(Alliance News) - Stocks in London are set to open unchanged on Wednesday ahead the US Federal Reserve's interest rate decision later in the day and the Bank of England's decision on Thursday.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1800 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1830 GMT.
While the chances of the Fed going for the full percentage point hike have ebbed in recent days, there are still lingering fears that the central bank could spring a hawkish surprise.
The market largely expects another 75 basis point rate hike.
Meanwhile, the BoE is expected to hike by 50 basis points.
In Europe, the European Central Bank is determined to stop soaring inflation becoming the norm, its president said Tuesday, as the coronavirus pandemic and the Russian invasion of Ukraine put lasting pressure on prices.
In corporate news, industrial software firm Aveva has agreed to a takeover offer from majority owner Schneider Electric.
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 flat at 7,192.00
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Hang Seng: down 1.4% at 18,510.32
Nikkei 225: closed down 1.4% at 27,313.13
S&P/ASX 200: closed down 1.6% at 6,700.20
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DJIA: closed down 313.45 points, or 1.0%, at 30,706.23
S&P 500: down 43.96 points, or 1.1%, at 3,855.93
Nasdaq Composite: closed down 109.97 points, or 1.0%, at 11,425.05
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EUR: down at USD0.9909 (USD0.9989)
GBP: down at USD1.1336 (USD1.1404)
USD: down at JPY143.56 (JPY143.75)
Gold: up at USD1,672.31 per ounce (USD1,664.71)
Oil (Brent): up at USD92.11 a barrel (USD90.82)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:30 BST UK economy statistical release forecasts
07:00 EDT US MBA weekly mortgage applications survey
10:00 EDT US existing home sales
10:00 EDT US SEC quarterly meeting
14:00 EDT US Federal Reserve economic projections
14:00 EDT US Federal Reserve interest rate decision
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UK Prime Minister Liz Truss said she is willing to be unpopular to bring in measures she believes will grow the economy, as she admitted her tax cuts will disproportionately benefit the rich. Truss confirmed she would be reversing the national insurance hike and axing the planned increase to corporation tax, ahead of Chancellor Kwasi Kwarteng's mini-budget on Friday. The Times reported that Kwarteng is also planning to announce a cut in stamp duty in a further attempt to boost growth – although Downing Street refused to comment.
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Ukrainian President Volodymyr Zelensky reacted calmly to the announcement of plans by four occupied regions in eastern Ukraine to hold referendums on joining Russia. "Our position does not change with noise or any announcements," Zelensky said in his Tuesday evening video address. "We are defending Ukraine, we are liberating our country, and above all we are not showing any weakness," he added.
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"The world is not waiting for China," the EU Chamber of Commerce warned in a new paper, citing how Beijing's draconian coronavirus policies and questions about human rights are scaring off foreign investors. The fact that "ideology trumps economy" is making China lose its appeal as a place to do business, warned the chamber, focusing in particular on China's zero-Covid policy, which has shut down various large swathes of the country for weeks at a time in the last year. "China no longer is as attractive as it used to be," said Jorg Wuttke, the chamber's president. "China looks difficult...no new European companies are coming...It is really a major concern that the world moves on and the world is not waiting for China."
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BROKER RATING CHANGES
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Citigroup cuts Flutter Entertainment to 'neutral' from 'buy'
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HSBC starts Rightmove with 'reduce'
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JPMorgan cuts Vistry to 'underweight' from 'neutral'
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COMPANIES - FTSE 100
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Software developer Aveva announced a takeover offer from French industrial group Schneider Electric for the remaining stake in the company it does not already own. Schneider Electric owns a 59% stake and has agreed to acquire the outstanding shares in Aveva for 3,100 pence per share in cash, implying an enterprise value of GBP10.15 billion for the entire company. The takeover is expected to complete in the first quarter of 2023.
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Pharmaceutical firm AstraZeneca said its Tezpire severe asthma treatment has been approved in the EU as an add-on treatment in patients aged 12 and older who are inadequately controlled with high dose inhaled corticosteroids plus another medicinal product. The approval in the EU was based on results from the Pathfinder clinical trial programme, in which Tezpire showed superiority across "every primary and key secondary endpoint" in patients with severe asthma, compared to a placebo, when added to standard therapy.
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Sportswear retailer JD Sports Fashion agreed terms for former executive chair and chief executive Peter Cowgill to depart from the business. The firm said it will honour his contractual notice period of twelve months. The board also reached two arrangements with Cowgill which it said were "in the best interests of the business". The first is a set of restrictive covenants for a two-year period, replacing the provisions in Cowgill's 18 year old contract. The second is a consultancy agreement for an expected period of three years for which Cowgill will be paid GBP2 million, phased over the life of the agreement.
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Student accommodation owner Unite Group disposed of a portfolio of six properties in Aberdeen, Scotland for GBP33 million. The disposal was priced in line with prevailing book value, the company said, reflecting a passing net operating income yield of 6.0% for the 2022-23 academic year. The company has now completed the sale of a total GBP339 million of properties in 2022, with Unite's share of this figure at GBP256 million.
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COMPANIES - FTSE 250
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UK supermarket investment trust Supermarket Income REIT reported a pretax profit of GBP110.3 million in the year ended June 30, up from GBP82.0 million the previous year. Net rental income in the year jumped to GBP72.1 million form GBP47.9 million. The trust declared a final dividend of 5.94 pence, up from 5.86p the prior year. Chair Nick Hewson said he was pleased with the results and said he expects the firm's assets to continue to deliver "stable" and "long-term" income to its shareholders.
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Games Workshop said trading in the three months to August 28 was in line with the board's expectations, with core revenue at GBP106 million, up from GBP98 million the previous year, and licensing revenue at GBP3 million, down from GBP5 million a year prior. Pretax profit is expected at GBP39 million, down from GBP45 million the previous year. Moving forward, the board game company said it would focus on sales growth and cost management.
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OTHER COMPANIES
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Pendragon reported an "encouraging" start to the year as it upped interim revenue and profit. Revenue in the six months to June 30 totalled GBP1.85 billion, up 1.6% from GBP1.82 billion the previous year. The company posted a pretax profit of GBP32.9 million, up 6.8% from GBP30.8 million. It added that trading through July and August has been in line with expectations and, despite macro-economic challenges, the firm said it expects to deliver underlying pretax profit in line with company expectations for the year as a whole.
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Creative services provider Keywords Studios reported increased profit and revenue in the six months ended June 30. Pretax profit rose to EUR39.1 million from EUR21.9 million the previous year, while revenue grew to EUR321.1 million from EUR238.7 million. Keywords says this was due to "healthy" demand across its diversified service offering, particularly external service provision. Keywords added that this healthy demand has continued into an "encouraging" second half. It said it is confident of delivering a performance in line with recently upgraded market expectations for the second half.
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By Heather Rydings; heatherrydings@alliancenews.com
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