(Alliance News) - Stocks are called to open higher on Thursday, after the US Federal Reserve chose not to surprise markets with its latest interest rate decision.
The BoE announces its rate decision at 1200 GMT, before the ECB at 1315 GMT. A press conference with President Christine Lagarde follows the ECB decision at 1345 GMT. There is no post-decision conference for the BoE this time.
The US Federal Reserve announced its own interest rate decision on Thursday. It left its benchmark interest rate unchanged, as expected, but signalled rate cuts of as much as 75 basis points in the coming year.
In early corporate news, Bunzl upgraded its profit outlook.
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 1.1% at 7,632.70
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Hang Seng: up 0.6% at 16,329.04
Nikkei 225: closed down 0.7% at 32,686.25
S&P/ASX 200: closed up 1.7% at 7,377.90
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DJIA: closed up 512.30 points, 1.4%, at 37,090.24
S&P 500: closed up 63.39 points, or 1.4%, at 4,707.09
Nasdaq Composite: closed up 200.57 points, or 1.4%, at 14,733.96
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EUR: up at USD1.0901 (USD1.0792)
GBP: up at USD1.2641 (USD1.2525)
USD: up at JPY141.65 (JPY145.11)
Gold: up at USD2,034.77 per ounce (USD1,983.30)
(Brent): up at USD74.64 a barrel (USD73.80)
(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 CET EU interest rate decision
10:00 CET Germany Ifo economic forecast
11:00 GMT Ireland CPI
09:00 CET Spain CPI
09:30 CET Switzerland interest rate decision
08:30 CET Switzerland PPI
12:00 GMT UK interest rate decision
08:30 EST US initial jobless claims
10:30 EST US EIA weekly natural gas storage report
08:30 EST US retail sales
08:30 EST US import and export prices
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The UK has signed an international treaty with Japan and Italy as the allies progress with a joint programme to develop a stealth fighter jet. Defence Secretary Grant Shapps said the deal will see the headquarters for the Global Combat Air Programme, the defence partnership between the three nations, based in the UK. Prime Minister Rishi Sunak announced 12 months ago the collaborative international efforts to build military planes with supersonic capability and cutting-edge technology. Called Tempest in the UK, they aim to take to the skies by 2035 and serve as a successor to the RAF Typhoon.
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The US House of Representatives voted Wednesday to formalize an impeachment inquiry into President Joe Biden, escalating Republicans' battle with Democrats ahead of the 2024 election in a move Biden himself slammed as a "baseless" stunt. Republicans, seizing on Biden's son Hunter's controversial international dealings, have yet to provide evidence of corruption by the president, and the Democratic-led Senate would be unlikely to convict him even if the inquiry did lead to an actual impeachment trial. Regardless, the procedure guarantees Republicans a new, high-profile platform to attack Biden as he campaigns for reelection – and to distract from the federal criminal trials facing his almost certain challenger Donald Trump. The vote of 221 to 212 was along strict party lines, with every Republican voting for it and every Democrat against. Conservatives accuse Biden's troubled son Hunter of influence-peddling – effectively trading on the family name in pay-to-play schemes during his business dealings in Ukraine and China. The allegations against Hunter Biden refer to incidents that took place before his father became president, and the White House has stressed there has been no wrongdoing. Biden himself responded immediately after the vote, accusing Republicans of stalling on key fronts – such as funding government – while obsessing over scoring political points ahead of the election.
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Four Japanese ministers tendered their resignations on Thursday as unpopular Prime Minister Fumio Kishida reels from a major corruption scandal in the ruling party. The cabinet crisis comes after allegations of kickbacks of JPY500 million, around USD3.4 million, in the faction-riven Liberal Democratic Party, which has governed the world's third-largest economy almost uninterrupted for decades. Media reports suggested that prosecutors were about to begin raiding offices and interviewing dozens of lawmakers later this week. Chief Cabinet Secretary Hirokazu Matsuno confirmed that he was stepping down and that Economy and Industry Minister Yasutoshi Nishimura, Internal Affairs Minister Junji Suzuki and Agriculture Minister Ichiro Miyashita had also tendered their resignations. Michiko Ueno, a special advisor to the prime minister, is also leaving office as well as five deputy ministers, Matsuno, who is also chief government spokesman, told reporters.
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Machinery orders in Japan fell in October, data from the country's Cabinet Office showed Thursday, but core figures showed another rise. The total value of machinery orders received by 280 manufacturers in Japan fell by 7.6% in October month-on-month on a seasonally adjusted basis. Notably however, private-sector machinery orders increased on a seasonally adjusted basis by 0.7% month-on-month. These exclude volatile orders for ships and those from electric power companies. Core machinery orders were up for the second straight month, after increasing by 1.4% in September from August. Meanwhile, Japan's industrial production improved in October, the Ministry of Economy, Trade & Industry reported. the production capacity index was at 98.5 points, down 0.1% monthly and down 0.2% annually. The operating ratio index rose 1.5% monthly to 108.2 points but fell year-on-year to 109.2 points. The indices compare to the 2020 average, which would be 100 points. Month-on-month figures are seasonally adjusted, while year-on-year figures are the original index. Further, the seasonally adjusted index of production edged up 1.3% month-on-month to 104.9 points, while the original index improved yearly by 1.1% to 106.6 points.
