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(Alliance News) - Stocks in London are called higher on Tuesday, as the FTSE 100 looks set to shake off weaker economic data from China.
China's factory activity fell back into contraction in October, official data showed, despite Beijing announcing a raft of policies aimed at shoring up the creaking economy.
The official manufacturing purchasing managers' index – a key measure of factory output – stood at 49.5 in October, below the 50-point mark separating expansion from contraction, the National Bureau of Statistics said. The reading came after the index edged up to 50.2 in September, having shrunk for five consecutive months.
The week's central bank decisions began on Tuesday, as the Bank of Japan announced a minor tweak to its unconventional policy of controlling government bond yields on Tuesday, stopping short of expectations and sending the yen lower. Meanwhile, the US Federal Reserve will begin its two-day monetary policy meeting later in the day.
In early UK news, shop price inflation continued to cool into October, as the pace of rising food prices eased.
BP launched another USD1.5 billion share buyback alongside its third-quarter results. Vodafone and Zegona Communications announced a EUR5 billion deal for the sale of the former's Spanish operations. IG Group said it will lay off 300 staff members in a bid to save costs and become a "lean fintech company".
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 13.2 points, 0.2%, at 7,340.59
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Hang Seng: down 1.6% at 17,132.97
Nikkei 225: closed up 0.5% at 30,858.85
S&P/ASX 200: closed up 0.1% at 6,780.70
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DJIA: closed up 511.37 points, or 1.6%, at 32,928.96
S&P 500: closed up 1.2% at 4,166.82
Nasdaq Composite: closed up 1.2% at 12,789.48
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EUR: up at USD1.0609 (USD1.0607)
GBP: up at USD1.2149 (USD1.2144)
USD: up at JPY150.21 (JPY149.13)
Gold: down at USD1,994.81 per ounce (USD2,000.32)
Oil (Brent): down at USD88.10 a barrel (USD88.31)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
UK Jon Cunliffe steps down as BoE Deputy Governor for Financial Stability
US Federal Open Market Committee meeting
11:00 CET EU GDP
11:00 CET EU flash CPI
08:30 EDT US employment cost index
08:55 EDT US Johnson Redbook retail sales index
09:00 EDT US house price index
09:45 EDT US ISM-Chicago business survey
10:00 EDT US consumer confidence index
16:30 EDT US API weekly statistical bulletin
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UK shop price inflation has eased for the fifth consecutive month to its lowest rate since last August, figures show. Prices were 5.2% higher in October than a year earlier, down from September's 6.2%, according to the British Retail Consortium-Nielsen Shop Price Index. Imported goods saw higher levels of inflation due to a weaker pound, still-high producer costs and emerging trade frictions, while prices for some domestically-produced food, such as fruit, were lower compared with last month. Prices of children's and baby clothing also fell as retailers continued to support families with the arrival of colder weather, the BRC said. Food inflation also slowed, to 8.8% from September's 9.9% – its sixth consecutive deceleration and lowest rate since last July – while fresh food inflation slowed even further to 8.3%, down from 9.6% a month earlier.
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BROKER RATING CHANGES
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Barclays raises Rolls-Royce to 'overweight' (equal weight) - price target 270 (239) pence
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Wells Fargo starts Wise with 'overweight' - price target 850 pence
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Berenberg reinitiates Assura with 'buy' - price target 49 pence
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COMPANIES - FTSE 100
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Oil major BP announced a further USD1.5 billion share buyback for the third quarter, as pretax profit soared to USD7.31 billion from USD1.98 billion a year before. Total revenue and other income fell to USD54.02 billion from USD57.81 billion a year before, but rose from USD49.48 billion in the second quarter. Replacement cost profit rose to USD3.65 billion from USD23 million a year before, but fell to USD3.29 billion from USD8.15 billion on an underlying basis. However, the underlying RC profit rose from USD2.59 billion in the second quarter, which BP credits to "higher realized refining margins, lower level of refining turnaround activity, a very strong oil trading result, higher oil and gas production, partly offset by a weak gas marketing and trading result". It announced a quarterly dividend of 7.27 cents, matching the second-quarter payout, and rising from 6.01 cents a year before. In the year as a whole, BP expects reported and underlying upstream production to be higher compared with 2022. "Within this, bp expects underlying production from oil production & operations to be higher and production from gas & low carbon energy to be slightly lower. bp continues to expect four major project start-ups during 2023," the firm said.
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Vodafone and fellow London listing Zegona Communications announced on the sale of Vodafone Spain. The consideration Zegona will pay is "at least" EUR4.1 billion in cash, and a further EUR900 million in redeemable preference shares. Vodafone will provide certain services to its Spain arm for a charge of around EUR110 million. "The sale of Vodafone Spain is a key step in right-sizing our portfolio for growth and will enable us to focus our resources in markets with sustainable structures and sufficient local scale," said Vodafone CEO Margherita Della Valle. Zegona said it will complete an equity raise of up to EUR600 million prior to completion with third-party investors, as well as taking on new debt. "We are very excited about the opportunity to return to the Spanish telecoms market. This financially attractive acquisition marks our third deal in Spain after successful turnarounds at Telecable and Euskaltel," said Zegona's Chair & CEO Eamonn O'Hare.
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COMPANIES - FTSE 250
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Online trading provider IG Group said it expects to lay off around 300 employees, or 10% of its workforce, as part of a cost-savings drive. It will undertake other "efficiency measures", including expanding use of its global centres of excellence, and expects to deliver full run rate cost savings of GBP50 million per year. "We want to position IG Group as a lean fintech company and today's decisive actions ensure a strong platform for future growth. We will continuously evaluate and pursue cost efficiency opportunities to create a more agile and scalable organisation," said acting CEO Charlie Rozes.
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RHI Magnesita said adjusted earnings before interest, tax, and amortisation in the third quarter were at a "similar level" to the first two quarters of the year. The Vienna-based supplier of refractory products said it saw lower sales volumes and under-absorption of fixed costs, but this was offset by benefits from strategic initiatives and mergers & acquisitions. "Order book visibility is at normal levels with limited signs of a recovery in demand volumes in 2024, as global construction activity continues to be weak and demand in the autos market remains below pre-pandemic levels," the firm said. However, thanks to the strong Ebitda seen in the third quarter, as well as other tailwinds, it raised annual Ebitda guidance to at least EUR380 million from EUR360 million previously. It also expects earnings per share to be "moderately ahead" of analyst consensus for 2023.
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By Elizabeth Winter, Alliance News senior markets reporter
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