(Alliance News) - London's FTSE 100 is called to open lower on Wednesday as US earnings overnight failed to improve sentiment, with both Tesla and Alphabet falling in after hours trade.
Electric carmaker Tesla's profit fell short of expectations, and while Alphabet's stacked up favourably to consensus, its YouTube arm missed on advertising revenue.
"There are already lingering concerns about the Magnificent Seven and whether the best days are over for their share prices, at least in this point in the cycle.
"The past few weeks have shown signs we might be in the early days of a market rotation away from the mega cap tech names towards more value-orientated stocks," AJ Bell analyst Dan Coatsworth commented.
In early UK corporate news, a Reckitt strategy update revealed it is looking to sell a portfolio of home care brands. It is also mulling its options for the Mead Johnson Nutrition business. Informa agreed a GBP1.2 billion deal to buy FTSE 250-listed Ascential.
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 0.5% at 8,126.87
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Hang Seng: down 1.2% at 17,266.42
Nikkei 225: down 1.1% at 39,154.85
S&P/ASX 200: down 0.1% at 7,963.70
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DJIA: closed down 57.35 points, 0.1%, at 40,358.09
S&P 500: closed down 0.2%, at 5,555.74
Nasdaq Composite: closed down 0.1% at 17,997.35
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EUR: lower at USD1.0843 (USD1.0855)
GBP: lower at USD1.2884 (USD1.2915)
USD: lower at JPY154.64 (JPY155.98)
GOLD: up at USD2,415.11 per ounce (USD2,406.10)
(Brent): up at USD81.37 a barrel (USD80.95)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:00 BST eurozone flash composite PMI
08:30 BST Germany flash composite PMI
09:30 BST UK flash composite PMI
14:45 BST US flash composite PMI
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US Vice President Kamala Harris is narrowly beating rival Donald Trump in a national presidential poll released Tuesday, one of the first conducted since US President Joe Biden ended his re-election campaign. Harris holds a two-point lead over Trump, 44% to 42%, according to the Reuters/Ipsos poll. It was conducted in the two days after Biden announced Sunday he was dropping out of the race and endorsing his vice president. In the previous week's poll, Harris, 59, and Trump, now the elder in the presidential race at 78, were tied at 44%. Harris, the overwhelming frontrunner for the Democratic nomination who is raking in endorsements and donations as well as pledged delegates, narrowly trailed Republican flag-bearer Trump in another survey also released Tuesday.
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BROKER RATING CHANGES
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HSBC raises Ocado price target to 305 (285) pence - 'reduce'
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Deutsche Bank starts Smith & Nephew with 'buy' - price target 1,350 pence
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COMPANIES - FTSE 100
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Reckitt Benckiser posted weaker half-year earnings, and said it will look to divest its portfolio of "leading home care brands", including Air Wick and Calgon. The consumer goods and hygiene products maker also said it deems Mead Johnson Nutrition, the business behind Enfamil infant nutrition, to be non-core. Reckitt said it will consider "all strategic options" for that division. "The core Reckitt portfolio will be a uniquely attractive consumer health and hygiene business, with premium, high-growth and high-margin Powerbrands, including Mucinex, Strepsils, Gaviscon, Nurofen, Lysol, Dettol, Harpic, Finish, Vanish, Durex and Veet. Over the last five years this portfolio has delivered strong growth and high margins," it added. Reckitt's net revenue in the first-half of 2024 declined 3.7% to GBP7.17 billion from GBP7.45 billion. Pretax profit fell 7.3% to GBP1.52 billion from GBP1.64 billion. It raised its interim dividend by 5.0% to 80.4 pence from 76.6p. It also announced its next GBP1 billion share buyback programme will "commence imminently".
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Informa reported an increase in half-year revenue, and the business information publisher and events organiser struck a deal to acquire Cannes Lions operator Ascential. It will pay 568 pence in cash per Ascential share. The deal values Ascential's equity at GBP1.2 billion. "Informa is in the business of creating, nurturing and growing world class B2B brands. Lions and Money20/20 are outstanding examples of such brands. Combined, we can expand them into more sectors, accelerate growth and take advantage of new opportunities," Informa Chief Executive Stephen Carter said. Ascential CEO Philip Thomas said the deal will "deliver substantial value for our shareholders". Informa also said revenue in the first half of 2024 totalled GBP1.70 billion, a rise of 12% year-on-year from GBP1.52 billion. Pretax profit declined by a quarter, however, to GBP237.4 million from GBP314.6 million. Informa upgraded revenue guidance, and now expects revenue for 2024 to be above its previously stated guidance range of GBP3.45 billion to GBP3.50 billion. Revenue in 2023 totalled GBP3.19 billion. Informa upped its interim dividend by 10% to 6.4 pence per share from 5.8p.
