(Alliance News) - Stocks in London are set to open slightly lower on Thursday, as the UK government descended further into chaos, and equities declined in Asia and the US following mixed earnings.
In corporate news, Dechra Pharmaceuticals reported weaker first-quarter sales but said it is on track to meet annual consensus estimates, while Schroders reported a quarterly drop in assets under management.
UK Prime Minister Liz Truss's government is teetering on the brink of collapse after another chaotic day which saw the acrimonious resignation of her home secretary, mayhem in the Commons over a fracking vote, and confusion over whether the chief and deputy chief whip had quit.
Suella Braverman lashed out at Truss's "tumultuous" premiership as she quit and accused the government of "breaking key pledges".
The exodus appeared to continue with speculation that Chief Whip Wendy Morton and her deputy Craig Whittaker walked out after a last-minute U-turn on a threat to strip the whip from Conservative members of Parliament if they backed a Labour challenge over fracking. Labour's motion was defeated by a 96 MP majority.
The farcical scenes in the House of Commons, with allegations of manhandling and intimidation by Tory whips, have been condemned as "inexcusable" and an "absolute disgrace", by Charles Walker, a former vice-chair of the 1922 Committee of backbench MPs.
"Dear, oh dear. Liz Truss is really in a hot seat, as the chaos among the Tories got worse yesterday...It is said that many Conservative Party members want Truss to resign immediately," said Swissquote Bank's Ipek Ozkardeskaya
"Cable continued falling, while the gilt yields eased - more on the long-end of the curve as the Bank of England said it will not be selling that part of the curve. But the Financial Times said that the UK is now paying extra money to borrow due to the 'moron risk', as the British leaders are a 'few sandwiches short of a tea party'."
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 15.2 points, 0.2%, at 6,909.79
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Hang Seng: down 1.6% at 16,253.47
Nikkei 225: closed down 0.9% at 27,006.96
S&P/ASX 200: closed down 1.0% at 6,730.70
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DJIA: closed down 99.99 points, or 0.3%, at 30,423.81
S&P 500: closed down 24.82 points, or 0.7%, at 3,695.16
Nasdaq Composite: closed down 91.89 points, or 0.9%, at 10,680.51
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EUR: flat at USD0.9788 (USD0.9784)
GBP: down at USD1.1219 (USD1.1242)
USD: up at JPY149.95 (JPY149.77)
GOLD: flat at USD1,631.31 per ounce (USD1,631.50)
OIL (Brent): up at USD93.22 a barrel (USD90.83)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
1000 CEST EU balance of payments
0830 EDT US unemployment insurance claims report
0830 EDT US export sales
1000 EDT US leading indicators
1630 EDT US Foreign Central Bank holdings
1630 EDT US federal discount window borrowings
0830 EDT US Philadelphia Fed business outlook survey
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The deputy governor of the Bank of England has said that the government did not fully brief the bank on its mini-budget and sweeping tax-cutting plans before it was unveiled. Jon Cunliffe was asked by Mel Stride, chair of the Treasury Committee, whether the mini-budget, unveiled by former Chancellor Kwasi Kwarteng on September 23, had "blindsided" the bank. Cunliffe said: "Like others, we knew there was a fiscal event and we knew some of the things that would be in it because it was very public and in the Conservative leadership campaign. "But some things were a surprise on the day, to us as to others. We did not have a full briefing of the package the night before."
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The UK government is pressing ahead with legal moves to introduce minimum service levels during strikes by transport workers. The announcement follows months of industrial action by railway workers in bitter disputes over pay, jobs and conditions which has caused travel chaos across the country. Unions criticised the move, with many believing it would be unworkable. The government said the Transport Strikes (Minimum Service Levels) Bill would mean that even during the most disruptive of strikes, a certain level of services will still run. The government said economists have assessed that the first wave of rail strikes in June cost the UK economy nearly GBP100 million.
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German producer price inflation showed no sign of abating during September. According to the Federal Statistics Office, the producer price index rose by 45.8% annually in September, the same pace as in August. This came in higher than FXStreet-cited market consensus of 44.7%. On a monthly basis, producer prices rose 2.3%, cooling considerably compared to the record 7.9% monthly rise seen in August. Consensus had expected a more modest rise of 1.3%, however. The higher prices were mostly a result of energy cost inflation, which in turn drove up the cost of intermediate goods and capital goods, as well as durable and non-durable consumer goods.
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BROKER RATING CHANGES
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Deutsche Bank raises Bellway to 'buy' (hold) - price target 2,167 (3,289) pence
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Peel Hunt cuts Antofagasta to 'hold'
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Deutsche Bank cuts Berkeley to 'hold' (buy) - price target 3,807 (5,535) pence
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COMPANIES - FTSE 100
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Bunzl reported quarterly sales growth and backed annual guidance. The logistics firm said revenue in the third quarter was up 19% year-on-year, and by 8.7% in constant currency. This was aided by acquisitions, which contributed further growth of 3.9% at constant exchange rates. "Despite a slowing macroeconomic environment, the group's guidance remains unchanged at constant exchange rates, with the group expecting very good revenue growth in 2022, driven by good organic revenue growth and the positive contribution of acquisitions announced in the last 12 months," it said. Bunzl continues to expect operating margin to be higher than historic levels, but to fall short of that of 2021.
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Dechra Pharmaceuticals said it was confident of delivering on market expectations for its financial year 2023, and expects the phasing to be weighted to the second half. Consensus estimates for underlying earnings before interest and tax is GBP191 million, it noted. Trading in its first quarter ending September 30 was below the prior year - as expected - due to a challenging comparator with higher demand levels due to the pandemic.
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Investment manager Schroders said its assets under management at September 30 fell to GBP752.4 billion, compared to GBP773.4 billion at the end of June.
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COMPANIES - FTSE 250
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Dunelm reported a dip in first quarter sales. For the 13 weeks to October 1, total sales for the furniture retailer came in at GBP357 million, down 8% from the previous year. This was "as expected, given the very strong comparative period, with Q1 last year benefiting from pent up demand and our rescheduled Summer Sale", it explained. Looking ahead, it noted a "challenging" macroeconomic environment, including recent volatility in exchange rate movements. However, Dunelm said it is "very well hedged" for the remainder of the year. It reiterated the annual guidance from last month.
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OTHER COMPANIES
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GB Group said it expects to report first half revenue of GBP133.8 million, rising 23% annually from GBP109.2 million. "Growth in the half year included contributions from the recently acquired Acuant and Cloudcheck businesses. This more than offsets a tough prior period comparative that included a GBP8.8 million benefit from unusually high and non-repeating transaction volumes driven by the US stimulus project and cryptocurrency trading," the software company said. It expects growth to accelerate into the second half, and backed its annual guidance.
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By Elizabeth Winter; elizabethwinter@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
Bellway (BWY)
Berkeley Group (BKG)
Antofagasta (ANTO)
Dunelm (DNLM)
Bunzl (BNZL)
Schroders (SDR)
Gb Group (GBG)