(Alliance News) - Stocks in London are expected to drift lower at Tuesday's open, after a weak close on Wall Street.
Trading in New York on Monday had initially been fairly positive until economic data on the US services sector raised concerns about the health of the country's economy.
The ISM services PMI registered 50.3 in May, its fifth consecutive month of growth. But this was down from 51.9 in April.
Investors will be keeping a close eye on US retail sales figures later Tuesday for further clues about how consumer spending is holding up in world's largest economy.
"With US central bank officials now muzzled until after next week’s rate decision markets now must reassess whether we do see a pause next week, or whether we see another 25 basis point hike," commented CMC Markets' Michael Hewson.
In early UK company news, Primark-owner Associated British Foods said its agri-food arm would acquire Aquis-listed National Milk Records for a hefty premium. British American Tobacco's new chief executive updated on the cigarette maker's strategy and outlook, and IAG's British Airways was reported to be the victim of a cyber attack.
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 10.5 points, 0.1%, at 7,589.49
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Hang Seng: up 0.1% at 19,126.35
Nikkei 225: closed up 1.0% at 32,522.97
S&P/ASX 200: closed down 1.2% at 7,129.60
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DJIA: closed down 199.90 points, 0.6%, at 33,562.86
S&P 500: closed down 0.2% at 4,273.79
Nasdaq Composite: closed down 0.1% at 13,229.43
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EUR: up at USD1.0725 (1.0711)
GBP: up at USD1.2441 (USD1.2415)
USD: down at JPY139.51 (JPY139.60)
Gold: flat at USD1,958.31 per ounce (USD1,959.00)
Oil (Brent): down at USD76.43 a barrel (USD77.37)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
10:00 CEST EU ECB consumer expectations survey results
11:00 CEST EU retail trade
09:30 BST UK construction purchasing managers' index
08:55 EDT US Johnson Redbook retail sales index
10:00 EDT US retail trade
10:00 EDT US IBD/TIPP economic optimism index
16:30 EDT US API weekly statistical bulletin
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The future of Britain's former top business lobby group hangs in the balance, ahead of a crunch vote on Tuesday for remaining members of the scandal-hit Confederation of British Industry. The CBI is battling to secure its future following a series of sexual harassment allegations, which first emerged in March. Members will be asked whether its plan for renewal is enough to give them confidence in the CBI, a vote which will determine the future path of the once-influential group.
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German factory orders continued to decline in April, official data showed. According to Destatis, factory orders in April were 9.9% behind the previous year, easing slightly from an 11% decline in March. From the previous month, orders fell 0.4% in April, which was much less steep than an 11% monthly fall in March.
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BROKER RATING CHANGES
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Berenberg starts Renew Holdings with 'buy' - price target 950 pence
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RBC raises Central Asia Metals to 'outperform' (sector perform) - price target 245 pence
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RBC raises Anglo American to 'outperform' (sector perform) - price target 2,700 (2,500) pence
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COMPANIES - FTSE 100
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British American Tobacco's new chief executive, Tadeu Marroco, affirmed there would be no change in the company's strategy. In a trading update, BAT's former finance director admitted the performance in US combustibles over the first half ending June 26 was "disappointing", and improving it will be a strategic focus. BAT's tobacco heating product, glo, saw an "underwhelming" start to the year, but has since seen more encouraging momentum. For the year as a whole, BAT expects global tobacco industry volumes to be down around 3%. For itself, BAT expects 3% to 5% constant currency revenue growth, with a second half weighting. For constant currency adjusted diluted earnings per share, it expects mid-single figure growth, with a 2% or so transaction foreign exchange headwind.
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Associated British Foods said it has reached a deal to acquire National Milk Records, in a deal worth GBP48 million. The agreement values NMR's shares at 215 pence, which is an 87% premium to Monday's closing price. NMR will be acquire by AB Agri, which is AB Food's international agri-food business. NMR provides technology information services to the UK dairy sector and is currently listed on the Aquis Stock Exchange in London. The deal has support from just under 69% of NMR's shareholders, and is expected to become effective in the third quarter.
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Unilever has appointed executive search firm Spencer Stuart to find a replacement for Chair Nils Andersen, Bloomberg reported on Monday, citing "people familiar with the situation". Bloomberg noted that the move continues a shake-up of the top ranks of the London-based consumer goods firm since it added activist investor Nelson Peltz to its board last year. This followed a failed attempt to buy the consumer healthcare arm of GSK, since spun off as Haleon. Late last month, Unilever said Chief Financial Officer Graeme Pitkethly intends to leave the company at the end of May next year. In the meantime, Hein Schumacher will takeover as chief executive from Alan Jope on July 1.
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Sky News reported that a trio of companies have been hit by a cyber attack that has exposed employee personal data, including bank and contact details, to hackers. It said the affected companies are International Consolidated Airlines Group's British Airways, Walgreens Boots Alliance, and the BBC, but it also expects "thousands" more firms to be affected. Hackers exploited a vulnerability in MOVEit Transfer software last week to access a range of information which is now casting a cloud over a growing number of UK firms and their staff, Sky News said.
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COMPANIES - FTSE 250
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Chemring said it saw record first-half order intake, with its order book reaching the highest level in over a decade at GBP750 million. The technology company's pretax profit in the half-year ended April 30 fell to GBP22.0 million from GBP28.9 million a year before. Revenue was lower at GBP212.1 million, compared to GBP220.4 million. The results were in line with the board's expectations, the firm said, reiterating the second-half weighting for Countermeasures & Energetics due to order intake delays. "Chemring is well placed to capitalise on its many opportunities and with 90% of expected H2 revenues covered by the order book, the board's full year expectations are unchanged," said CEO Michael Ord.
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OTHER COMPANIES
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Indie video game and educational app developer Team17 named Steve Bell as its new chief executive officer. He will join as CEO designate from September 4, and formally assume the role from January 1, 2024. Bell joins from marketing agency Iris Worldwide Holdings, which he co-founded in 1999 and currently leads. Team17 incumbent Debbie Bestwick will move to non-executive director on January 1.
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By Elizabeth Winter, Alliance News senior markets reporter
Comments and questions to newsroom@alliancenews.com
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Renew Holdings (RNWH)
Central Asia Metals (CAML)
Anglo American (AAL)
British American Tobacco (BATS)
International Airlines (IAG)
AB Foods (ABF)
Chemring (CHG)
Team17 (TM17)