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easyJet said it is set for a "record-breaking summer" as third-quarter earnings improved. Revenue for the quarter ended June 30 rose 11% to GBP2.64 billion from GBP2.36 billion a year earlier. Headline pretax profit shot up 16% to GBP236 million from GBP203 million. Passenger numbers rose 8% during the period. "Our strong performance in the quarter has been driven by more customers choosing easyJet for our unrivalled network of destinations and value for money. This result was achieved despite Easter falling into March this year, demonstrating the continued importance of travel and this means we remain on track to deliver another record-breaking summer, taking us a step closer to our medium term targets," CEO Johan Lundgren said.
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COMPANIES - FTSE 250
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Aston Martin reported a widened half-year loss and a revenue decline, but said it is set for a "strong second half performance". It also confirmed Adrian Hallmark will take over as chief executive officer from September 1, with Amedeo Felisa stepping down on the same date. The carmaker's revenue in the first-half of 2024 declined 11% to GBP603.0 million from GBP677.4 million a year prior. Its pretax loss stretched to GBP216.7 million from GBP142.2 million. Executive Chair Lawrence Stroll said: "In line with prior guidance, our execution in the first half of the year focused on the successful delivery of our new Vantage and upgraded DBX707 and we remain on track to deliver a strong second half performance. This will be underpinned by a significant ramp up in wholesale volumes including both the new V12 flagship Vanquish and ultra-exclusive Valiant Special, which we recently unveiled at Goodwood with Fernando Alonso." The firm expects its third-quarter volume performance to "materially improve sequentially" compared with the second. The final quarter is to be the "most material" for volumes and its financial performance.
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Convenience food maker Greencore raised its annual profit guidance. The firm said like-for-like revenue in the third quarter ended June 28 rose 1.4%. It noted manufactured volumes were "more subdued", however, as June 2023 presented a "strong" comparator. Overall revenue fell 6.1% on-year to GBP465.2 million. "Q3 represents another excellent performance by the business against a tough comparative period. Our continued progress has been delivered through ongoing impactful operational and commercial initiatives, which we are continuing to implement at pace, supporting the improved profit conversion in the quarter," CEO Dalton Philips said. For the full-year, it now expects adjusted operating profit in the range of GBP88 million to GBP90 million, "ahead of previous guidance and market expectations". It puts market expectations for profit at GBP87.6 million. Adjusted operating profit in financial 2023 rose 5.7% to GBP76.3 million.
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OTHER COMPANIES
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Pub firm Marston's said sales have picked up in recent months, with England's run to football's Euro 2024 final lessening the hit from a wet start to the UK summer. In the 42 weeks to July 20, like-for-like sales rose by 5.2% on-year, Marston's said. For the final 16 weeks of that period, they improved 2.4%. "We have seen considerable uplift from Euro 2024, with like-for-like sales for the week of the semi-final and final matches rising by 8.0%. This has helped to lessen the impact of recent unseasonably wet weather and a particularly strong comparative period last year. We continue to see positive momentum across both food and drink occasions. Food sales have been particularly encouraging, with changes to our menu proving increasingly popular with guests," it added. The firm had agreed to sell its 40% stake in Carlsberg Marston's Brewing to partner and Danish brewer Carlsberg for GBP206 million in cash. Due to a recent change in listing rules, the disposal no longer needs shareholder approval, Marstson's added. "The board can therefore confirm that its intention is to waive the requirement for the transaction to gain shareholder consent when the new UK listing rules come into force. Completion of the transaction is targeted for 31 July 2024," it added.
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Deutsche Bank swung to a quarterly loss on a litigation hit, the Frankfurt-listed bank revealed. The EUR1.3 billion provision meant it reported an attributable net loss of EUR143 million for the second-quarter of 2024, a swing from profit of EUR763 million a year prior. Pretax profit plunged 71% to EUR411 million from EUR1.41 billion. Revenue, however, climbed 2.4% to EUR7.59 billion from EUR7.41 billion a year prior. Deutsche said that were it not for the litigation provision, it would have reported pretax profit of EUR1.7 billion, a rise on-year from EUR1.4 billion. The firm in April explained it would book a EUR1.3 billion hit in connection to a Postbank takeover litigation. The long-running litigation related to the price Deutsche paid for Postbank, which it acquired back in 2010.
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Madrid-listed Santander upgraded its annual guidance, as the lender hailed "strong momentum". It said total revenue in the second-quarter of the year rose 9.6% to EUR15.67 billion from EUR14.30 billion a year prior. Consolidated profit increased 17% on-year to EUR3.48 billion from EUR2.97 billion. Santander said net interest income alone rose 6.9% on-year to EUR11.47 billion, though it declined 4.2% on-quarter. The firm now expects "high-single-digit" growth in revenue this year. It had previously earmarked a mid-single-digit rise. Revenue in 2023 totalled EUR57.65 billion, a rise of 11%.
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By Eric Cunha, Alliance News news editor
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