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London pre-open: Stocks seen flat; consumer confidence falters

Fri, 23rd Feb 2024 07:30

(Sharecast News) - London stocks were set for a broadly flat open on Friday despite strong gains on Wall Street, as investors digested the latest reading on UK consumer confidence and results from Standard Chartered.

A survey out earlier showed that consumer confidence faltered in February as concerns about the economy continued to weigh heavily.

According to the latest GfK consumer confidence barometer - which has been running since January 1974 - the overall index fell two points to -21.

Within that, the measure for the general economic situation over the last 12 months dipped two points to -43, while the gauge for the outlook for the coming year fell three points, to -24.

The major purchase index was also lower, off five points at -25.

However, respondents did appear marginally more confident about how their personal finances would fare over the coming months, with the measure unchanged on January at 0.

While the measure has yet to move into positive territory, GfK said, it is a notable improvement on the -18 recorded in February 2023.

Joe Staton, client strategy director at GfK, said: "The metric is key to understanding the financial mood of the nation, because confident householders are more likely to spend despite the cost of living crisis."

He continued: "It will be interesting to see what the forthcoming budget delivers in terms of taxation and inflation.

"These are important issues to everyone, especially in an election year; the recent performance of the economy will play a crucial role in determining results at the ballot box."

The highest-score ever achieved by the consumer confidence barometer was 21 in January 1978, while the lowest was -49 in September 2022.

The largest monthly drop occurred in March 2020, at the start of the first Covid-19 lockdown, when it plunged 25 points.

In corporate news, Asia-focused bank Standard Chartered unveiled a new $1bn buyback, increased dividend and higher annual profits, but reined in guidance on income for the current year.

The bank reported an 18% rise in pre-tax profit to $5.1bn and lifted its full-year dividend 50% to 27 cents a share, well above estimates of 23.7 cents.

However, it also forecast income growth at the upper end of 5-7% this year, down from the previous estimate of 8-10% given last October. The lender reported a 13% rise in income in 2023 on a constant currency basis.

Elsewhere, Chemring held guidance but said that annual results will now be increasingly weighted to the second half after severe winter conditions interrupted manufacturing operations at the start of the financial year.

The aerospace and defence firm said the current environment of heightened geopolitical uncertainty continues to position it well for growth as it reported an order book of £991m at 30 January, up 51% on the same point a year ago.

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