(Alliance News) - London's FTSE 100 is to follow its late rise into the green on Thursday with another advance at the opening bell on Friday.
In New York, the Dow outperformed, though benchmarks with a greater tech exposure did not.
"We have one more important data to go before next week’s decision: the core PCE index, the Fed's favourite gauge of inflation. That number is expected to show a slight slowdown from 2.6% to 2.5%, although we may see a certain quickening in the monthly figure.
"But all in all, if not catastrophic, the Fed will probably hint that a rate cut is coming in fall, when they meet next week," Swissquote analyst Ipek Ozkardeskaya commented.
The Fed's preferred inflation gauge is the core personal consumption expenditures. That year-on-year reading is expected to show the rate of inflation eased to 2.5% in June, from 2.6% in May.
In early UK corporate news, NatWest reported a consensus-topping second-quarter and it boosted its forecast. IMI and Computacenter announced buybacks, Keywords cautioned on its growth outlook and the owner of Brighton Palace Pier said wet UK weather has kept visitors away.
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 8,203.05
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Hang Seng: up marginally at 17,013.02
Nikkei 225: down 0.5% at 37,667.41
S&P/ASX 200: up 0.8% at 7,921.30
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DJIA: closed up 81.20 points, 0.2%, at 39,935.07
S&P 500: closed down 0.5% at 5,399.22
Nasdaq Composite: closed down 0.9% at 17,181.72
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EUR: lower at USD1.0851 (USD1.0860)
GBP: lower at USD1.2860 (USD1.2882)
USD: lower at JPY153.69 (JPY153.88)
GOLD: higher at USD2,367.21 per ounce (USD2,366.60)
OIL (Brent): higher at USD82.42 a barrel (USD81.75)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
13:30 BST US personal consumption expenditures
15:00 BST US Michigan consumer sentiment index
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UK Chancellor Rachel Reeves is expected to unveil a black hole in the public finances of around GBP20 billion, signalling that tax rises could be on the way. The chancellor will on Monday set out the results of the spending audit she ordered Treasury officials to produce. Her update will reveal "the true scale of the damage the Conservatives have done to the public finances", a Labour source said. They did not deny reports that an early assessment has found a nearly GBP20 billion annual gap between revenues and funding commitments, including in areas such as asylum and public sector pay. The figure could still shift as each department's spending commitments are assessed before her Commons statement. Any tax hikes to plug the shortfall in spending for essential public services are not expected before the autumn budget, the date of which Reeves is also set to announce on Monday. Labour has ruled out lifting income tax, VAT, national insurance and corporation tax, but changes to capital gains or inheritance levies may be on the table. Asked about the black hole at a meeting of G20 finance ministers in Brazil, Reeves said: "I'll give a statement to Parliament on Monday, but I have always been honest about the scale of the challenge we face as an incoming government, and let me be crystal clear: we will fix the mess we have inherited." The Labour source said: "On Monday, the British public are finally going to see the true scale of the damage the Conservatives have done to the public finances."
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BROKER RATING CHANGES
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RBC cuts Lloyds Banking Group to 'sector perform' (outperform) - price target 60 pence
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UBS raises Anglo American to 'buy' (neutral) - price target 2,700 pence
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COMPANIES - FTSE 100
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NatWest raised its yearly outlook and announced a deal to acquire a mortgage portfolio from Metro Bank. The lender reported total income of GBP7.13 billion for the first-half of 2024, down 7.7% on-year from GBP7.73 billion. Net interest income alone dropped 5.6% to GBP5.41 billion. Pretax profit declined 16% to GBP3.03 billion from GBP3.59 billion. In the second-quarter alone, total income fell 5.0% annually to GBP3.66 billion, but beat company-compiled consensus of GBP3.41 billion. Pretax profit, which declined 14% to GBP1.70 billion, beat consensus of GBP1.26 billion. NatWest raised its interim dividend by 9.1% to 6.0 pence per share from 5.5p. Looking ahead, it now expects to achieve a return on tangible equity above 14%, its outlook raised from "around 12%". Income excluding notable items to be around GBP14.0 billion, ahead of its previous forecast in the range of GBP13.0 billion to GBP13.5 billion. NatWest said the deal with Metro Bank will see it snap up a GBP2.5 billion portfolio of prime UK residential mortgages. Chief Executive Officer Paul Thwaite said: "Following today's announcement, we are acquiring GBP2.5 billion of prime residential mortgages from Metro Bank and, as a result, look forward to welcoming around 10,000 customers to NatWest group. This transaction is a further opportunity to accelerate the growth of our retail mortgage book within our existing risk appetite, with attractive returns. It is in line with our strategic priorities and builds on our recent acquisition from Sainsbury's Bank. We are focussed on a smooth transition and have a strong track record of successful integration with Metro Bank, following our previous acquisition of mortgages in 2020."
