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(Alliance News) - The FTSE 100 looks set to give back a fraction of its weekly gain at the open on Friday, edging slightly lower after being boosted Thursday by a Bank of England decision that was interpreted as dovish.
The Bank of England left the door ajar open for an August interest rate cut after saying June's decision to leave bank rate unchanged was "finely balanced".
At its June meeting, the BoE's Monetary Policy Committee voted 7-2 to keep bank rate at 5.25% for the seventh-successive meeting.
The decision comes after numbers on Wednesday showed that inflation returned to the BoE's target for the first time since July 2021.
According to the Office for National Statistics, the rate of yearly consumer price growth faded to 2.0% in May, from 2.3% in April. The reading was in-line with the FXStreet cited consensus.
"In the UK, a rate cut was not on the menu of the Brits on Thursday, but the accompanying statement was 'finely balanced', more dovish than expected and revived the expectation that the Bank of England could announce a rate cut as early as in August. And because the market was pricing a rate cut not before November before the meeting, yesterday's decision sent cable to 1.2654. There is one more hurdle to an August cut, and it's the BoE's new member Claire Lombardelli who could be more 'hawkish' and may prevent the dovish camp from reaching the 5 voters needed to secure a cut. Right now, we are at 2," Swissquote analyst Ipek Ozkardeskaya commented.
In early economic news, data showed UK retail sales increased at a faster pace than expected.
In UK corporate news, Informa said it has achieved double-digit revenue growth so far in 2024. JLEN Environmental lifted its dividend outlook, despite its net asset value declining in a tricky year for the renewable investment sector.
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 0.1% at 8,267.16
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Hang Seng: down 1.4% at 18,087.52
Nikkei 225: down 0.1% at 38,596.47
S&P/ASX 200: up 0.3% at 7,796.00
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Dow: closed up 299.90 points, 0.8%, at 39,134.76
S&P 500: closed down 0.3% at 5,473.17
Nasdaq Composite: closed down 0.8% at 17,721.59
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EUR: up at USD1.0717 (USD1.0713)
GBP: down at USD1.2664 (USD1.2675)
USD: up at JPY158.98 (JPY158.71)
GOLD: higher at USD2,361.54 per ounce (USD2,357.90)
(Brent): higher at USD85.68 a barrel (USD85.57)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
09:00 BST eurozone flash composite PMI
08:30 BST Germany flash composite PMI
09:30 BST UK flash composite PMI
14:45 BST US flash composite PMI
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UK Prime Minister Rishi Sunak said Tory figures who are found to have broken gambling rules "should face the full force of the law", as he is likely to face further questions on the betting scandal engulfing his faltering election campaign. The prime minister said he was "incredibly angry to learn" of the allegations that a string of people with links to the Conservative Party or Number 10 bet on the timing of the July 4 contest before he announced it. Concerns over political insiders profiting from the election date could overshadow his campaigning on Friday, when he is at the Welsh Conservative manifesto launch in Kinmel Bay. Sunak was asked during a bruising appearance on Thursday night's BBC Question Time leaders' special whether the betting allegations were "the absolute epitome of the lack of ethics" displayed by the Conservative Party in recent years.
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UK retail sales increased at a faster pace than expected last month, numbers on Friday showed. According to the Office for National Statistics, UK retail sales volumes surged 2.9% in May from April, topping the FXStreet cited consensus of a 1.5% rise. Sales had declined 1.8% in April from March. April's outcome was upwardly revised from an initially-reported 2.3% decline. On May's reading, the ONS said: "Sales volumes rose across most sectors, with clothing retailers and furniture stores rebounding following poor weather in April. More broadly, sales volumes rose by 1.0% in the three months to May 2024 when compared with the previous three months. However, they fell by 0.2% when compared with the three months to May 2023." Year-on-year, retail sales rose 1.3% in May, defying expectations of a 0.9% decline, and improving markedly from a 2.3% slide in April.
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The UK government borrowed less money than predicted in May but saw debt lift to levels not witnessed for more than 60 years, according to official figures. The Office for National Statistics said that public sector net borrowing hit GBP15 billion for the month. It comes amid significant scrutiny on the state finances with only two weeks until the general election. Initial data found public sector borrowing – the difference between government spending and income – was GBP800 million higher than the same month a year earlier. It was also the third-highest May since monthly records began in 1993. Nevertheless, this was GBP600 million below forecasts from the Office for Budget Responsibility, the government's official forecaster, and was also less than economists had predicted. The ONS also found that public sector net debt as a proportion to UK gross domestic product rose to 99.8% – the highest level since March 1961. Prime Minister Rishi Sunak promised to reduce debt as one his five pledges at the start of 2023.
