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(Alliance News) - Stocks in London are called flat on Thursday, as Asian markets succumb to profit taking after recent gains.
"The sweet mix of the [US] recent economic data backs the idea that the Federal Reserve could achieve what they call a ‘soft landing’ following an aggressive monetary policy tightening – and more importantly stop hiking the interest rates," said Swissquote Bank's Ipek Ozkardeskaya.
On Wednesday, annual US producer price growth was weaker than expected, reinforcing the cooler-than-expected consumer price inflation print on Tuesday, while separate numbers on Wednesday showed retail sales were better than forecast.
Adding to positive drivers for market sentiment were constructive conversations between the leaders of the world's two largest economies. US President Joe Biden and Chinese President Xi Jinping agreed to restore military communications at their first summit in a year, even as Biden went off script by saying he still considered Xi a "dictator".
Further, the US Congress passed a stop-gap funding bill to keep federal agencies running for another two months and avert a painful holiday season government shutdown – although the deal leaves out aid to war-torn Ukraine and Israel requested by President Joe Biden.
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 2.7 points at 7,489.61
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Hang Seng: down 1.4% at 17,818.32
Nikkei 225: closed down 0.3% at 33,424.41
S&P/ASX 200: closed down 0.7% at 7,058.40
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DJIA: closed up 163.51 points, or 0.5%, at 34,991.21
S&P 500: closed up 0.2% at 4,502.88
Nasdaq Composite: closed up 0.1%, at 14,103.84
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EUR: down at USD1.0840 (USD1.0864)
GBP: down at USD1.2398 (USD1.2448)
USD: up at JPY151.34 (JPY150.91)
GOLD: up at USD1,966.26 per ounce (USD1,962.09)
OIL (Brent): down at USD80.84 a barrel (USD81.59)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
UK BoE Monetary Policy Committee Member Swati Dhingra speaks
08:30 EST US import and export price index
08:30 EST US Philadelphia Fed business outlook survey
08:30 EST US unemployment insurance weekly claims report
08:30 EST US Fed Cleveland President Loretta Mester speaks
09:15 EST US industrial production
10:00 EST US NAHB housing market index
16:00 EST US treasury international capital data
16:30 EST US foreign central bank holdings
16:30 EST US federal discount window borrowings
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China condemned US President Joe Biden's description of Xi Jinping as a dictator as "extremely wrong", after the two leaders wrapped up a summit in California. Asked about Biden's remarks, foreign ministry spokesperson Mao Ning said: "This kind of speech is extremely wrong and is irresponsible political manipulation. China firmly opposes it." "I need to point out that there are always some people with ulterior motives attempting to sow discord and wreck China-US relations, and this too will not succeed," she added.
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BROKER RATING CHANGES
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Exane BNP cuts Entain to 'neutral' (outperform) - price target 1,000 pence
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Morgan Stanley raises easyJet to 'overweight' (equal-weight) - price target 670 (600) pence
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Morgan Stanley cuts Wizz Air to 'equal-weight' (overweight) - price target 2,400 (3,700) pence
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COMPANIES - FTSE 100
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Melrose Industries said its recent trading has been better than expectations, prompting the industrial and manufacturing company to upgrade its annual expectations. It now expects revenue between GBP3.3 and GBP3.4 billion. In Aerospace, it expects adjusted operating profit between GBP400 and GBP410 million, with an adjusted operating margin above 12%, and adjusted earnings before interest, tax, depreciation and amortisation between GBP545 and GBP555 million. " Due to the stronger underlying margins being achieved, the 2023 full year profit expectations are upgraded by 7%, more than doubling profits compared to last year. This reflects ongoing confidence in the performance of the business with Engines full year margins now expected to be 25% and Structures margins 4% or more," Melrose explained. In the period from July 1 to October 31, revenue was up 18%, with higher underlying demand.
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British fashion company Burberry warned it is unlikely to achieve its annual revenue guidance amid a slowdown in luxury demand. Reporting on its half-year period to September 30, Burberry said revenue grew 3.8% on-year to GBP1.40 billion from GBP1.35 billion. Retail comparable store sales grew 10% at constant currency or 6% on a reported basis. Wholesale revenue dropped by around 8% to GBP241 million, but licensing revenue rose 45% to GBP31 million. However, pretax profit fell 15% to GBP223 million from GBP263 million, as its operating profit margin dropped to 15.9% from 19.5%. "The slowdown in luxury demand globally is having an impact on current trading. If the weaker demand continues, we are unlikely to achieve our previously stated revenue guidance for FY24," the firm said. It had expected low double-digit growth for the year. This would have a knock-on effect on profit, which would be towards the lower end of the current consensus range of GBP552 to GBP668 million. It increased dividends for its first-half to 18.3 pence from 16.5 pence.
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COMPANIES - FTSE 250
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Crest Nicholson said it expects adjusted pretax profit to be between GBP45.0 and GBP50.0 million for the financial year ended October 31, having guided for GBP50.0 million in August. At the top end of the range, it represents a 64% decline from the GBP137.8 million achieved in the prior year. Crest also updated on the planned streamlining of its operations in light of a deterioration in trading conditions seen in the second half. It plans to cut administration costs to around GBP3.0 million for financial 2024, moderate the pace of growth in Yorkshire, incorporate its new East Anglia division into the existing Eastern division, and "align headcount and resources to the expected level of output" in the current year. "These are difficult decisions to take but will ensure the group is well positioned to recover strongly as more supportive market conditions return," said Chief Executive Peter Truscott. "We expect the housing market will remain challenging as we head into 2024... However, there are reasons to be optimistic with year-on-year inflation now halved and real wage growth starting to be felt in households across the UK. We have acquired some excellent sites that are at advanced stages in the planning process, leaving us well positioned to trade in whatever market conditions emerge," he added.
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OTHER COMPANIES
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Hotel Chocolat said it has agreed the terms of a recommended cash acquisition by US multinational confectionery products manufacturer Mars Inc. Hotel Chocolat's shareholders will receive 375 pence in cash for each share, which represents a high premium to the closing price of 139p on Wednesday, valuing the chocolatier at GBP534 million on a fully-diluted basis. "Mars believes it is well-positioned to support Hotel Chocolat's next growth phase with its international footprint, global supply chain and extensive commercial relationships, which could provide the Hotel Chocolat brand with an enhanced platform for growth in the UK and potentially in new geographies," the companies said.
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By Elizabeth Winter, Alliance News senior markets reporter
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