(Alliance News) - Stocks in London are expected to open lower on Thursday, in line with equity markets in Asia and New York.
Optimism about US and UK interest rate cuts next year appeared to have vanish suddenly ahead of the Christmas holidays, as stocks on Wall Street pulled back sharply.
Investors now are looking ahead to the key US personal consumption expenditures price index print on Friday, which is the Federal Reserve's preferred metric of inflation.
"Investors could still enjoy a soft US inflation read for November, and the latter could keep the bond rally intact into Xmas. If that's the case, the US dollar will remain under pressure," said Swissquote Bank's Ipek Ozkardeskaya.
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 41.3 points, 0.5%, at 7,674.38
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Hang Seng: up 0.2% at 16,642.06
Nikkei 225: closed down 1.6% at 33,140.47
S&P/ASX 200: closed down 0.5% at 7,504.10
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DJIA: closed down 1.3%, at 37,082.00
S&P 500: closed down 1.5% at 4,698.35
Nasdaq Composite: closed down 1.5% at 14,777.94
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EUR: down at USD1.0945 (USD1.0968)
GBP: down at USD1.2637 (USD1.2673)
USD: down at JPY143.09 (JPY143.75)
Gold: up at USD2,037.05 per ounce (USD2,034.50)
Oil (Brent): down at USD79.59 a barrel (USD80.44)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 GMT UK CBI distributive trades survey
08:30 EST US gross domestic product
08:30 EST US unemployment insurance weekly claims report
08:30 EST US Philadelphia Fed business outlook survey
16:30 EST US foreign central bank holdings
16:30 EST US federal discount window borrowings
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UK government borrowing was higher than expected in November amid greater benefits costs and increased interest payments, according to official figures. However, it was lower than the same month last year after the Westminster government spent significantly less on energy support for households, PA reported. The Office for National Statistics said public sector net borrowing stood at GBP14.3 billion in November, reflecting the fourth-highest November total since monthly records began in 1993. Economists had forecast borrowing of GBP13.1 billion for the month. The ONS also revealed that borrowing for October was GBP3.8 billion greater than it had previously estimated. Borrowing for the financial year-to-date stood at GBP116.4 million, GBP24.4 billion more than the same period last year but undershooting forecasts from the UK government's official forecaster, the Office for Budget Responsibility.
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UK Chancellor Jeremy Hunt is to strike a financial services deal with Switzerland aimed at easing UK firms' access to the Swiss market and vice versa. Hunt is in Bern on Thursday to sign the agreement, which is based on the mutual recognition of each other's laws and regulations governing the sector, the Financial Times reported. It will create a framework to facilitate cross-border trade in wholesale financial services, with the Treasury hoping this will boost the City of London. The chancellor will ink the deal with Swiss finance minister Karin Keller-Sutter. The FT said Hunt will attribute the UK's ability to strike its own trade deals with major finance hubs to Brexit.
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BROKER RATING CHANGES
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Berenberg cuts Admiral to 'hold' (buy) - price target 2,961 (2,543) pence
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COMPANIES - FTSE 100
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Swisscom is weighing an offer for Vodafone's Italian business early next year, potentially countering a rival bid from Iliad for the unit, Bloomberg reported, citing people familiar with the matter. The possible deal would combine Vodafone's mobile service with Swisscom's Fastweb SpA fiber broadband carrier in the country, the people said. Swisscom and Vodafone are in talks to discuss the terms and a formal bid could be announced as soon as next month, they said.
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COMPANIES - FTSE 250
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Hipgnosis Songs Fund released its delayed interim results for the six months ended September 30, two days after the music intellectual property investor flagged discrepancies between an independent valuation of its intellectual property assets and its manager's own view. On an IFRS basis, net asset value per share at the end of September fell 7.2% to 110.12 US cents from 118.63 cents at the end of March, or 9.2% to 173.92 cents from 191.53 cents on an operative basis. "This primarily reflects the material reduction in expectations of CRBIII and CRBIV income," the fund explained. Total revenue over the six months fell to USD63.2 million from USD86.2 million a year before, with net revenue from continuing operations falling to USD54.0 million from USD76.8 million - which was driven by a USD11.9 million reversal of CRB III accrual due to lower anticipated future retroactive payments.
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Hipgnosis Songs Fund Chair Robert Naylor said the firm's investment adviser had "regrettably" initially refused to provide an opinion on the fair value of its assets. When eventually provided, its opinion was "heavily caveated". Naylor explained the firm's board sought to have the IA's opinion published on its website to provide transparency, but the IA refused to consent to this. "We note the announcement from Hipgnosis Song Management stating that they will 'continue to work in a constructive manner to support the interests of the company and its shareholders'. On behalf of the board, I therefore urge the investment adviser to provide the board with their opinion as to the fair value of the company assets, without caveats, such that we can provide greater certainty and transparency to our shareholders," Naylor said.
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OTHER COMPANIES
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Smart Metering Systems faces opposition to its proposed private equity takeover from major shareholders. The Glasgow-based utility connection, smart metering and energy management provider agreed to a takeover from funds advised by Kohlberg Kravis Roberts earlier this month. However, PrimeStone Capital and the firm's founders Alan Foy and Steve Timoney - who together control around 17.8% of the firm's share capital - deemed the offer price of 955 pence per share too low. They said on Thursday they intend to vote against the offer.
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Irish building materials firm CRH said it has completed the latest phase of its share buyback, with USD1.0 billion returned to shareholders. Since May 2018, the programme has seen USD7 billion paid out to shareholders. Further, it begins another tranche of its buyback for up to USD300 million, which will end no later than February 28 and will be conducted by Citigroup Global Markets.
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Danish renewable energy firm Orsted said it will build the world's single largest offshore wind farm off Britain's eastern coast. The company said it had made a final investment decision to build the Hornsea 3 project, which will have a 2.9-gigawatt capacity to power more than 3.3 million UK homes. The wind farm is expected to be completed around the end of 2027, creating up to 5,000 jobs during the construction phase. It will add 1,200 permanent positions, "both directly and in the supply chain in the long operational phase," the company said. It will be Orsted's third gigawatt project in the Hornsea area, which are operated out of Grimsby.
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By Elizabeth Winter, Alliance News deputy news editor
Comments and questions to newsroom@alliancenews.com
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