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(Alliance News) - London's FTSE 100 is set for a tepid open on Monday, amid a downbeat handover from Asia, with catalysts lacking at the start of the week.
It has, however, been a decent month for the blue-chip benchmark. It has registered a gain of 2.3% so far in November.
"European markets look to be on course for their best month since January after the gains of the last few weeks, on the growing anticipation that central banks are not only done on the rate hike front, but that we could start to rate cuts as soon as the early part of 2024," CMC Markets analyst Michael Hewson commented.
"The shift to bullish from bearish sentiment has also been reflected in the performance of US markets with the S&P500 also on course to post its best monthly performance since July 2022, with US 10-year yields on course for their biggest monthly decline since March."
Hewson added: "While central bankers will do reluctant to countenance the idea of rate cuts in the next 6 to 12 months given it cuts against the 'higher for longer' narrative they are so keen to push, the hawkish messaging jars slightly against a backdrop of a deteriorating economic outlook, particularly in Europe. This messaging is expected to get a further airing this week when we have a host of central bankers set to jawbone the latest narrative about future policy pronouncement."
The week's economic calendar gets off to a slow start on Monday, though as the week progresses, focus will be on inflation readings. There is a US personal consumption expenditures reading and eurozone inflation data on Thursday. There is a US gross domestic product reading on Wednesday.
In early UK corporate news on Monday, insurer Aviva and tech investor Molten Ventures have struck deals for acquisitions, the latter buying a fellow London listing. Molten said it is also to receive backing from asset manager BlackRock. Rightmove said trading has been better than expected, meanwhile.
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 0.2% at 7,472.27
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Hang Seng: down 0.2% at 17,525.73
Nikkei 225: closed down 0.5% at 33,447.67
S&P/ASX 200: closed down 0.8% at 6,987.60
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DJIA: closed up 117.12 points, 0.3%, at 35,390.15
S&P 500: closed up 0.1% at 4,559.34
Nasdaq Composite: closed down 0.1% at 14,250.85
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EUR: higher at USD1.0954 (USD1.0935)
GBP: higher at USD1.2620 (USD1.2605)
USD: lower at JPY148.92 (JPY149.59)
GOLD: higher at USD2,009.64 per ounce (USD1,999.98)
(Brent): lower at USD80.01 a barrel (USD81.47)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
15:00 GMT US new home sales
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UK Foreign Secretary David Cameron has defended his pursuit of close ties with China as prime minister, as he insisted that "engaging" with Beijing today is necessary. The former PM, who was appointed foreign secretary this month in a shock return to frontline politics, said that the Asian power had become "much more aggressive, much more assertive" since he left office in 2016.
As prime minister, Cameron presided over the so-called "golden era" of relations between Britain and China, hosting a state visit for Chinese President Xi Jinping and welcoming investment from Beijing into the UK. The years since have seen relations between the West and China deteriorate dramatically.
In his first foreign policy speech as prime minister, Rishi Sunak declared the golden era over and described the pursuit of closer economic ties over the previous decade as "naive".
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UK Prime Minister Rishi Sunak has said the tax-cutting autumn statement is the "start of a journey", as he appeared to signal hopes for future tax cuts next year. In comments that will delight Tory MPs, the PM used an interview with the Mail on Sunday to claim that his government will "do more when we can" on tax cuts. Chancellor Jeremy Hunt announced a national insurance cut worth GBP10 billion as well as savings for businesses in his autumn statement this week. While welcomed by businesses, economists have warned that his fiscal plans will result in painful and "implausible" savings for already-squeezed departments and public services beyond the next general election.
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A multibillion-pound funding package for key manufacturing sectors will drive growth and boost investment in the UK, ministers have said. Business Secretary Kemi Badenoch said the UK would not be drawn into a "distortive subsidy battle" as the government set out its plan to boost key sectors and nurture a "globally competitive" battery supply chain over the next decade. Carmakers, aerospace companies and clean energy firms are set to benefit from a GBP4.5 billion government fund earmarked for "strategic" manufacturing sectors, under the government's Advanced Manufacturing Plan. The plan has been published alongside a GBP50 million battery strategy, which will see the UK aim to become a world leader in design and production of key technology.
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BROKER RATING CHANGES
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Numis raises Rightmove to 'buy' - price target 675 pence
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Barclays cuts FDM Group price target to 510 (700) pence - 'overweight'
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COMPANIES - FTSE 100
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Insurer Aviva said it has struck a GBP100 million deal to support its growth in the "attractive Canadian market". Aviva is to acquire Optiom from Novacap and other minority shareholders. "Optiom, which operates as a managing general agent, is a leading provider of vehicle replacement insurance in Canada and offers flexible payment options to customers," Aviva said. "The acquisition expands Aviva's capital-light businesses, which make up over half of Aviva's portfolio, and grows Aviva Canada's presence in a profitable segment of the Canadian insurance market. As an existing underwriting capacity provider for Optiom, the transaction provides an opportunity for Aviva Canada to increase its access to an attractive line of business, while securing a stable, growing stream of distribution income." It expects the deal to close in the first-quarter of next year.
