1.7% at 6,779.20
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DJIA: closed up 550.99 points, or 1.9%, at 30,185.82
S&P 500: closed up 94.88 points, or 2.7%, at 3,677.95
Nasdaq Composite: closed up 354.41 points, or 3.4%, at 10,675.80
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EUR: up at USD0.9853 (USD0.9810)
GBP: down at USD1.1346 (USD1.1409)
USD: up at JPY148.89 (JPY148.77)
GOLD: lower at USD1,654.27 per ounce (USD1,661.00)
OIL (Brent): higher at USD92.54 a barrel (USD91.70)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
1000 BST Germany ZEW indicator of economic sentiment
1415 BST US industrial production
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UK PM Truss will hope openly apologising for "mistakes" in her tumultuous early premiership will pacify restless Tory colleagues as she seeks to fight on for another day in Number 10. Truss is seeking to shore up her authority after she sacked her former chancellor and abandoned her economic agenda in a bonfire of tax-cutting policies, sparking questions over her mandate to lead. She will rally her Cabinet at a meeting on Tuesday following an informal reception with senior ministers over drinks and nibbles in Downing Street on Monday evening. Truss has suggested she believes she can weather the storm that has rocked the party in recent weeks, as she vowed to lead the Tories into the next general election. In an interview with the BBC, aired on Monday night, the PM admitted to and apologised for "mistakes" during her short tenure to date. She said she has "adjusted what we're doing" after the government's fiscal policies spooked the markets, putting in place a new chancellor with a fresh strategy to "restore economic stability". Earlier, she sat silent in the Commons for roughly 30 minutes as Jeremy Hunt – the new chancellor – told MPs he was scaling back the energy support package and ditching most of the tax cuts announced by his predecessor.
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A bid to force UK government ministers to speed up efforts to explain the energy support for households after April has been rejected in the Commons. Hunt announced on Monday he was scaling back the energy support package, with the two-year price freeze now only running for six months. The chancellor said the government will launch a review on how to target support to those most in need after April in a bid to save taxpayers' cash. The SNP sought to amend the Energy Prices Bill, which puts in law the support package and was fast-tracked through the Commons, to require ministers to set out to Parliament the full details on the different scenarios from April within 28 days of it receiving royal assent. The SNP's amendment was rejected by 61 votes to 304, for a majority of 243.
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BROKER RATING CHANGES
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Jefferies raises Dechra Pharmaceuticals to 'buy' (hold) - price target 3,112 (2,880) pence
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Canaccord initiates Asos with 'sell' - target 409 pence
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Canaccord initiates boohoo with 'hold' - target 35 pence
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Canaccord initiates THG with 'buy' - target 81 pence
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Canaccord initiates AO World with 'sell' - target 31 pence
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Canaccord initiates Moonpig with 'buy' - target 232 pence
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Canaccord initiates On the Beach with 'buy' - target 193 pence
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COMPANIES - FTSE 100
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Aveva said its half-year revenue was supported by a stronger dollar. The industrial software firm said revenue in the six months to September 30 fell by a "low-single digit rate" annually on an organic, constant-currency basis. Reported revenue, however, rose at an upper-single-digit rate, helped by the stronger dollar, in which Aveva invoices most of its revenue. "As previously indicated, costs have increased significantly against the Covid-impacted levels of the first half of last year, and this has had a material impact on Aveva's adjusted [earnings before interest and tax] margin for the six months to 30 September 2022," it added. "The full year projections indicate revenue seasonality at broadly similar levels to previous years and significantly lower second half cost increases." In addition, Aveva set court and general meetings for November 17 to approve its takeover by Schneider Electric.
