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(Alliance News) - Stocks in London are expected to open lower on Wednesday, as investors consider the latest dovish remarks from the US Federal Reserve.
The Fed is making good progress in its fight against inflation, senior bank officials said, while voicing differing opinions on the chances of another interest rate hike. "I am encouraged by what we have learned in the past few weeks – something appears to be giving, and it's the pace of the economy," Fed Governor Christopher Waller told a conference in Washington.
Economic data from October "are consistent with the kind of moderating demand and easing price pressure that will help move inflation back to two percent," he added.
"The dollar index tumbled to the lowest levels since August, as gold rallied past the USD2,050 level this morning on the back of a broadly softer US dollar and tumbling US yields," said Ipek Ozkardeskaya, Swissquote Bank senior analyst.
On the economic calendar, key focal points for the day will be German consumer price index data, and a US gross domestic product reading.
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 19.4 points, 0.3%, at 7,435.84
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Hang Seng: down 2.4% at 16,934.69
Nikkei 225: closed down 0.3% at 33,321.22
S&P/ASX 200: closed up 0.3% at 7,035.30
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DJIA: closed up 0.2%, at 35,416.98
S&P 500: closed up 0.1% at 4,554.89
Nasdaq Composite: closed up 0.3% at 14,281.76
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EUR: up at USD1.1002 (USD1.0987)
GBP: up at USD1.2716 (USD1.2689)
USD: down at JPY147.07 (JPY147.59)
Gold: up at USD2,044.75 per ounce (USD2,037.08)
Oil (Brent): up at USD81.88 a barrel (USD81.77)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 CET EU economic sentiment indicator
14:00 CET Germany CPI
09:30 GMT UK money and credit
09:30 GMT UK monetary and financial statistics
09:30 GMT UK effective interest rates - October 2023
07:00 EST US MBA weekly mortgage applications survey
08:30 EST US GDP
08:30 EST US advance economic indicators report
12:45 CST US Fed Cleveland President Loretta Mester speaks
14:00 EST US Federal Reserve Beige Book
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Former UK foreign secretary William Hague has described the sale of the Daily Telegraph to a United Arab Emirates-based investment fund as "disturbing". A number of Conservative MPs have urged ministers to block the sale to RedBird IMI, an investment fund owned by Mansour bin Zayed Al Nahyan, vice-president of the United Arab Emirates. Hague told Culture Secretary Lucy Frazer, who is considering whether the deal warrants intervention on public interest grounds, that he would "certainly intervene". Writing in The Times, the former Conservative leader said: "The prospect of important British media institutions the Telegraph newspapers and The Spectator falling into the ownership of Sheikh Mansour of the UAE is disturbing and should be prevented. "I say that as an avowed enthusiast for the Emirates, its achievements and its role in the world."
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BROKER RATING CHANGES
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JPMorgan cuts Diageo to 'neutral' (overweight) - price target 3,500 pence
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Jefferies raises Auto Trader Group price target to 810 (740) pence - 'buy'
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COMPANIES - FTSE 100
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Hargreaves Lansdown named Alison Platt as its new chair. Platt is currently chair of Dechra Pharmaceuticals, which is undergoing an acquisition by EQT. She is also a non-executive director at Tesco, and chair of general insurer Ageas UK. She replaces Deanna Oppenheimer, who will step down at the company's annual general meeting next Friday, having served as chair for six years. While Platt undergoes regulatory approval for the position, Senior Independent Director Penny James will serve as interim chair. "I would like to thank Deanna for her guidance and stewardship during her tenure as chair. I look forward to working with Alison who brings a wealth of experience to the board," said CEO Dan Olley.
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COMPANIES - FTSE 250
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Pennon Group reported a sharp drop in interim profit, but raised its dividend. In the half year to September, the water utility firm said revenue rose 5.4% year-on-year to GBP448.6 million from GBP425.5 million. However, profit before tax plunged 85% to GBP3.2 million from GBP20.9 million. "Whilst this outturn reflects a reduction in earnings compared to [the first half of financial 2023] it represents a marked improvement in performance compared to [the second half of financial 2023] where the impact of elevated power pricing and financing costs resulted in a second half underlying loss before tax of GBP5.7 million," Pennon said. It raised its interim dividend by 8.3% to 14.04 pence from 12.96p a year prior. It expects its underlying annual performance to be second-half weighted. It expects lower revenue due to seasonal demand patterns and water efficiency measures, thought costs are also expected to fall.
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OTHER COMPANIES
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Charlie Munger, the longtime friend and business partner of famed US investor Warren Buffett, died on Tuesday at the age of 99, his employer has confirmed. Berkshire Hathaway, where Munger served for decades as vice chair under Buffett, announced it was "advised by members of Charlie Munger's family that he peacefully died this morning at a California hospital". "Berkshire Hathaway could not have been built to its present status without Charlie's inspiration, wisdom and participation," Warren Buffett said in a statement. Like Buffett, Munger was born and brought up in Omaha, Nebraska. The two met as adults in 1959 and forged a friendship that lasted more than 60 years. Munger joined Buffett at Berkshire Hathaway as vice chair in 1978, and helped transform it from a small textile company into a gigantic conglomerate, now valued at USD785 billion.
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Inkjet printing technology firm Xaar said its annual adjusted pretax profit will be between GBP2.5 and GBP3 million, which is ahead of board expectations. However, due to "challenging" trading conditions in the second half, annual revenue is expected between GBP70 and GBP72 million, behind 2022's GBP72.8 million. It expects weaker demand to persist in the final quarter of this year and into 2024. "Together with delays in some customer product launches, [this] will result in lower revenue and adjusted profit in 2024 than previously anticipated," the firm warned, adding: "We are optimistic and remain focused on delivering significant opportunities in our customer pipeline."
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The UK Competition & Markets Authority set out its Autumn review of competition in the groceries sector. The regulator said some branded suppliers have increased prices more quickly than their costs have risen. However, it noted that generally, consumers can find cheaper own-label alternatives. Consumers switching to these cheaper alternatives has caused lower volumes of branded sales, leading to overall profit margins at branded manufacturers falling since 2021. The regulator said it will be taking a closer look at the competition dynamics in baby formula, given the sharp rise in prices over the past couple of years, with consumers generally opting not to switch to cheaper options. "The CMA will now undertake further work to better understand consumer behaviour (including what influences choice) and barriers to entry and expansion for baby formula manufacturers and consider whether any changes to the regulatory framework could help the market work better," it said. It will also be beginning a review of loyalty scheme pricing by supermarkets early next year, noting that some supermarkets are only offering cheaper prices for loyalty card members.
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By Elizabeth Winter, Alliance News deputy news editor
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