(Alliance News) - Stocks in London are expected to open slightly lower on Wednesday, as investors digest some cooler-than-expected inflation in the UK and look ahead to the latest US interest rate decision.
The US Federal Reserve is expected to once again leave interest rates unmoved on Wednesday, while also dialling back cut expectations in its latest dot-plot.
The US central bank announces its latest interest rate decision at 1800 GMT on Wednesday. A press conference with Chair Jerome Powell follows shortly after.
"It's expected that the US Federal Reserve will maintain its policy rate, with the updated dot plot possibly reflecting a less dovish stance. Factors such as persistent core inflation, a resilient labor market, and a rebound in housing starts in February suggest a nuanced approach to monetary policy. Market sentiment indicates fewer than three US rate cuts this year, with increasing odds of the first cut occurring in September," said Stephen Innes at SPI Asset Management.
In early economic news, investors have inflation data from the UK to digest. Consumer price inflation in the UK slowed by more than expected in February.
The data comes ahead of the latest interest rate decision from the Bank of England on Thursday.
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 marginally at 7,736.30
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Hang Seng: up 0.4% at 16,590.18
Nikkei 225: financial markets in Japan closed for holiday
S&P/ASX 200: closed down 0.1% at 7,695.80
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DJIA: closed up 320.33 points, 0.8%, at 39,110.76
S&P 500: closed up 29.09 points, 0.6%, at 5,178.5
Nasdaq Composite: closed up 63.34 points, 0.4%, to 16,166.79
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EUR: up at USD1.0868 (USD1.0860)
GBP: down at USD1.2715 (USD1.2719)
USD: up at JPY151.50 (JPY150.76)
Gold: up at USD2,156.88 per ounce (USD2,155.26)
(Brent): down at USD87.14 a barrel (USD87.91)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:45 CET eurozone European Central Bank President Christine Lagarde speaks
11:00 CET eurozone construction output
16:00 CET eurozone consumer confidence
08:00 CET Germany PPI
17:45 CET Germany Deutsche Bundesbank President Joachim Nagel speaks
07:00 EDT US MBA mortgage applications
10:30 EDT US EIA Crude oil stocks
14:00 EDT US interest rate decision
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UK consumer price inflation was cooler than expected in February, according to new data from the Office for National Statistics on Wednesday. The consumer price index rose 3.4% in February from a year before, having increased 4.0% annually in January. Inflation had been expected to decelerate to 3.6%, according to FXStreet-cited market consensus, meaning that the reading was below expectations. Consumer prices rose by 0.6% in February from January. They had been expected to rise at a monthly pace of 0.7%, according to FXStreet. Prices had fallen by 0.6% in January from December. The UK inflation rate hit a recent peak of 11.1% in October 2022. The Bank of England has a 2% inflation target, with the current rate still significantly higher than that. The BoE will announce its next interest rate decision on Thursday. Markets are expecting the central bank to keep rates unchanged.
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A bill banning the next generation from being able to buy cigarettes is being introduced to UK parliament. The Tobacco & Vapes Bill will restrict the sale of tobacco so that anyone turning 15 this year, or younger, will never legally be sold cigarettes. It will effectively raise the age of tobacco sale by one year every year, with the aim of stopping today's youngsters from ever taking up smoking in the first place. Government figures show that smoking costs the UK around GBP17 billion a year, including GBP10 billion every year through lost productivity alone. If the bill passes, ministers say smoking rates among those aged 14-30 could be near zero by 2040. The bill will also tackle youth vaping, by introducing new powers to restrict vape flavours and packaging intentionally marketed at children. Some Tory MPs have expressed concerns about the plans, with former prime minister Liz Truss saying they are "profoundly unconservative". But Labour has given backing to the move, which is subject to a free vote in parliament.
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BROKER RATING CHANGES
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UBS raises Melrose Industries price target to 770 (690) pence - 'buy'
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JPMorgan raises Pearson price target to 1,220 (1,200) pence - 'overweight'
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HSBC cuts Entain price target to 940 (1,090) pence - 'buy'
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COMPANIES - FTSE 100
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Prudential credited strong growth in new business profit to a "relentless focus on execution" in Asia and Africa over 2023. The insurer said revenue in 2023 climbed 9.6% to USD9.37 billion from USD8.55 billion in 2022, while it swung to a pretax profit of USD2.27 billion from a loss of USD519 million. New business profit jumped 43% to USD3.13 billion from USD2.18 billion - ahead of USD2.94 billion company-compiled consensus, while adjusted operating profit rose to USD2.89 billion from USD2.72 billion - a slight beat compared to consensus of USD2.88 billion. "We delivered an excellent financial and operational performance in 2023 and deployed increased levels of capital in new business, enhancing core capabilities and expanding distribution. Sales growth has continued in the first two months of 2024...We are increasingly confident in achieving our 2027 financial and strategic objectives and in accelerating value creation for our shareholders," said CEO Anil Wadhwani. Prudential announced a second dividend of 14.21 US cents, bringing its annual total payout to 20.47 cents, an increase from 18.78 cents in 2022. Shares in Prudential were up 1.6% in Hong Kong after the lunch break.
