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(Alliance News) - London's FTSE 100 is called to open higher on Tuesday, taking confidence from a decent showing for US equities overnight, with inflation data and central bank decisions the key plot points as the week progresses.
Inflation readings will be in focus on Tuesday and Wednesday. Eurostat reports consumer price index data for May, with the number expected to confirm the rate of inflation picked up to 2.6% last month, from 2.4% in April.
On Wednesday, the eve of the Bank of England decision, UK inflation data is released. According to consensus cited by Trading Economics, a return to the Bank of England's 2% target is expected for May, easing from a consumer price inflation rate of 2.3% in April.
The BoE is expected to leave rates unmoved on Thursday.
On Tuesday, the Reserve Bank of Australia left its cash rate target unmoved, as it warned inflation "is proving persistent".
The RBA left the cash rate target unchanged at 4.35%, and the interest rate paid on exchange settlement balances unchanged at 4.25%, in a decision widely expected by the market.
Though European stocks look set for a higher open on Tuesday, the US equity market remains the star for the moment. The S&P 500 hit a record high on Monday.
"The slow recovery and political turmoil in Europe, war in Ukraine and the geopolitical tensions with China help driving funds toward fertile American markets thanks to new AI opportunities – and high interest rates. Bloomberg points that some market optimists believe that around USD6 trillion that's sitting in money-market cash could be reallocated to equities to further boost the equity rally. And today, big banks revise their price targets for the S&P 500 higher. Citi and Goldman for example expect the S&P 500 to end the year at 5600, while Evercore thinks that the S&P500 stocks will advance to 6000," Swissquote analyst Ipek Ozkardeskaya commented.
In early UK corporate news equipment hire provider Ashtead reported annual revenue growth but a decline in profit. Whitbread reported a slightly improved first-quarter.
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 0.6% at 8,188.85
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Hang Seng: down 0.2% at 17,896.08
Nikkei 225: up 1.0% at 38,482.11
S&P/ASX 200: up 1.0% at 7,778.10
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DJIA: closed up 188.94 points, 0.5%, at 38,778.10
S&P 500: closed up 0.8% at 5,473.23
Nasdaq Composite: closed up 1.0% at 17,857.02
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EUR: up at USD1.0730 (USD1.0723)
GBP: up at USD1.2693 (USD1.2685)
USD: up at JPY157.94 (JPY157.84)
GOLD: flat at USD2,321.51 per ounce (USD2,321.50)
OIL (Brent): higher at USD84.09 a barrel (USD83.45)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
10:00 BST eurozone CPI
14:30 BST eurozone European Central Bank Vice President Luis de Guindos speaks
13:30 BST US retail sales
14:15 BST US industrial production
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The Conservatives have launched yet more attacks on Labour with a series of demands that the party rule out specific UK tax rises while the opposition is set to continue its bid to woo businesses. The Conservatives called on Labour to rule out scrapping the requirement for local authorities to hold referendums on tax rises above a certain level. At the same time, the party accused Labour of having a "secret plan" to abolish inheritance tax relief for farmers, saying the party had not committed to keeping the exemption in its manifesto. A Labour spokesperson dismissed the Conservative attacks as "hysterical" and "desperate nonsense", while reiterating that the party would not raise taxes on "working people".
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UK Prime Minister Rishi Sunak insisted the Tories can still win the general election after Cabinet minister Grant Shapps said a Conservative victory is unlikely. The prime minister said he understands people's frustrations but gave a more optimistic assessment of his party's chances than the defence secretary, who said that to claim the Tories are on course for a win would be to "try and pretend black is white". As the party continues to languish behind Labour in the polls, he said Starmer lacked "the courage of his convictions" and suggested his rival would find the job in Downing Street "hard to do well".
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The flow of new investment into the UK has been the lowest of any of the world's most advanced economies for three years running, new analysis shows, as leading political parties sharpen their pledges to boost the economy. Business investment by private companies was lower in the UK than any other G7 country in 2022, according to research by the Institute for Public Policy Research. The G7 is a group of seven major economies, also incorporating the US, Canada, France, Germany, Italy and Japan. The analysis, which used the latest datasets provided by the Organisation for Economic Co-operation & Development, showed that the UK was at the bottom of the pack for the third year in a row. It suggests that the country is not attracting as much business investment, as a percentage of gross domestic product, as its international peers. Furthermore, total investment across the whole economy – including from the government, corporations and households – has remained lacklustre, according to the IPPR. Data showed that the UK has had the lowest level of investment in the G7 for 24 of the last 30 years.
