LONDON BRIEFING: Astra promises dividend hike; Darktrace ups guidance

Thu, 11th Apr 2024 07:49

(Alliance News) - Stocks in London are called to open slightly higher on Thursday, as investors eye the latest interest rate decision from the European Central Bank, a day after a hotter-than-expected US inflation reading.

Thursday's economic calendar has an interest rate decision from the European Central Bank. It is due out at 1315 BST and markets are widely expecting the central bank to keep rates unchanged.

Investors will be eyeing the press conference which will follow, in hopes of some hints on the ECB's expected timing of rate cuts.

Stocks in New York took a hit on Wednesday, following some hotter-than-expected US inflation data, alongside minutes from the latest US Federal Reserve meeting. Both crushed hopes for an imminent interest rate cut.

According to the Bureau of Labor Statistics, the year-on-year rate of US consumer price inflation picked up to 3.5% last month, from 3.2% in February, taking it further above the Fed's 2% inflation target. The rate of CPI had been expected to pick up to just 3.4%, according to FXStreet cited consensus.

"Wednesday's inflation report dealt a significant blow to the Federal Reserve's aspirations for a soft landing as, once again, inflation outpaced expectations," said SPI Asset Management's Stephen Innes.

"Hotter-than-expected prices force Fed officials back into a cautious stance, where they must await further clarity on inflation dynamics and tangible signs of economic deceleration before even entertaining a rate cut before Q4."

In early corporate news, AstraZeneca announced plans to hike its dividend. Darktrace also upped its annual guidance.

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 0.2% at 7,976.40

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Hang Seng: down 0.4% at 17,073.93

Nikkei 225: closed down 0.4% at 39,442.63

S&P/ASX 200: closed down 0.4% at 7,813.60

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DJIA: closed down 422.16 points, 1.1%, at 38,461.51

S&P 500: closed down 49.27 points, 1.0%, at 5,160.64

Nasdaq Composite: closed down 136.28 points, 0.8%, at 16,170.36

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EUR: flat at USD1.0745 (USD1.0743)

GBP: flat at USD1.2546 (USD1.2546)

USD: up at JPY152.91 (JPY152.88)

Gold: up at USD2,341.48 per ounce (USD2,334.91)

(Brent): up at USD90.56 a barrel (USD89.31)

(changes since previous London equities close)

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ECONOMICS

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Thursday's key economic events still to come:

14:15 CEST eurozone interest rate decision

14:45 CEST Germany current account

11:00 IST Ireland CPI

17:30 BST UK Bank of England MPC member Megan Greene speaks

08:30 EDT US PPI

08:30 EDT US initial jobless claims

08:45 EDT US New York Fed President John Williams speaks

10:30 EDT US EIA natural gas stocks

13:30 EDT US Atlanta Fed President Raphael Bostic speaks

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UK surveyors are predicting that house sales will bounce upwards in the months ahead. There was a steady improvement in sentiment in March, with home buyer demand and the supply of available properties increasing, the Royal Institution of Chartered Surveyors said. But it cautioned that, against a backdrop of elevated mortgage rates, the scope for an acceleration in housing market activity "will still be relatively limited". A net balance of 8% of property professionals reported seeing inquiries from new buyers rising rather than falling in March. This was the most positive result since February 2022, Rics said. The flow of fresh property listings increased for the fourth month in a row, with a net balance of 13% of professionals noting a pick-up in new instructions to sell in March.

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BROKER RATING CHANGES

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JPMorgan raises Marks & Spencer to 'overweight' (neutral) - price target 330 (260) pence

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Barclays cuts Jupiter Fund to 'underweight' (equal weight) - price target 85 (88) pence

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Barclays cuts Liontrust Asset to 'equal weight' (over weight) - price target 760 (1,000) pence

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COMPANIES - FTSE 100

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AstraZeneca said it intends to increase its dividend for 2024 by between 20 US cents and USD3.10 per share. It said that this underlines its "confidence in its performance and cash generation." This marks a 7% annual increase. Chair Michel Demare says: "This uplift is in line with our progressive dividend policy, which remains unchanged, and reflects the continuing strength of AstraZeneca's investment proposition for shareholders."

