(Alliance News) - Stocks in London traded higher early on Thursday in the final trading day of a holiday-shortened week, despite some hawkish words from a US central banker.
It is also despite unrevised numbers from the Office for National Statistics confirming the UK entered a technical recession in the fourth quarter of 2024.
"The only thing that investors need is the Federal Reserve rate cut dream to stay alive for the June meeting. And for now, that's the case. Activity on Fed funds futures gives around 64% chance for a June rate cut," said Swissquote Bank analyst Ipek Ozkardeskaya.
"But note that, this probability was around 75% last week and it's coming lower as many investors think that the Fed won't be able to cut the rates with robust growth and bumpy inflation. And indeed, the US latest GDP update is due today and is expected to confirm an above 3% growth for the US economy in the last quarter of last year, down from almost 5% printed a quarter earlier. These levels don’t call for an imminent Fed cut."
In early corporate news, JD Sports said it outperformed the sportswear market in its full-year, with like-for-like sales growing.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 7,955.13
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Hang Seng: up 1.1% at 16,564.84
Nikkei 225: closed down 1.5% at 40,168.07
S&P/ASX 200: closed up 1.0% at 7,896.90
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DJIA: closed up 477.75 points, 1.2%, at 39,760.08
S&P 500: closed up 44.91 points, 0.9%, at 5,248.49
Nasdaq Composite: closed up 83.82 points, 0.5%, to 16,399.52
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EUR: down at USD1.0802 (USD1.0823)
GBP: down at USD1.2615 (USD1.2630)
USD: up at JPY151.38 (JPY151.35)
Gold: up at USD2,193.16 per ounce (USD2,190.33)
(Brent): up at USD85.66 a barrel (USD85.41)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
08:55 GMT Germany unemployment
09:00 GMT eurozone money supply
12:30 GMT US GDP
12:30 GMT US initial jobless claims
14:00 GMT US pending home sales
14:00 GMT US Michigan consumer sentiment index
15:00 GMT US Kansas City Fed manufacturing activity
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The UK slipped into a technical recession in the fourth quarter of 2023, numbers from the Office for National Statistics confirmed on Thursday. UK gross domestic product slumped 0.3% in the three months to December from a quarter earlier, unchanged from initial ONS numbers provided in February. The UK economy had declined 0.1% quarter-on-quarter in the third-quarter of 2023. It means the UK has entered a technical recession at the end of last year, which is generally defined as two successive quarterly falls in gross domestic product. In output terms for the fourth quarter, the ONS said there were falls in all three main sectors: services down 0.1%, production down 1.1% and construction output down 0.9%. Meanwhile, in expenditure terms, there was a fall in the volume of net trade, household consumption and gross capital formation, according to the ONS, partially offset by an increase in government consumption.
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The US Federal Reserve should either scale back or delay its interest rate cuts in response to "disappointing" inflation data, a senior Federal Reserve official said. "In my view, it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data," Fed Governor Christopher Waller told a conference in New York. "Shorter-term inflation measures are now telling me that progress [in reducing inflation] has slowed and may have stalled. But we will need more data to know that," he added. "I see economic output and the labour market showing continued strength, while progress in reducing inflation has slowed," Waller said. "Because of these signs, I see no rush in taking the step of beginning to ease monetary policy," he continued.
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BROKER RATING CHANGES
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Jefferies cuts Diploma to 'hold' (buy) - price target 3,950 (3,750) pence
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Exane BNP cuts Aviva to 'underperform' ('neutral') - target 420 (445) pence
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Exane BNP cuts Legal & General to 'neutral' ('outperform') - target 270 (280) pence
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COMPANIES - FTSE 100
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Retailer JD Sports said it outperformed the sportswear market in the 53 weeks that ended February 3. It said like-for-like sales rose 4.2% on-year and up 8.4% organically on a constant currency basis, while total sales grew 3.6% to around GBP10.5 billion. It expects pretax profit to be in line with its guided range of GBP915 million to GBP935 million, down from GBP991.4 million a year earlier. "We made good strategic progress, opening 215 new JD stores, and focusing our effort on developing JD and enhancing EPS through taking full control of ISRG and MIG," said Chief Executive Officer Regis Schultz. It outlined its initial financial 2025 profit forecast of GBP900 million to GBP980 million, while saying trading in the new financial year-to-date is in line with its expectations after seven weeks. Schultz continued: "Looking ahead, the current trading environment remains challenging due to less product innovation and elevated promotional activity, especially online. We anticipate trading conditions will improve as we move through the year, helped by a busy sporting summer and softer comparatives with last year."
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The UK Competition & Markets Authority decided not to refer the planned acquisition by FTSE 100-listed insurer Aviva of AIG's life-insurance and retirement-services division AIG Life to a phase 2 investigation. The UK competition watchdog said this decision was based on the information currently available and that a further announcement on the decision will be made "as soon as is reasonably practicable". In February, the CMA said it was investigating the deal, saying it could reduce competition in the UK services sector.
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COMPANIES - FTSE 250
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Automated test and assurance solutions provider Spirent said it agreed to a GBP1.16 billion takeover from Keysight Technologies. Spirent said the offer was superior to Viavi's existing GBP1.01 billion bid. The latest offer rates Spirent at 201.5 pence per share, 199.0p in cash and 2.5p in a special dividend. Spirent Chair Bill Thomas commented: "The board of Spirent is pleased to recommend Keysight's cash offer for Spirent, which is an increase of 15% to the Viavi proposal." Chief Executive Officer Eric Updyke added: "Keysight's offer for Spirent will provide further opportunities for our employees and strengthens our customer offering, given Keysight's technology expertise, capabilities and robust global platform with its breadth and depth of industry-leading solutions."
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OTHER COMPANIES
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Cancer and immunological diseases treatments developer Hutchmed said its supplemental new drug application for savolitinib has been accepted for review by the China National Medical Products Administration. If accepted, the new label indication for savolitinib will be expanded to include treatment-naive patients, those that have not received any treatment, in China. Savolitinib is a treatment for adult patients with locally advanced or metastatic non-small cell lung cancer. It had previously been granted conditional approval in China. "More than a third of the world's lung cancer patients are in China," Hutchmed noted.
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Troubled utility Thames Water has said its shareholders will not be injecting the first GBP500 million of funding that was agreed last summer into the group as industry regulations make its business plan "uninvestible". Thames Water – the UK's biggest water supplier with 15 million households across London and the South East – said the funding plan drawn up last July was subject to conditions, including a business plan that is supported by "appropriate regulatory arrangements". It said the regulations being imposed by industry watchdog Ofwat "make the PR24 plan "uninvestible", and as a result the shareholder support letter from last July "has not been satisfied".
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By Greg Rosenvinge, Alliance News senior reporter
Comments and questions to newsroom@alliancenews.com
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JD Sports (JD.)
Aviva (AV.)
Hutchmed (HCM)
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Legal & General (LGEN)