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BROKER RATING CHANGES
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JPMorgan places Bunzl on 'positive catalyst watch'
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JPMorgan reinitiates RS Group with 'neutral' - price target 780 pence
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COMPANIES - FTSE 100
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Equipment hire company Ashtead Group reported an annual revenue hike and it lifted its payout, though profit declined on a higher interest expense amid lofty central bank rates. Revenue in the year ended April 30 improved 12% to USD10.86 billion from USD9.67 billion. Pretax profit, however, fell 2.1% to USD2.11 billion from USD2.16 billion. Interest expenses were 48% higher at USD546.3 million, while operating costs rose 14% to USD5.97 billion. Ashtead proposed a final dividend of 89.25 cents per share, up 5.0% from 85.0 cents. Its annual dividend totalled 105.0 cents, also rising 5.0% from 100.0 cents. Looking ahead, it said: "Our end markets in North America remain robust with healthy demand, supported in the US by the increasing number of mega projects and recent legislative acts. We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the opportunities arising from these market conditions and ongoing structural changes." For the new year, it expects rental revenue growth of 5% to 8% at constant exchange rates, slowing from a 10% rise in the year just ended.
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Premier Inn owner Whitbread said its first-quarter sales nudged slightly higher, helped by "improved UK trading and continued progress in Germany". Sales in the 13 weeks to May 30 rose 1% to GBP739 million. Chief Executive Dominic Paul said: "Our UK trading results strengthened during the quarter and we continued to grow accommodation sales ahead of the market. Underpinned by the favourable supply backdrop, total accommodation sales and [revenue per available room] remained significantly ahead of pre-pandemic levels. In Germany, we delivered another strong performance, led by the increasing maturity of our estate and continued room growth. Our cohort of more established hotels is continuing to outperform the M&E market and we remain on course to achieve the important milestone of reaching break-even on a run-rate basis during the second half of 2024." Whitbread said recent trading in the UK has been "more encouraging" and the firm is confident in its full-year outlook.
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Drugmaker AstraZeneca said a phase three probe of its Truqap drug, in tandem with chemotherapy, failed to meet its goals. The combo did not improve overall survival in two groups of sufferers of locally advanced or metastatic triple-negative breast cancer, when compared to a cohort that took chemo in tandem with a placebo. One group was labelled the "overall trial population" and another included patients with tumours that had "specific biomarker alterations". Failing to improve overall survival in either group meant the trial did not meet its dual primary endpoints. Susan Galbraith, Astra's executive vice president for oncology research & development, said: "We are committed to advancing science for patients in some of the most challenging cancers, including this heterogeneous subtype of breast cancer. While we are disappointed in the CAPItello-290 outcome, these results will further our understanding of the role of the PI3K/AKT pathway in breast cancer as we continue our clinical research across the Truqap clinical development programme and across our pipeline."
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Aerospace firm Melrose Industries named Chris Grigg as its next chair, with the former British Land chief executive taking on the role next year. Grigg joins the Melrose board as a non-executive director and chair designate from the start of October. "Following a planned transition period, Justin Dowley will step down from his role as non-executive chairman on 30 March 2025, and it is intended that Chris will succeed Justin Dowley as the company's non-executive chairman," Melrose added. Grigg, who was British Land CEO between January 2009 and December 2020, had a more than 10-year stint as a non-executive director of defence firm BAE Systems until December 2023. Grigg is also the current chair of Evelyn Partners, a London-based wealth manager with about GBP62 billlion of assets under management.
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Frasers Group announced a share buyback of up to GBP80.0 million. The repurchase programme kicks off on Tuesday and runs until the day it reports annual results. No more than 10.0 million shares will be repurchased in the programme.
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COMPANIES - FTSE 250
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STEM-focused staffing company SThree expects a full-year outturn line with market expectations, despite an "ongoing challenging backdrop". The firm, focused on the fields of science, technology, engineering and mathematics, said group net fees in the half-year to May 31 fell 9.5% on-year to GBP188.7 million from GBP208.6 million. At constant currency, net fees declined 7%. CEO Timo Lehne says: "Against the challenges experienced by the sector, we are pleased with our trading performance over the past six months, with strong contract extensions partially offsetting continued soft new business activity. The group's unique business model, centred on scarce STEM skills and flexible talent solutions, continues to be a source of strength, aligned to the strategic priorities of our clients and providing sizeable growth opportunities across all our key markets. We are well placed to take full advantage when the market returns." For the full-year, consensus stands at GBP71.0 million for pretax profit, which would be a decline of around 8.9% from GBP77.9 million.
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OTHER COMPANIES
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Security and surveillance systems firm Synectics said it has landed a USD10 million contract at a major gaming resort in South-East Asia. Synectics will "upgrade and expand the surveillance system" at the resort. Delivery of the contract is anticipated to begin late in the current financial year, which runs to November 30, before concluding in the following period. "We are delighted to have secured this contract which reflects the significant market opportunity that exists in the casino and leisure sector in Asia," CEO Paul Webb says.
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XP Power suitor Advanced Energy Industries will not make make a takeover offer for the power control systems maker. Advanced Energy noted a "lack of any progress" when it sought to engage with the XP Power board. This meant it did not have access to the "due diligence necessary to make a firm offer". Advanced Energy Industries is a maker of precision power conversion, measurement, and control solutions. In May, it said it made three all-cash takeover approaches, each slightly higher than the last. The first offer in October valued XP Power's equity at GBP339 million, a second roughly two weeks later in November valued it at GBP369 million and the most recent, in May, valued it at GBP468 million. Including debt, the latest proposal had a total value of GBP571 million.
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By Eric Cunha, Alliance News news editor
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