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(Alliance News) - Stocks in London are called flat on Tuesday, as upcoming central bank decisions and the latest rise in oil prices subdue risk appetite.
The focal points of this week are interest rate decisions from the US Federal Reserve on Wednesday and the Bank of England on Thursday, with the Bank of Japan to follow on Friday.
The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July.
"If the Fed is not expected – not even a little bit – to hike rates this week, the Bank of England could hike the bank rate by a final 25 [basis points] on Thursday. It's possible that a hawkish pause from the Fed propels the dollar higher, while a dovish hike from the BoE has the opposite impact on sterling," said Swissquote Bank's Ipek Ozkardeskaya.
In early UK company news, Kingfisher cut annual profit guidance as interim profit dropped by a third. Hargreaves Lansdown posted a "robust" full-year performance but warned tough market conditions will weigh on investor confidence going forward. On AIM, Quiz warned it expects to swing to an annual loss if the recent slump in revenue continues.
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 2.9 points at 7,650.04
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Hang Seng: marginally lower at 17,925.43
Nikkei 225: closed down 0.9% at 33,242.59
S&P/ASX 200: closed down 0.5% at 7,196.60
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DJIA: closed little changed at 34,624.30
S&P 500: closed up 0.1% at 4,453.53
Nasdaq Composite: closed little changed at 13,710.24
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EUR: down at USD1.0677 (USD1.0684)
GBP: down at USD1.2373 (USD1.2393)
USD: up at JPY147.80 (JPY147.70)
Gold: up at USD1,930.96 per ounce (USD1,927.22)
Oil (Brent): up at USD94.98 a barrel (USD94.78)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
US Federal Open Market Committee meeting begins
10:00 CEST EU balance of payments
11:00 CEST EU CPI
08:30 EDT US housing starts and building permits
08:55 EDT US Johnson Redbook retail sales index
16:30 EDT US API weekly statistical bulletin
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French President Emmanuel Macron will meet UK opposition chief Keir Starmer Tuesday, a chance for both men to strike up a political relationship with the Labour Party increasingly confident it can take over from Britain's ruling Conservatives. The closed-door talks at Macron's Elysee Palace in Paris come as part of a mini-international tour for Starmer, who visited Europol in The Hague last week and appeared alongside fellow centre-left leaders – including Canada's Justin Trudeau and former British prime minister Tony Blair – at a weekend gathering in Montreal. In a Sunday interview billed by the Financial Times as Starmer "stepping onto the global stage", he told the newspaper he would "attempt to get a much better deal for the UK" with the EU.
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Thousands of NHS consultants are on strike across England in a dispute over pay as the health service braces itself for another wave of industrial action. Consultants will also walk out on Wednesday, when they will be joined by junior doctors in the first joint strike in the history of the NHS. Junior doctors, who have held 19 days of strike action since March, will then continue their strike on Thursday and Friday this week.
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BROKER RATING CHANGES
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HSBC cuts NatWest to 'hold' - price target 260 pence
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Barclays cuts S4 Capital to 'equal weight' (overweight) - price target 95 (215) pence
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Barclays cuts Wizz Air price target to 1,800 (2,150) pence - 'underweight'
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COMPANIES - FTSE 100
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Hargreaves Lansdown reported its results for the financial year ended June 30. The UK-based digital wealth management service said revenue climbed 26% to GBP735.1 million from GBP583.0 million a year before, as pretax profit surged 47% to GBP402.7 million from GBP269.2 million. Net new business inflows fell 13% to GBP4.8 billion from GBP5.5 billion, however, but active clients increased by 67,000 to 1.8 million. The firm raised its dividend by 4.5% to 41.5 pence per share from 39.7p. "In spite of the challenging backdrop, we have delivered robust financial performance...The current economic climate is likely to remain much the same for the coming financial year, and so will continue impacting investor confidence. This will provide a continued tailwind for flows into Active Savings but a potential constraint on net new investment flows and dealing volumes," said Chief Executive Dan Olley.
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Kingfisher said sales in the first half ended July 31 edged up 1.1% to GBP6.88 billion from GBP6.81 billion a year before, but statutory pretax profit dropped by 33% to GBP317 million from GBP474 million. The B&Q-owner maintained its interim dividend at 3.80p, and announced a new share buyback programme of GBP300 million. However, the firm cut its guidance for adjusted pretax profit in 2023, now expecting around GBP590 million, compared to previous estimates of GBP634 million. "We remain very positive on the medium-to-long term outlook for home improvement growth in our markets, and confident in our ability to grow market share and deliver on our medium-term financial objectives," said CEO Thierry Garnier.
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COMPANIES - FTSE 250
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Renishaw said revenue in the year to June 30 rose to GBP688.6 million from GBP671.1 million a year before, as pretax profit was little changed at GBP145.1 million from GBP145.6 million. The provider of manufacturing technologies, analytical instruments and medical devices cited a "downturn in demand" in one of its key sectors, and challenging trading conditions over the year. In the current financial year, it has seen a "steady start" with a "solid" order book. "While the short-term macroeconomic picture remains unclear, we continue to manage costs prudently, we are implementing further price rises, and remain focused on improving our productivity," said CEO Will Lee. The firm proposed a final dividend of 59.4p, up from 56.6p per share, bringing the full-year total to 76.2p, up from 72.6p a year before.
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OTHER COMPANIES
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Fashion company Quiz said revenue in the year beginning April 1 has continued to lag the prior year, sitting below management expectations, as inflationary cost pressures have hit consumer confidence and demand for its products. In the five months to August 31, revenue was down 15% year-on-year to GBP37.0 million from GBP43.7 million. Quiz said that if the current trend continues, annual revenue is likely to be 6% to 7% behind current market expectations, which will have a knock-on effect on profit. It would expect a pretax loss of no more than GBP1.5 million, swinging from profit of GBP2.3 million in the prior year.
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By Elizabeth Winter, Alliance News senior markets reporter
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