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COMPANIES - FTSE 250
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Computacenter reported that revenue in 2023 rose by 7.0% to GBP6.92 billion from GBP6.47 billion a year earlier. Pretax profit jumped 9.3% to GBP272.1 million from GBP249.0 million. On the back of the results, Computacenter upped its dividend by 3.1% to 70.0p from 67.9p. Looking ahead, the company said it expects to make further progress in 2024 with growth weighted to the second half of the year, reflecting "a significantly more challenging comparison" in the first half of the year than in the second half. CEO Mike Norris says: "We delivered our nineteenth consecutive year of growth in adjusted earnings per share, outperforming our markets in 2023, as our large customers continued to invest heavily in new technology. We managed an uncertain macroeconomic backdrop and inflationary pressures effectively, reduced our inventory significantly, resulting in a record net cash position. As planned, we stepped up our investment in strategic initiatives to underpin our competitiveness and future growth."
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Johnson Matthey said it has agreed to sell its Medical Device Components business to Montagu Private Equity for USD700 million. The MDC business produces components for medical device manufacturers globally with a focus on precious metal alloys and nitinol. It operates in the US, Mexico and Australia. The sale is expected to be completed in the third quarter of this year. CEO Liam Condon said: "Today's announcement represents a significant milestone in our disposals programme announced in May 2022. As a JM business, MDC has delivered technological differentiation and good growth to the critical health sector. We welcome Montagu's plans to continue the investment and growth plans at MDC."
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Vitruvian Partners has sold GBP31.0 million in Trustpilot Group shares. It has sold 15.5 million shares in the Copenhagen-based consumer reviews platform, at a price of 200 pence each. The sale was announced after market close on Tuesday, with Vitruvian initially planning to sell just 12.5 million shares. Vitruvian was one of the original backers when Trustpilot came to the market back in 2021.
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OTHER COMPANIES
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South32 said on Wednesday it has withdrawn its annual production guidance for its manganese business Groote Eylandt Mining Co Pty Ltd, which remained temporarily suspended due to Tropical Cyclone Megan. The Perth-based diversified mining group first reported it had shut down its manganese unit located on an island in Australia's Gulf of Carpentaria, citing the cyclone. The miner said access to key infrastructure has been restored to enable an initial assessment of the impact of the cyclone, as weather conditions have eased on the Eylandt. It noted that initial assessments had identified flooding in the mining pits, as well as "significant" damage to a critical haul road bridge that connects the northern pits of the Western Leases mining area and the processing plant. "Significant structural damage to the wharf and port infrastructure has now also been confirmed," it said. "Further assessment of the full impact of the damage is ongoing and will inform recovery plans, with a view to returning to safe operations as soon possible. Alternative shipping arrangements are also being evaluated," South32 said.
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Hundreds of jobs could be at risk as the company behind Ted Baker filed a motion to appoint administrators to the ailing high street retailer. Authentic Brands Group, which owns the brand, said there had been "damage" done during a partnership with Dutch firm AARC Group, which ran Ted Baker's shops and online business in Europe. No Ordinary Designer Label, the company which trades as Ted Baker, walked away from the AARC deal in January after it claimed its partner had failed to meet its promise to inject cash into the business. It has now filed a motion to appoint administrators. Authentic, which bought Ted Baker in 2022, said that the business had built up "a significant level of arrears". NODL has around 975 employees and runs more than 80 shops and concessions in the UK. In its statement, Authentic did not say whether any shops or jobs would be lost in the likely administration.
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By Sophie Rose, Alliance News senior reporter
Comments and questions to newsroom@alliancenews.com
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South32 (S32)
Prudential (PRU)
Entain (ENT)
Pearson (PSON)
Melrose (MRO)
Trustpilot (TRST)
Johnson Matthey (JMAT)