(Alliance News) - The FTSE 100 is set to open higher on Thursday, shrugging off underwhelming trade in Asia, with investor focus turning to US data.
A US gross domestic product reading is released on Thursday, before the key personal consumption expenditures gauge for May on Friday.
Political developments will also be in focus in Europe, as campaigning in elections either side of the English Channel nears its end. The French go to the polls on Sunday, before the UK vote a week from now.
"There is not much doubt about a Tory washout. This being said, there is a problem that the FT summarizes very well in just one sentence: Labour and the Conservatives are on course to register their lowest combined vote share in a century, according to pre-election polls. The latter could leave the country with a lot of political uncertainties moving forward," analyst Ipek Ozkardeskaya commented.
In early UK corporate news distribution firm Bunzl and outsourcer Serco raised their outlooks. Halma announced a Portuguese acquisition, while 3i Group reported decent trading at its Action investee.
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 0.2% at 8,237.43
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Hang Seng: down 2.0% at 17,731.74
Nikkei 225: down 0.8% at 39,341.54
S&P/ASX 200: down 0.3% at 7,759.60
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DJIA: closed up slightly at 39,127.80
S&P 500: closed up 0.2% at 5,477.90
Nasdaq Composite: closed up 0.5% at 17,805.16
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EUR: up at USD1.0694 (USD1.0678)
GBP: up at USD1.2638 (USD1.2624)
USD: down at JPY160.42 (JPY160.66)
GOLD: up at USD2,301.01 per ounce (USD2,297.70)
(Brent): up at USD84.33 a barrel (USD84.21)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
10:00 BST eurozone consumer confidence
13:30 BST US GDP
13:30 BST US initial jobless claims
13:30 BST US durable goods orders
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UK Prime Minister Rishi Sunak and Keir Starmer return to the campaign trail after they clashed over the Westminster betting row in their final televised head-to-head debate ahead of the general election. The Labour leader accused the PM of being "bullied" into taking action in the scandal, while Sunak repeatedly warned voters not to "surrender" to Labour's tax and migration plans in the heated exchange. With the polls showing the Tories heading for an electoral drubbing with just a week to go until July 4, Sunak used the BBC debate to hammer home his claim that Starmer "is not being honest with everyone about his plans to raise their taxes". He reiterated the much-disputed claim that taxes would rise by GBP2,000 under a Labour government, which Starmer dismissed as a "lie". The leaders are likely to face further questions on the deepening gambling saga, as it emerged the Metropolitan Police will lead on investigating a "small number of cases" related to betting to look into potential "misconduct in public office".
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A business leader is urging the next UK government to stop "treading on eggshells" around trade with the EU if it wants to grow the UK economy. Shevaun Haviland, director general of the British Chambers of Commerce, said firms want to know what the government will do on day one after the election. She will tell a BCC conference on Thursday: "After six weeks of electioneering, businesses will be looking at the next government and who will be true to their word. "We must stop walking on eggshells and start saying it how it is. "The current plan isn't working for our members. But better trade terms are possible if the UK government and the EU reach agreement in areas of mutual benefit for business on both sides. A better deal is best for everyone. "Business wants a long-term, sustainable economic growth plan – some call it an industrial strategy, call it what you like, but what we need is a plan for the next 10, 15, 20 years and beyond. "Firms don't want handouts, they want government to create the right environment so they can thrive. "Whoever wins next week, we are ready to lean in and help our new government power the economy. "Our plan is to build an economy that has the green transition at its core, with a workforce fit for the future, living in thriving local places and powered by businesses that are globally facing and digitally enabled."
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BROKER RATING CHANGES
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Redburn cuts Darktrace to 'neutral' (buy) - price target 610 pence
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Berenberg cuts Hochschild Mining to 'hold' (buy) - price target 200 pence
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COMPANIES - FTSE 100
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Distribution firm Bunzl said it is lifting annual guidance, as it has seen an "improved margin performance" in its first half. It now expects "robust revenue growth in 2024", its qualitative guidance comparing to its previous prediction of "slight revenue growth". Revenue in 2023 totalled GBP11.80 billion. The operating margin is now expected to be slightly above 2023's level of 8.0%. It had previously forecast an outcome "slightly below". For the first-half of the year, revenue is expected to decrease between 3% and 4% on-year. "Group operating margin for the first half of 2024 is expected to show a strong improvement compared to the first half of 2023, resulting in robust adjusted operating profit growth at constant exchange rates," Bunzl added.
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Safety equipment maker Halma said it has acquired Faro, Portugal-based Global Fire Equipment for EUR42.5 million. GPE makes fire detection and alarm systems and it serves commercial customers. The deal will bolster Halma's Ampac offering. "ts technologies are complementary to Ampac's and those of our existing portfolio of market-leading fire detection companies. The acquisition extends Ampac's presence in Europe in the complete fire systems market," Halma added.