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COMPANIES - FTSE 250

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Darktrace provided an update on the three months ended March 31 and updated markets on its full year guidance. At constant currency rates, annualised recurring revenue at March 31 was USD731.1 million, representing growth of 24% on-year. Revenue in its third quarter jumped 24% to USD176.1 million. Darktrace added that it expects the adjusted Ebitda margin for the third quarter to be above its previously communicated financial 2024 guidance range of at least 21%. Looking ahead, Darktrace narrowed its guidance. It expects annual constant currency ARR growth between 22.25% and 23.0%, narrowed from 21.5% to 23.0% previously. Darktrace also raised its expectations for year-over-year revenue growth and adjusted Ebitda margin. It now expects revenue growth of at least 25.5%, up from its previous 23.5% and 25.0% range. Adjusted Ebitda is expected to be at least 23%, up from 21%. Chief Financial Officer Cathy Graham says: "Following the roll-out of significant Go-to-Market changes in our first quarter, we were very pleased to see the resulting benefits that drove strong second quarter results, continue to accelerate third quarter financial performance."

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Domino's Pizza completed its acquisition of Shorecal for EUR72 million. In March, the Milton Keynes, England-based pizza delivery firm said it will acquire the remaining 85% shareholding it does not already own in Shorecal. It bought the stake from Charles Caldwell, Adrian & Anne Caldwell, and SC Holdings I Ltd, an investment vehicle controlled by Radcliff Management in partnership with the Bronfman Family Office.

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Wincanton on Wednesday said shareholders voted in favour of the proposed GBP750 million acquisition by by GXO Logistics. The Chippenham, UK-based supply chain logistics specialist held court and general meetings on Wednesday, where shareholders voted with near unanimous approval. Completion of the acquisition remains subject to the satisfaction or waiver of certain other conditions, Wincanton said. On Friday last week, Wincanton said that the period for an increased takeover offer from Ceva Logistics UK Rose had passed, leaving the company open for an acquisition by GXO Logistics. Wincanton had been in the midst of a bidding war between Ceva and GXO, for an all-share takeover of the company. Ceva is a subsidiary of Marseilles, France-based CMA CGM, while GXO is based in Greenwich, Connecticut. Both are supply chain logistics companies.

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OTHER COMPANIES

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Heathrow hailed its busiest Easter weekend ever, with Good Friday being the busiest ever direct departure day with 118,000 people beginning their journey at Heathrow. It noted that nearly seven million people travelled through Heathrow in March, making it the second month in a row the airport served a record number of passengers this year. Chief Executive Thomas Woldbye said: "We're on a journey to be an extraordinary airport fit for the future and it's great to see the progress we're making this year with smooth journeys for a record number of passengers choosing Heathrow. But to keep up the momentum the government needs to exempt airside transit passengers from the ETA scheme to avoid encouraging passengers to spend and do business elsewhere. We need to level the playing field, so the UK aviation industry continues to be world-class."

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Alpha Financial Markets Consulting said that the global consulting market has experienced a more competitive environment during financial 2024, with a longer sales cycle remaining evident and supply & demand dynamics continuing to rebalance. However, it noted that trading has improved through the fourth quarter, following a slower than planned January. The company said it continues to expect to deliver net fee income growth of around 3% against the prior year and adjusted Ebitda of GBP42 million to GBP43 million, at a slightly improved margin on the first half. CEO Luc Baque said: "As noted last in February, challenging market conditions remain and the market environment continues to rebalance supply & demand. However, it is encouraging to see some improvement in market conditions and increased sales wins in recent months and going into FY 25."

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Revolution Bars shares will be restored on AIM on Thursday, following the lifting of a suspension on its shares. On Wednesday, the firm published its interim results for the 26 weeks to December 30. It reported a pretax profit of GBP3.1 million, swinging from a pretax loss of GBP91,000 the year prior. Sales climbed to GBP82.3 million from GBP76.0 million. "Despite a strong festive trading period, the macroeconomic trading environment continued to provide a challenging trading environment," Revolution Bars said. The Manchester-based bar group, which operates the brands Revolution and Revolucion de Cuba also said it plans to raise GBP10.5 million via a firm placing and subscription at 1 pence per share and GBP2.0 million via a placing & open offer at the same price.

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By Sophie Rose, Alliance News senior reporter

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