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(Alliance News) - Stocks in London are set to open higher on Monday as interest rate expectations held steady despite Friday's bumper US nonfarm payrolls report.
"Having spent most of the last few weeks fretting about the prospect of another rate hike and higher rates for longer the thinking now appears to be that a resilient economy and jobs market could mean that companies will be able to deliver better revenues and earnings growth," said Michael Hewson, chief market analyst at CMC Markets.
Data on Friday showed US payrolls surged in September, underscoring the strength seen in US economic activity over the summer and backing the Federal Reserve's argument for interest rates to stay higher for longer.
In early UK corporate news, Metro Bank announced a new deal with investors to shore up its finances and Croda International said its performance in the period from July 1 to September 30 has been weaker than originally expected.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 17.82 points, or 0.2% at 7,512.40
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Hang Seng: up 0.7% at 17,611.81
Nikkei 225: closed down 0.3% at 30,994.67
S&P/ASX 200: closed up 0.2% at 6,970.20
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DJIA: closed up 288.01 points, 0.9%, 33,407.58
S&P 500: closed up 1.2% at 4,308.50
Nasdaq Composite: closed up 1.6% at 13,431.34
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EUR: lower at USD1.0555 (USD1.0576)
GBP: lower at USD1.2215 (USD1.2226)
USD: lower at JPY149.12 (JPY149.18)
Gold: higher at USD1,852.78 per ounce (USD1,831.35)
(Brent): higher at USD87.51 a barrel (USD84.22)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
Canada Thanksgiving: financial markets closed
Japan Health and Sports Day: financial markets closed
UK BoE MPC Member Catherine Mann and Fed Dallas President Lorie Logan speak
US Columbus Day: financial markets open
US Federal Reserve Vice Chair Michael Barr speaks
11:00 IST Ireland industrial production and turnover
10:00 EDT US employment trends index
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China's top diplomat said he hoped Washington and Beijing could manage their differences "more rationally" as he met with visiting senior American lawmakers. Senate Majority Leader Chuck Schumer is the latest high-level American official to go to China as Washington seeks to ease tensions with Beijing, leading a six-person team reportedly seeking a meeting with leader Xi Jinping. Meeting with Schumer at Beijing's Diaoyutai State Guesthouse, Foreign Minister Wang Yi told the senate delegation he hoped their visit would help the two sides "manage existing differences more rationally, helping the relationship between the two countries return to the track of healthy development".
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BROKER RATING CHANGES
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JPMorgan places AB Foods on 'negative catalyst watch'
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JPMorgan places Next on 'negative catalyst watch'
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JPMorgan cuts Aston Martin price target to 379 (425) pence - 'neutral'
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COMPANIES - FTSE 100
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Citigroup announced it has agreed to sell its onshore consumer wealth portfolio in China to HSBC Bank China, an arm of London-based lender HSBC. The New York-based retail, commercial and investment bank said the portfolio sale includes clients, assets under management, and deposits, for a total value of around USD3.6 billion. The terms of the transaction were not disclosed, and the deal is expected to close in the first half of 2024, Citi said. Citi noted the transaction does not include its institutional businesses in the country.
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GSK announced it has reached an exclusive agreement with Chongqing Zhifei Biological Products Ltd to co-promote GSK's shingles vaccine, Shingrix, in China for an initial three-year period. There is also the potential to extend the partnership, should the companies agree. Zhifei will have exclusive rights to import and distribute Shingrix in China from January 1. The pharmaceutical company described Zhifei as the largest vaccine company by revenue in China and said the partnership will significantly extend the availability of Shingrix.
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Croda International said that its customers have continued to reduce their ingredient inventories in consumer care, crop and industrial end markets due to a combination of destocking and a weaker demand environment. As a result, the company's sales volumes have been depressed and its overall performance in the period from July 1 to September 30 has been weaker than originally expected. With no indications of a rebound in the final quarter of its financial year, Croda now expects full-year adjusted pretax profit to be between GBP300 million and GBP320 million.
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COMPANIES - FTSE 250
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Assura said it has delivered another strong financial performance in the half-year ended September 30. The primary care property investor and developer said its portfolio currently consists of 612 properties with an annualised rent roll of GBP146.9 million. In the half-year, Assura said it has continued to focus on areas of "strategic expansion" to unlock value through several portfolio additions, including the completion of the day case hospital in Kettering, England. It noted "growing and consistent demand" for healthcare buildings in a community setting. Separately, Assura announced it refinanced its revolving credit facility to GBP200 million from GBP125 million.
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Sirius Real Estate said it has continued to trade in line with expectations in the half-year ended September 30, despite challenging conditions in Germany and the UK. The branded business and industrial park owner and operator reported like-for-like rent roll growth of 7.7% against the year prior. It added its balance sheet remains "robust" with cash reserves of EUR112 million as at September 30.
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OTHER COMPANIES
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Impax Asset Management said its assets under management as at September totalled GBP37.4 billion. This represented a decrease of 5.8% over the three-month period since July 1, but an increase of 4.8% from September 30, 2022. Chief Executive Ian Simm said investment conditions had continued to be challenging during the final quarter of the firm's financial year. "Notwithstanding the sustained market volatility, Impax has continued to show its resilience with an up-tick in our assets under management over the financial year, inclusive of overall net outflows of GBP92 million," he said.
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Metro Bank announced a new deal with investors to shore up its finances. The deal includes a GBP325 million capital raise and GBP600 million in debt refinancing. Spaldy Investments, Metro Bank's largest shareholder, is contributing GBP102 million and will become the controlling shareholder of Metro Bank upon completion of the transaction – with roughly a 53% shareholding. It comes after the bank's shares tumbled last week on reports it was in talks with investors to raise around GBP250 million in equity funding and GBP350 million in debt. Daniel Frumkin, chief executive officer at Metro Bank, said: "Today's announcement marks a new chapter for Metro Bank, facilitating the delivery of continued profitable growth over the coming years."
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By Heather Rydings, Alliance News senior economics reporter
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