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Investor 3i Group said the majority of its portfolio is "trading well", with Dutch discount retailer Action impressing. Ahead of 3i's annual general meeting, Chief Executive Simon Borrows said "Action continues to perform strongly". Action's like-for-like sales growth year-to-date is 9%. "The like-for-like performance is a combination of a high volume of transactions, driven specifically by the sale of everyday necessities, and a negative price effect. We believe Action's approach of passing on price reductions to consumers as a result of its growing buying power will continue to underpin its sector-leading like-for-like performance over the medium term," Borrows added. "The remainder of the Private Equity portfolio continues to demonstrate resilience with the majority of the portfolio trading well. The trends driving portfolio performance are consistent with those set out in our full-year results."
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Legal & General Investment Management said Wednesday it is divesting from miner Glencore, as the company has failed to "sufficiently address" green concerns. LGIM said the exit follows "extensive engagement" with the FTSE 100 listing since the investment manager first launched a climate impact pledge eight years ago. "LGIM filed a shareholder resolution at Glencore last year, requesting that the company disclose how its projected thermal coal production aligns with the Paris Agreement and efforts to limit the global temperature increase to 1.5 [degrees celsius]. LGIM remains concerned that Glencore has not disclosed plans for thermal coal production that are aligned with a net zero pathway," LGIM added.
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COMPANIES - FTSE 250
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Electricals retailer Currys reported a decline in annual revenue but growth in profit, and it said the new year has started strongly. Revenue in the year ended April 27 fell 4.5% to GBP8.48 billion from GBP8.87 billion. However, it swung to a pretax profit of GBP28 million, from a loss of GBP462 million. Its bottom line was aided by the non-repeat of a GBP511 million non-cash impairment charge booked last year in its UK & Ireland operating segment. This time around, UK & Ireland revenue declined 1.9% to GBP4.97 billion. Nordics revenue was down 7.9% to GBP3.51 billion. "Our performance continues to strengthen. We've kept up our encouraging momentum in the UK&I, our Nordics business is getting back on track, and we're stronger financially," CEO Alex Baldock said. "Encouraged as we are by our progress, we know we can go further. For one thing, we expect AI-powered technology to be the most exciting new product cycle since the tablet in 2010. With our partnerships, scale and expert colleagues to demystify AI, we're best-placed to benefit." Like last year, it decided against a final dividend. Currys added: "Currently, the group continues to benefit from the relaxed bank covenants and lower pension contributions that were negotiated in spring 2023, although pension contributions will increase to GBP50 million this year, and capital expenditure will rise back towards normalised levels. In this context, the board has taken a prudent decision not to declare a dividend at this year-end. Providing trading is in line with expectations, it is the board's intention to announce a recommencement of shareholder returns during the next twelve months." Currys said trading in the early weeks of the new financial year "has been in line with expectations".
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Outsourcer Serco said it has upped guidance after "good progress" in the first half. It now expects underlying operating profit for 2024 of GBP270 million, its guidance raised from GBP260 million. The new guidance represents roughly an 8.4% increase from the GBP249 million achieved in 2023. "We have delivered a good performance in the first half, with progress in improving productivity and the underlying performance of our portfolio," CEO Mark Irwin said. "As we enter the second six months of the year, while mindful of a potential impact internationally from elections in 2024, we remain optimistic about the quality of our pipeline of potential new work to support our medium-term growth targets."
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Watches of Switzerland said it is "cautiously optimistic" for its new financial year, after a tricky one just ended. For the year ended April 28, revenue was largely flat on-year at GBP1.54 billion. Pretax profit, however, fell 40% to GBP92.1 million from GBP154.8 million. "I am proud of the performance that our team delivered this year in what was undoubtedly a more challenging market. We cemented our position as a leading international luxury watch and jewellery retailer and delivered further market share gains in both the UK and US, driven by our proven, differentiated business model. In particular, our US business went from strength to strength, growing 11% and will soon represent half of group sales," the luxury watches seller said. Looking ahead, it expects revenue of GBP1.67 billion to GBP1.73 billion for the new year. It added: "Following the more challenging trading conditions of FY24, we are cautiously optimistic about trading in FY25. The industry as a whole is being more conservative on production, which we believe is a responsible approach to the long-term stability of the luxury watch market."
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OTHER COMPANIES
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AIB Group welcomed the Irish state trimming its stake in the lender, in what it labelled "another important milestone". The Irish government cut its stake in AIB by roughly 5.0%. It now owns 25.5%, cut from 30.5% previously. "This well-supported transaction is another important milestone in the normalisation of the share register and will yield a further EUR593 million for the Irish taxpayer to whom AIB owes an immense debt of gratitude for its support during the financial crisis. This brings the total proceeds returned to the state to over EUR16 billion," AIB said. The stake was sold through an accelerated book building process to institutional investors.
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By Eric Cunha, Alliance News news editor
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