(Alliance News) - London's FTSE is called to open higher on Monday, with focus firmly on the US ahead of some crucial data later this week, and for now, political developments.
Joe Biden bowed out of the re-election campaign, throwing his weight behind Vice President Kamala Harris. Harris also got the support from major Democrat Gavin Newsom, in her bid to beat Donald Trump to the White House.
But Trump is "still favourite" to win the November election, Capital Economics analyst Paul Ashworth commented.
"Harris will have a real chance to sell herself to the American public in the second presidential debate, currently scheduled for September 10th, although the Trump campaign could withdraw, not wanting to go toe-to-toe with the ex-attorney," the analyst added.
Away from the US, China's central bank cut key interest rates, to boost the economy.
Monday's rate cuts, anticipated by some economists, are supposed to encourage commercial banks to grant more credit and at more advantageous rates.
The one-year loan prime rate, which constitutes the benchmark for the most advantageous rates that banks can offer to businesses and households, was cut from 3.45% to 3.35%, having been last lowered in August.
The five-year rate, the benchmark for mortgage loans, was reduced from 3.95% to 3.85%, following a trim in February.
In early UK corporate news, BT received a fine from the UK telecoms watchdog for emergency call failings, Vodafone lowered its stake in Vantage Towers, and Entain named a new boss. Elsewhere, Ocado received an order from US retail Kroger, while MONY reported an interim earnings hike and dividend increase.
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 0.7% at 8,213.12
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Hang Seng: up 0.9% at 17,581.03
Nikkei 225: down 1.2% at 39,599.00
S&P/ASX 200: down 0.5% at 7,931.70
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DJIA: closed down 377.49 points, 0.9%, at 40,287.53
S&P 500: closed down 0.7% at 5,505.00
Nasdaq Composite: closed down 0.8% at 17,726.94.
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EUR: marginally higher at USD1.0887 (USD1.0885)
GBP: marginally higher at USD1.2916 (USD1.2915)
USD: lower at JPY156.48 (JPY157.36)
GOLD: down at USD2,402.63 per ounce (USD2,404.10)
(Brent): down at USD82.99 a barrel (USD84.04)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
11:00 BST Ireland wholesale prices
13:30 BST US Chicago Fed national activity index
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World leaders lined up to pay tribute to Biden after he announced he was dropping out of the US presidential race. Ukrainian leader Volodymyr Zelensky thanked Biden for taking "bold steps" in supporting his country, praising the US president's "tough but strong decision" to end his re-election bid. UK Prime Minister Keir Starmer said he respected Biden's decision. "I know that, as he has done throughout his remarkable career, President Biden will have made his decision based on what he believes is in the best interests of the American people," Starmer said. Former UK Prime Minister Rishi Sunak praised Joe Biden's "love for America and dedication to service". In a post on X, formerly Twitter, the former prime minister said: "Working with Joe Biden, I saw first-hand his love for America and dedication to service. Our partnership has led to significant achievements, including Aukus, steadfast support for Israel and joint efforts in defending our people from Houthi threats."
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California Governor Gavin Newsom endorsed Vice President Harris to lead the Democratic ticket, removing a key possible rival to the nomination after Biden's shock exit from the White House race. "With our democracy at stake and our future on the line, no one is better to prosecute the case against Donald Trump's dark vision and guide our country in a healthier direction than America's Vice President, @KamalaHarris," Newsom wrote on X, formerly Twitter.
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BROKER RATING CHANGES
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JPMorgan raises Travis Perkins to 'overweight' (underweight) - price target 1,100 (610) pence
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Berenberg raises Gym Group to 'buy' (hold) - price target 180 (121) pence
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COMPANIES - FTSE 100
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BT Group was fined by a UK watchdog which deemed it "ill-prepared" to cope with a failure in its emergency call handling service last year. BT, which connects emergency calls in the UK, suffered a network fault in June 2023. It affected its ability to "connect calls to emergency services" from the just after 0600 in morning on June 25 to around 1700 in the early evening. "During the incident, nearly 14,000 call attempts - from 12,392 different callers - were unsuccessful," regulator Ofcom said. Ofcom fined BT GBP17.5 million. Ofcom said: "We found that BT did not have sufficient warning systems in place for when this kind of incident occurs, nor did it have adequate procedures for promptly assessing the severity, impact and likely cause of any such incident or for identifying mitigating actions. We also found that BT's disaster recovery platform had insufficient capacity and functionality to deal with a level of demand that might reasonably be expected." It added: "The incident also caused disruption to text relay calls, which meant people with hearing and speech difficulties were unable to make any calls, including to friends, family, businesses and services. This left deaf and speech-impaired users at increased risk of harm."
