(Alliance News) - Stocks in London are set to open in the red on Friday, as risk sentiment across the globe is damped by hawkish central banks.
On Thursday, the Bank of England surprised with a chunkier-than-expected 50 basis point interest rate hike.
A 25 basis point hike had been largely expected. However, following Wednesday's red-hot consumer price index data, bets on a half-point hike had increased, with the expectation that a more aggressive move may better tame the UK's stubborn annual inflation rate.
Defying the otherwise gloomy mood, government data showed UK retail sales volumes held up better than expected in May, boosted by sunny weather. In addition, GfK's UK consumer confidence indicator ticked up, despite the cost-of-living crisis and double-digit grocery inflation.
In early UK company news, GSK said it has reached a confidential settlement in a lawsuit related to Zantac in California. HSBC downgraded stocks of blue-chip housebuilders, meanwhile.
Revolution Beauty boasted a 60% year-on-year increase in sales at the beginning of its financial year and continued to hit out at boohoo.
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 18.8 points, 0.3%, at 7,483.23
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Hang Seng: down 1.9% at 18,850.50
Nikkei 225: closed down 1.5% at 32,781.54
S&P/ASX 200: closed down 1.3% at 7,099.20
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DJIA: closed down just 4.81 points at 33,946.71
S&P 500: closed up 16.20 points, or 0.4%, at 4,381.89
Nasdaq Composite: closed up 128.41 points, or 1.0%, at 13,630.61
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EUR: down at USD1.0932 (USD1.0953)
GBP: down at USD1.2706 (USD1.2741)
USD: up at JPY143.39 (JPY142.86)
Gold: up at USD1,915.28 per ounce (USD1,913.60)
Oil (Brent): down at USD73.47 a barrel (USD74.22)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
10:00 CEST EU flash PMI
09:15 CEST France flash PMI
09:30 CEST Germany flash PMI
09:00 CEST Spain GDP
09:00 CEST Switzerland balance of payments
09:30 BST UK flash PMI
12:00 BST UK BoE market participants survey results
07:30 EDT US Fed Atlanta President Raphael Bostic speaks
09:45 EDT US flash manufacturing PMI
09:45 EDT US flash services PMI
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Consumer confidence in the UK has climbed in June, despite red-hot inflation, amid growing optimism on personal finances. GfK's consumer confidence index increased three points to negative 24 in June, from a tally of negative 27 in May. It marks the fifth monthly improvement in-a-row. Despite "fierce economic headwinds", three measures were up, while one was down and one was unchanged. The index measuring changes in personal finances during the last 12 months was up five points on-month at minus 15, eight points better off a year prior. The general economic situation index during the last 12 months was unchanged monthly at minus 54. It was 11 points higher than in June 2022, however. The major purchase index, an indicator of confidence in buying big ticket items, was down one point to minus 25 in June, from minus 24 in May, however. It was =16 points higher than the same time last year.
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UK retail sales volumes held up better than expected in May, according to government data, boosted by sunny weather. The Office for National Statistics said retail sales fell 2.1% annually in May, easing from a downwardly revised fall of 3.4% in April. The market had been expecting a 2.6% fall for May, according to FXStreet-cited consensus. April's reading was previously reported as a 3.0% decline. From the previous month, sales ticked up 0.3% in May, slowing from a 0.5% rise in April. However, the reading was better than market consensus, which had forecast a 0.2% decline.
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BROKER RATING CHANGES
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JPMorgan places BHP and Rio Tinto on 'negative catalyst watch'
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HSBC cuts Berkeley Group to 'reduce' - price target 3,000 pence
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HSBC cuts Persimmon to 'hold' - price target 1,190 pence
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COMPANIES - FTSE 100
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GSK said it has reached a confidential settlement with James Goetz, a claimant in Zantac litigation. The case he filed in California state court, which was set to begin in July, will now be dismissed. "The settlement reflects the company's desire to avoid distraction related to protracted litigation in this case. GSK does not admit any liability in this settlement and will continue to vigorously defend itself based on the facts and the science in all other Zantac cases," the pharmaceutical company said.
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Shell and BP were among the fossil fuel companies named in a US lawsuit. A county in the northwestern state of Oregon on Thursday filed suit against major fossil fuel corporations seeking more than USD51 billion over the 2021 "Heat Dome", one of the US' deadliest ever weather disasters. Multnomah County, which encompasses the state's most populous city Portland, said combined historic carbon pollution from use of the companies' products – and their decision to mislead the public about their impacts – was a big factor in exacerbating the heat wave. Multnomah County's suit names major oil firms including ExxonMobil, Shell, Chevron and BP, but also the American Petroleum Institute and Western States Petroleum Association, trade groups, as well as consultancy McKinsey & Company.
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The UK Competition & Markets Authority said it was beginning a merger investigation into Severn Trent's buy of Andigestion. On Monday, the CMA had said it was considering whether the merger would create any lessening of competition in any UK markets, and invited interested parties to comment. Water utility Severn Trent had announced its green power unit's acquisition of Andigestion in February. Andigestion which operates two food waste anaerobic digestion plants in southwest England. It disclosed no financial details. The CMA said it has a deadline of August 18 for its phase 1 decision.
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OTHER COMPANIES
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Revolution Beauty hailed its recent trading, and took aim at boohoo for its recent "hostile" attempts to re-shape the embattled beauty company's board. Revolution Beauty said trading has been "excellent" in the first three months of the financial year ending February 28, with sales up 60% year-on-year, and gross margins improving to 48.2% from 41.7%. In recent days, online fast fashion retailer boohoo, which holds just under a 27% stake in Revolution, has attempted to replace the company's board. "boohoo's stated rationale for the proposed changes to the Revolution Beauty board is that the focus of the group must switch to growth. The company hopes that shareholders are reassured that the current board is similarly minded and that growth is being delivered without one shareholder taking control of the board at the expense of the interests of other shareholders," Revolution Beauty said. Among boohoo's latest proposed additions was Rachel Horsefield, former chief executive of THG Beauty, a company Revolution Beauty "has recently undertaken to cease commercial relationships" with. "The board of Revolution Beauty believes that boohoo's announcement yesterday vindicates its view," Revolution Beauty explained, affirming that members of its own board are better-placed to drive than company forward than those boohoo recommends.
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By Elizabeth Winter, Alliance News senior markets reporter
Comments and questions to newsroom@alliancenews.com
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Glaxosmithkline (GSK)
BP (BP.)
Shell (SHEL)
Severn Trent (SVT)
Boohoo (BOO)
Revolution Beauty (REVB)
BHP Group (BHP)
Rio Tinto (RIO)
Berkeley Group (BKG)
Persimmon (PSN)
Thg (THG)