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BROKER RATING CHANGES
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JPMorgan adds Compass Group to 'analyst focus list'
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JPMorgan raises Compass Group to 'overweight' (neutral) - price target 2,500 (2,200) pence
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JPMorgan cuts Severn Trent to 'underweight' (neutral) - price target 2,450 (2,400) pence
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COMPANIES - FTSE 100
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Bunzl upgraded its profit outlook. It said it expects adjusted operating profit in 2023 to be slightly ahead of prior guidance. The distribution firm said said group revenue is expected to be broadly in line with 2022, at constant exchange rates and excluding the impact of the disposal of its UK healthcare business. Inclusive of the disposal of its UK healthcare business, total revenue in 2023 is expected to be 1 to 2% lower than in 2022, at constant exchange rates, and with currency over the year expected to have minimal impact. Looking ahead, Bunzl said it expects "some" revenue growth in 2024, at constant exchange rates, driven by announced acquisitions and slightly positive organic growth. It said this will be achieved "despite uncertainties relating to the wider economic and geopolitical landscape."
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BP said former chief executive Bernard Looney has been dismissed without notice after concluding he had "knowingly misled the board". The oil major said Looney will receive no further salary, pension allowance or benefits from the date of his dismissal, effective from Wednesday. It also plans to clawback 50% of the cash portion of the annual paid to him in respect of the financial year 2022, and he will forfeit a chunk of his award of shares that vested in August 2023. In total, BP said, the total maximum value of the potential remuneration that has been forfeited or clawed back is GBP32.4 million. BP explained that in 2022 the board sought assurances regarding disclosure of Looney's past personal relationships with company colleagues and his future behaviour.
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COMPANIES - FTSE 250
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IntegraFin, which owns investment platform Transact, reported that, in the financial year ended September 30, revenue edged up to GBP134.9 million from GBP133.6 million a year earlier. IFRS pretax profit rose to GBP62.6 million, up from GBP54.3 million. On the back of the results, IntegraFin announces a final dividend of 7.0p, bringing its total dividend to 10.2p, in line with the prior year. Looking ahead, IntegraFin said financial guidance for financial 2024 is unchanged. "I am pleased with the solid performance shown by the group during the past financial year. We have grown group revenue, client numbers, and adviser numbers, and delivered resilient net inflows over the period. This is attributable to the dedication of our staff in delivering a first-class service to our clients and their advisers," Chief Executive Alexander Scott said.
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Currys hailed a "solid" performance in the half year ended October 28, despite a tough environment. The consumer electronics retailer noted that like-for-like revenue fell 4% whilst adjusted pretax loss was GBP16 million, in line with the prior year. Since the period end, Curry said trading has been "consistent" with company expectations. It left previous guidance unchanged. CEO Alex Baldock said: "Our priorities this year are simple: to get the Nordics back on track, to keep up the UK&I's encouraging momentum, while strengthening our balance sheet and liquidity. We're making good progress on all these in a still challenging economic environment."
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Serco has agreed to acquire European Homecare, a provider of immigration services to public sector customers in Germany. The business is to be acquired from Korte-Stiftung for EUR40 million. In 2023, EHC expects to report revenue of around EUR150 million. Serco said the acquisition will increase the reach and capability of Serco's international immigration services platform which has substantial operations in the UK, Australia and Europe. CEO Mark Irwin said: "There are complex and growing requirements for immigration and asylum seeker support services globally and we have a strong track record of providing high standards of service underpinned by our commitment to ensuring that service users are treated with care and respect. Increasing our presence in Germany will expand the immigration support we already provide to government customers in the UK, Australia and across Europe."
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OTHER COMPANIES
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Adobe reported strong growth in revenue and profit in the financial fourth quarter but it wasn't enough to prevent a sharp fall in its share price. For the three months to December 1, the San Jose, California-based computer software firm reported revenue of USD5.05 billion, up 12% from USD4.53 billion a year prior. Adobe said it had seen strong momentum across its Creative Cloud, Document Cloud and Experience Cloud businesses. Net income increased 25% to USD1.48 billion from USD1.18 billion the year before with diluted net income per share reaching USD3.23 compared to USD2.53 the year prior. Digital Media segment revenue was USD3.72 billion, up 13% while Creative revenue grew 12% to USD3.00 billion. Document Cloud revenue was USD721 million, an increase of 16%, with net new Digital Media annualized recurring revenue at USD569 million. Digital Experience segment revenue was USD1.27 billion, up 10% with Digital Experience subscription revenue of USD1.12 billion, up 12%.
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By Sophie Rose, Alliance News senior reporter
Comments and questions to newsroom@alliancenews.com
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Compass Group (CPG)
Severn Trent (SVT)
Bunzl (BNZL)
IntegraFin Holdings (IHP)
Currys (CURY)
BP (BP.)
Serco (SRP)