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Vodafone Group said it has trimmed its stake in Vantage Towers, achieving a planned 50-50 joint ownership structure. It sold a 10% stake in Oak Holdings for EUR1.3 billion, at EUR32 per share. Oak owns just over 89% of Vantage Towers. "This takes the total net proceeds to Vodafone from the sell down in Vantage Towers to EUR6.6 billion," the firm said. Proceeds will go towards reducing debt. Vodafone added: "This further sale achieves the 50:50 joint ownership structure with the consortium of long-term infrastructure investors led by Global Infrastructure Partners and KKR that was envisaged when the co-control partnership was first announced."
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Entain named Gavin Isaacs as its new chief executive, with effect from September 2. Isaacs brings with him "broad leadership experience", including in the US market. He has held roles with New York-listed DraftKings, as well as Aristocrat Technologies. "In 2022, Gavin was inducted into the American Gaming Association's Hall of Fame, reflecting his extensive industry expertise leading and building a wide range of businesses," Entain added. Stella David, interim CEO of Entain since December, will work alongside Isaacs before taking over as chair when Barry Gibson retires at the end of September. Jette Nygaard-Andersen left the CEO role in December. Nygaard-Andersen's departure came after the company agreed to pay GBP585 million to HMRC to settle an investigation concerning alleged bribery at its Turkish businesses between 2011 and 2017.
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COMPANIES - FTSE 250
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Ocado Group said US retailer Kroger has made an order for a "wide range of new automated technologies" for its customer fulfilment centres. Grocer and warehouse technology firm Ocado said its offering will bring "new levels of efficiency and labour productivity" to Kroger. Ocado CEO Tim Steiner said: "Today marks another exciting milestone in our partnership with Kroger. Our current CFCs are already helping to deliver a game-changing quality of service to their customers across the USA. We are excited for these latest technologies to further enhance that proposition, as well as the efficiency of Kroger's operations in live and future CFCs."
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MoneySuperMarket operator MONY Group reported "best ever" first-half revenue, and expects results in line with market expectations for the full-year. Revenue in the six months to June 30 rose 4.5% to GBP223.5 million from GBP213.8 million a year prior. Pretax profit increased 9.0% on-year to GBP58.1 million from GBP53.3 million. Earnings before interest, tax, depreciation and amortisation amounted to GBP73.0 million, up 7.8% from GBP67.7 million. CEO Peter Duffy said: "We've made good progress in the first half of the year reaching a best ever H1 revenue and Ebitda." MONY upped its interim dividend by 3.1% to 3.3 pence per share from 3.2p. Looking ahead, it said: "The progress of our strategy, as well as the actions we are taking to generate growth, give the board confidence that the group will deliver results in line with market expectations for the year. As previously stated, we expect growth in Insurance to return to more normalised levels as we begin to lap the exceptional growth experienced in 2023 and we do not expect any material revenue from energy switching this year." MONY, citing analyst consensus, said market expectations for full-year adjusted Ebitda stand at GBO140.5 million.
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OTHER COMPANIES
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South32 said it will book a USD554 million impairment as a result of "increased uncertainty" at its Worsley Alumina offering in Western Australia. Back in 2019, the mining group began an environmental approval process for a Worsley mine development project, aiming to "enable access to bauxite to sustain production". "Over the past five years, Worsley Alumina has undertaken extensive environmental assessment and consultation with a range of stakeholders on its proposal for the project," the firm added. Earlier in July, Western Australia's Environmental Protection Authority said the project "may be implemented, subject to conditions". The conditions imposted by the watchdog, however, would "create significant operating challenges for Worsley Alumina and impact its long-term viability", South32 cautioned. "In Worsley Alumina's view, several of the recommended conditions go beyond reasonable measures for managing environmental risks of the proposal based on scientific assessment and decades of operating experience," it explained, noting it plans to file an appeal to the environmental assessment report. South32 continued: "We have undertaken a carrying value assessment of Worsley Alumina having regard to the increased uncertainty created by the WA EPA's recommended conditions and associated challenging operating conditions." The impairment will be booked for the financial year that ended June 30. South32 shares tumbled over 10% in Sydney.
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Ryanair said quarterly profit nearly halved, as revenue declined slightly due to lower ticket prices despite carrying more passengers. The weakness in fares is expected to continue throughout the summer. The Dublin-based budget airline reported pretax profit of EUR400.8 million for the three months that ended June 30, down 46% from EUR740.7 million a year before. Total operating revenue was EUR3.63 billion, down 0.6% from EUR3.65 billion. Ancillary revenue - for example, from onboard food and drink sales - grew by 10% to EUR1.30 billion from EUR1.18 billion, but scheduled revenue from ticket sales declined by 5.9% to EUR2.33 billion from EUR2.47 billion. Looking ahead, Ryanair said passenger traffic in all of financial year 2025 is expected to grow by 8% to between 198 million and 200 million passengers. While costs are expected to rise only "modestly" this year, passengers fares will remain down. "While Q2 demand is strong, pricing remains softer than we expected, and we now expect Q2 fares to be materially lower than last summer (previously expected to be flat to modestly up)," Chief Executive Officer Michael O'Leary said in a statement.
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By Eric Cunha, Alliance News news editor
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