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Property portal Rightmove said revenue growth has "continued to track marginally ahead of consensus expectations" since it reported first-half results back in July. This is despite "uncertainty in the housing market". It has seen better-than-forecast average revenue per advertiser. Its ARPA is set to grow between GBP112 and GBP116 in 2023, better than its previous forecast of GBP103 to GBP105. In 2022, its ARPA amounted to GBP1,314. Its overall revenue growth outlook is at the 8% to 10% range. It predicts underlying operating profit growth of 7% to 8%. In 2022, it achieved underlying operating profit of GBP245.4 million, on revenue of GBP332.6 million. "Our performance underscores the strength and resilience of the business, with both estate agent subscriptions and new homes development listings stable. Our share of consumer time in the second half to date remains unchanged - at [around] 85% - demonstrating the strength of our brand, our position with consumers and the established network effect of our business model," the firm said. Further, it set a 2028 revenue target of over GBP600 million, with underlying operating profit targeted at over GBP420 million.
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COMPANIES - FTSE 250
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Shaftesbury Capital said it has made a "strong start to the Christmas trading period". The real estate investment trust, which invests in London's West End, explained "footfall remains high and customer sales are tracking 12% ahead of last year". Ahead of an investor event on Monday, Chief Executive Ian Hawksworth said: "There is excellent leasing momentum across all uses with 220 leasing transactions signed so far in the second half, at rents on average six per cent ahead of June 2023 ERV and a strong leasing pipeline. Despite the uncertain macroeconomic backdrop, our prime West End portfolio continues to demonstrate its resilience and appeal. Backed by our strong balance sheet, we look forward with confidence with a focus on delivering further growth and attractive returns as the leading central London mixed-use REIT." It is the inaugural investor event for the firm, which was formed out of the all-share merger of Capital & Counties and Shaftesbury in March. Setting out medium-term guidance, Shaftesbury Capital predicts annual rental growth in the 5% and 7% range. It added: "With stable cap rates, this would result in average total property returns of 7%-9% and total accounting returns of 8%-10%. These return targets are intended to indicate overall direction in the medium term; outcomes for shorter reporting periods will be highly dependent on activity levels and prevailing market conditions. Components of the portfolio will have different return profiles." It added: "We will maintain significant liquidity through the next refinancing cycle, and seek to manage the absolute level of finance costs to deliver efficient conversion of income to earnings and a progressive dividend profile."
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OTHER COMPANIES
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PPHE Hotel Group said it has achieved planning approval for a new hotel in London. It will develop a new site with the Park Plaza Victoria London property, following the green light from Westminster City Council. "PPHE has a strong track record of creating shareholder value by growing the group through new acquisitions and developments, as well as through repositioning programmes to enhance assets.
At Park Plaza Victoria London, the group will convert 6,500 square metres of predominantly subterranean space to a new 179-guest room hotel with a separate and dedicated entrance. The current 299-key Park Plaza Victoria London hotel will continue to operate standalone in its current form," it added. The land does not need to be acquired, as it will be using an "existing structure".
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Molten Ventures has agreed an all-share deal to acquire Forward Partners Group. Molten said it is also set to receive backing from asset manager BlackRock. Tech-focused investor Molten said that under the terms of the acquisition, Forward Partners shareholders will receive one new Molten share for each nine shares in Forward Partners they hold. In turn, Molten's 279.6 pence closing price on Friday values Forward Partners at GBP41.4 million. Molten shareholders will own just over 91% of the enlarged firm. Forward Partners, which backs early stage technology businesses, has been listed for around two-and-a-half years, having made its AIM debut in July 2021. It listed at a GBP134.6 million market capitalisation, though its value has shrunk since, sitting at GBP45.1 million as of the London equities close on Friday. The acquisition sum is a 7.3% discount to Forward's Friday closing value. Molten said the acquisition fits its "investment objective and policy". In addition, Molten will conduct an equity raise of GBP50 million, at a price of 270p per share, a 3.4% discount to its Friday closing price. As part of the fundraise, Molten will receive backing from funds and accounts managed by BlackRock, the largest shareholder in Forward Partners, to the tune of up to GBP25 million. British Business Bank, owned by the UK government, has agreed to subscribe to GBP10 million worth of Molten shares, meanwhile.
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By Eric Cunha, Alliance News news editor
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