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Rio Tinto slightly toned down annual guidance and warned of "downside risks to demand" for commodities on Tuesday. The miner now expects 2022 Pilbara iron ore shipments in the bottom end of a 320 million to 335 million tonnes range. Shipments of 322 million tonnes were achieved in 2021. In the third quarter of 2022, Pilbara iron ore shipments fell 1% annually to 82.9 million tonnes. Output climbed 1% to 84.3 million tonnes. Elsewhere, bauxite and aluminium output each fell 2% year-on-year, while mined copper and titanium dioxide slag production were 10% and 48% higher, respectively. Looking ahead, it noted commodity prices continued to weaken during the third quarter amid a global economic growth slowdown. China's economy has been "challenged" by virus curbs recently, Rio noted, while the US economy is now showing "more signs of a slowdown".
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COMPANIES - FTSE 250
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Bellway reported an annual revenue rise, and it continues to expect good things from the UK housing market, supported by a recent relaxing of stamp duty. Revenue in the financial year that ended July 31 rose 13% to GBP3.54 billion from GBP3.12 billion a year earlier. Pretax profit shrunk 37% to GBP304.2 million from GBP479.0 million. Bellway's bottom line took a GBP346.2 million hit from legacy building safety improvements provisions. Bellway said it has "continued commitment to act responsibly with regards to fire safety" following the Greenfell fire in west London in 2017. Without the provisions, underlying pretax profit rose 23% to GBP650.4 million from GBP530.8 million. Bellway lifted its dividend by 19% to 140.0 pence per share from 117.5p. "While the sector faces a number of near-term headwinds, including rising interest rates and the expiry of Help-to-Buy, unemployment levels remain low and the recent positive changes to stamp duty thresholds offer additional support for housing demand. The combined strength of our balance sheet, land bank and order book support our ability to grow outlets in the year ahead, but also provide strategic flexibility to respond to changes in the housing market," Bellway explained.
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Moneysupermarket.com said its third-quarter outturn topped expectations, and it now expects profit at the top end of market forecasts. Revenue in the three months that ended September 30 rose 33% to GBP101.9 million. "In Insurance, travel insurance growth moderated but was still strong with revenue around 15% higher than 2019 levels. This growth was partially offset by car and home, although market switching volumes did improve to single-digit declines compared to the double-digit declines seen in the first half," the price comparison site operator said. It expects annual earnings before interest, tax, depreciation and amortisation to be at the upper end of market expectations.
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Ibstock said it traded ahead of expectations in the third quarter. The manufacturer of clay bricks and concrete products now expects annual results "to be above our previous expectations". In the third quarter of 2022, clay sales volumes were "marginally" higher year-on-year, while its performance in concrete was in line with expectations. "Our strong trading in the first half of the year continued through the third quarter, supported by robust demand across our end markets. We remain focused on serving our customers, through providing high quality, sustainable products and solutions to create much-needed homes and spaces across the UK," Chief Executive Joe Hudson said.
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OTHER COMPANIES
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Fintech Wise reported improved volumes in its second quarter. Volumes rose 50% year-on-year to GBP27.0 billion in the quarter ended September, from GBP18.0 billion. Wise's financial year runs to March 31. Revenue in the second quarter rose 59% to GBP211.5 million from GBP132.8 million. Total income increased 73% to GBP229.0 million from GBP132.2 million a year earlier. Wise now expects total income growth of between 55% and 60% for the full year.
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Vehicle seller Lookers said it outperformed the market in the third quarter, despite supply chain strife continuing. It outperformed the market by roughly 5.6%, it said. The total UK new car market declined by 0.1% in the third quarter. "Global supply chain disruption continued throughout the period, impacting the supply and availability of both new and used vehicles. Vehicle gross margins remained broadly in line with those reported in the first half. The group continued to face significant cost inflationary pressures, partly offset by improvements in operational efficiency and a continuing focus on working capital management," Lookers said. The company now expects underlying pretax profit of no less than GBP75 million for 2022, ahead of previous expectations, but down from GBP90.1 million in 2021.
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finnCap confirmed it has received a non-binding takeover proposal from Panmure Gordon. The proposal consisted of a cash portion or an alternative which would see electing shareholders receive Panmure Gordon stock. The stockbroker said talks with Panmure are at an early stage, and there is no guarantee a firm offer is forthcoming.
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By Eric Cunha; ericcunha@alliancenews.com
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