(Alliance News) - Stock prices in London are set to open lower on Thursday, after the US Federal Reserve raised interest rates as expected and ahead of three more central bank decisions.
The Fed hiked rates by 50 basis points, as widely expected, but also forecast that interest rates will peak at a higher level than previously expected.
The Federal Open Market Committee lifted the target range for the federal funds rate to 4.25% to 4.50% - the highest since 2007 - from the previous range of 3.75% to 4.00%.
"The committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time," the Fed explained.
The Swiss National Bank will kick off Thursday's busy day for central bank decisions at 0830 GMT, before the Bank of England announces its interest rate decision at midday, followed shortly afterward by the European Central Bank.
China's retail sales plunged last month, official data showed, as Covid restrictions and a property market crisis hammered the world's second-largest economy.
The figures highlight the work ahead for the government as it moves away from almost three years of strict containment measures that have whittled growth and sent shudders through supply chains.
November retail sales sank 5.9% year-on-year, marking the second successive contraction, according to data released by the National Bureau of Statistics.
In early company news in London, electronics retailer Currys fell into a half-year loss, due to an impairment. Outsourcer Serco raised its 2022 guidance, and oil field services provider Hunting raised 2023 guidance.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called down 27.63 points, or 0.4%, at 7,468.30
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Hang Seng: down 1.5% at 19,373.22
Nikkei 225: closed down 0.4% at 28,051.70
S&P/ASX 200: closed down 0.6% at 7,204.80
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DJIA: closed down 0.4%, at 33,966.35
S&P 500: closed down 0.6% at 3,995.32
Nasdaq Composite: closed down 0.8% at 11,170.89
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EUR: lower at USD1.0652 (USD1.0660)
GBP: lower at USD1.2387 (USD1.2410)
USD: higher at JPY135.77 (JPY134.82)
Gold: lower at USD1,792.36 per ounce (USD1,810.74)
(Brent): lower at USD82.00 a barrel (USD82.51)
(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 ECB interest rate announcement
11:00 GMT Ireland goods exports and imports
12:00 GMT UK BoE MPC meeting minutes
12:00 GMT UK interest rate decision
08:30 EST US advance monthly sales for retail and food services
08:30 EST US Philadelphia Fed business outlook survey
08:30 EST US unemployment insurance claims report
08:30 EST US weekly export sales
09:15 EST US industrial production
16:00 EST US treasury international capital data
16:30 EST US Foreign Central Bank holdings
16:30 EST US federal discount window borrowings
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Tens of thousands of nurses are going on strike for the first time across England, Wales and Northern Ireland. Picket lines are being set up at dozens of hospitals in a dispute over pay, with the Welsh government saying services will be "significantly impacted". Thousands of NHS appointments and operations have been cancelled because of the strike, with the health service running a bank holiday-style service in many areas. The Royal College of Nursing has said it will still staff chemotherapy, emergency cancer services, dialysis, critical care units, neonatal and paediatric intensive care. Some areas of mental health and learning disability and autism services are also exempt, while trusts have been told they can request staffing for specific clinical needs. When it comes to adult A&E and urgent care, nurses will work Christmas Day-style rotas.
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BROKER RATING CHANGES
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Deutsche Bank raises AstraZeneca price target to 13,000 (12,000) pence - 'buy'
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Goldman Sachs raises Big Yellow to 'buy' ('neutral') - price target 1,250 (1,130) pence
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Barclays raises Victorian Plumbing to 'overweight' ('equal-weight') - price target 100 (75) pence
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COMPANIES - FTSE 100
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Pharmaceutical firm AstraZeneca, alongside US peer Merck & Co, announced that the US Food & Drug Administration will extend the Prescription Drug User Fee Act date by three months to allow further time for a full review of the supplementary new drug application of Lynparza in combination with abiraterone and prednisone or prednisolone. The review is for Lynparza in combination for the treatment of metastatic castration-resistant prostate cancer.
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SSE's SSEN Transmission arm welcomed UK Ofgem's approval of transmission investments needed to meet the UK government's 50 gigawatt offshore wind target by 2030. The electricity provider said the decision by the regulator confirms that all SSEN transmission projects will be taken forward as part of the Accelerated Strategic Transmission Investment framework. As a result, two 2 gigawatt subsea high-voltage direct current links will be taken forward as joint ventures with National Grid Electricity Transmission, amongst other projects. Ofgem also confirmed these will be exempt from proposals to introduce competitive ownership of onshore electricity networks. National Grid said it welcomed the clarity that the Ofgem decision gives to NGET. Ofgem said the ASTI framework streamlines the onshore transmission regulatory approval process in the UK.
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COMPANIES - FTSE 250
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Currys swung sharply to a loss in the six months ended October 29, as revenue declined. The electricals retailer posted a pretax loss of GBP548 million, swinging from a profit of GBP48 million in the previous year. Revenue fell to GBP4.47 billion from GBP4.79 million. More significantly, Currys booked an impairment of goodwill of GBP511 million in the half-year, compared to no such impairment a year before. It said this arose at the time of the Dixons Carphone merger in 2014. Currys also noted lower international profits and margin for the swing to a loss. The company now expects full-year pretax profit to be between GBP100 million and GBP125 million. In the first six weeks of the second half, trading has been in-line with the first half.
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Outsourcer Serco said it expects its 2022 results to be "slightly" ahead of previous guidance and added its 2023 results are due to be in-line with expectations. Revenue for 2022 is expected at GBP4.5 billion, Serco said, slightly above 2021 despite a reduction in Covid-related revenue. Underlying trading profit is expected at GBP235 million, representing a GBP5 million increase on the firm's previous guidance. For 2023, underlying trading profit is expected to be similar to 2022 at GBP235 million. Chief Executive Rupert Soames said: "2022 will turn out much better than we expected at the start of the year as strong growth across the business largely replaced Covid contracts. Revenue is expected to be 8% higher and underlying trading profit around 20% better than we anticipated when we first gave guidance in December 2021." Soames steps down at the end of the year, replaced by Mark Irwin, currently CEO of Serco's UK & Europe business.
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OTHER COMPANIES
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Hunting said that its 2022 trading and financial outturn remains in-line with market expectations, with earnings before interest, tax, depreciation and amortisation predicted at USD50 million. The oil and gas industry services provider added that its sales order book continues to improve, with the order book now approaching USD500 million. For 2023, Hunting raised guidance for Ebitda to between USD85 million and USD90 million, up from USD80 million previously. Chief Executive Jim Johnson said: "2022 has been a year of rebuilding for the industry with 2023 now likely to be a strong year of growth for the group. All of our operating segments are reporting good levels of enquiries, and with our order book now approaching USD500 million, our earnings visibility for the year ahead is robust, despite recessionary fears."
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By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
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Astrazeneca (AZN)
Big Yellow (BYG)
Victorian Plumbing (VIC)
Currys (CURY)
Serco (SRP)
Hunting (HTG)
SSE (SSE)
National Grid (NG.)