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UK consumer confidence has seen its third monthly increase since March bolstered by increasing optimism about the economy, a survey suggests. GfK's long-running consumer confidence index rose by three points in June as it made its slow climb out of negative territory to minus 14. The increase was driven by a seven-point improvement in confidence in the general economic situation during the last 12 months to minus 32, and a six-point rise in expectations for the economy over the coming year to minus 11. The major purchase index, an indicator of confidence in buying big ticket items, was up three points to minus 23, two points higher than this time last year. However the forecast for personal finances over the next 12 months is down three points to positive four, which is five points higher than last June.
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BROKER RATING CHANGES
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Morgan Stanley cuts B&M to 'underweight' - price target 433 pence
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JPMorgan raises Severn Trent to 'neutral' (underweight) - price target 2,700 (2,450) pence
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JPMorgan raises United Utilities to 'overweight' (neutral) - price target 1,250 (1,050) pence
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COMPANIES - FTSE 100
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London-based business information publisher and events organiser Informa hailed double-digit year-to-date revenue growth, and said it is on track to deliver 2024 results at the upper end of guidance. "The Informa group has changed gears and we are now delivering 10%+ growth," Chief Executive Stephen Carter said. Five-month group underlying revenue growth totalled just over 10%, "reflecting strong operational performances across all businesses". It said revenue delivered to date amounts to GBP1.4 billion, and it noted a further GBP1 billion of Subscriptions / Exhibitor revenue is "committed and visible" in 2024. In the B2B Markets offering, it said it is on track for high single digit underlying revenue growth in 2024. In Academic Markets, it believes it is set for over 5% growth. At group level, it expects high single digit underlying revenue growth and group revenue between GBP3.45 billion and GBP3.50 billion.
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COMPANIES - FTSE 250
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JLEN Environmental reported a decline in net asset value in a "challenging year for the listed renewable investment company sector". The environmental infrastructure fund's NAV per share at its March 31 year-end shrunk 7.7% to 113.6 pence from 123.1p 12 months prior. Chair Ed Warner said: "As we celebrate JLEN's 10th anniversary as a listed company, this year's performance is another demonstration of our resilience, despite it being a challenging year for the listed renewable investment company sector, including JLEN. In the current difficult operating environment, we have maintained our disciplined approach to investment activity during the year. Future cash flows remain robust, with comfort provided from near-term fixes, such that the board has set a dividend target of 7.80 pence per share for the current year, an increase of 3%." The firm lifted its total dividend for the year just ended by 6.0% to 7.57p per share from 7.14p.
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OTHER COMPANIES
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Three PensionBee directors, including its chief executive and chair, trimmed their stakes in the company during a bookbuild, bookrunner Stifel Nicolaus Europe said. Chair Mark Wood, CEO Romi Savova and Chief Technology Officer Jonathan Parsons sold a total of 5.6 million shares in the online pension services provider at 153.5 pence each, GBP8.6 million in total. Shares were sold to institutional investors. "The placing was significantly oversubscribed and was strongly supported by both existing and new institutional investors. Following the placing, the company's free float increased to approximately 50% and its institutional shareholder base increased to approximately 35% of the share capital," the statement said. The stock represented 2.5% of PensionBee's issued share capital. The trio now have just over a 40% stake, trimmed from just under 43%. CEO Savova owns just under 34%, tech chief Parsons 5.3% and Chair Wood 1.1%.
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Gulf Keystone Petroleum hailed "robust" crude sales from the Shaikan field to the Kurdistan market recently. Year-to-date sales totalled around 38,700 barrels of oil per day. In May alone, sales averaged 48,200 bopd but have eased to 40,500 so far in June. GKP put this down to the "temporary impact of Eid al-Adha celebrations on truck availability". The oil company operating in the Kurdistan Region of Iraq said realised prices have improved to around USD28 a barrel from USD27, due to "local market demand". CEO Jon Harris said: "Shaikan field crude sales to the Kurdistan market have continued to be robust in recent weeks." As a result of its liquidity position improving, it declared a 6.832 US cents per share interim dividend, worth USD15 million in total. It added: "With improvements in the operating environment, the company's ambition is to reinstate an appropriate distributions policy to provide shareholders with greater clarity on returns."
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By Eric Cunha, Alliance News news editor
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