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IMI announced improved half-year results, backed its outlook and announced a new share buyback. It also revealed its chief financial officer will step down. The engineering company said revenue in the first-half of 2024 rose 1.3% to GBP1.10 billion from GBP1.08 billion. Pretax profit improved 17% to GBP162.5 million from GBP138.5 million. IMI raised its interim dividend by 10% to 10.0p per share from 8.0p. In addition, it announced a GBP100 million share buyback. CEO Roy Twite said: "We continue to make good progress delivering our purpose-led strategy, Breakthrough engineering for a better world. First half performance was in line with expectations, and we were pleased to deliver 5% organic sales growth and 6% organic adjusted operating profit growth, despite mixed end markets. Based on current market conditions, we continue to expect that full year adjusted basic earnings per share will be between 120p to 126p." IMI said that Daniel Shook with step down as CFO after nearly 10 years with the firm. He leaves for "family reasons" no earlier than May of next year. IMI has kicked off a search to find Shook's replacement.
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COMPANIES - FTSE 250
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Computacenter expects a first-half profit fall, as it grapples with weaker demand in the UK and unfavourable order timing in North America, though it announced a buyback. It expects adjusted pretax profit of GBP87 million for the first six months of 2024, down around 29% from GBP121.8 million a year prior, computer technology and services provider said. "This result has been impacted by the timing of fulfilment of certain large orders in North America which have now moved into H2, as well as the phasing of our strategic initiatives investments where we spent an additional GBP6 million versus the same period in 2023," it explained. "As anticipated, Technology Sourcing volumes normalised during the first half versus an exceptionally strong H1 2023. We delivered a solid underlying performance in Germany and North America whereas in the UK, demand for hardware has been weaker than expected, with customers exercising greater caution and purchasing decisions taking longer to conclude. Encouragingly, our committed product order backlog has grown significantly since the start of the year driven by notable Technology Sourcing wins in North America." The firm announced it will return up to GBP200 million to shareholders, due to its "strong positive adjusted net funds position".
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OTHER COMPANIES
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Keywords Studios warned on its growth outlook as it has seen "softer demand" in one unit, and a slow recovery to content production in Hollywood following strikes. The provider of technical and creative services for video game production said revenue will grow 7% in the first-half, but fall around 2% on an organic basis. It had previously expected a "slightly negative" organic outcome. "Keywords has had a small number of larger game development projects deferred or cancelled in H1, creating capacity gaps in Create which were unable to be filled at short notice," it explained. Keywords added that there has been a "relatively slow ramp-up in content production in Hollywood". Looking ahead, it added: "The group has seen spend from larger clients continue to grow strongly during the first half, and anticipates a stronger recovery from the US strikes in H2, reinforcing our confidence in an improved second half performance, although further delays and project scope reductions are now expected to temper H2 organic growth from previous expectations. The board continues to be confident in the group's ability to outperform the market and deliver on its medium-term guidance beyond 2024."
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Brighton Pier Group said footfall has suffered due to a wet start to the UK summer. The leisure and entertainment business, which operates Brighton Palace Pier, said footfall for the four weeks to July 21 was down 29% on-year. "Despite a warm and sunny spell in the last week, and the successful implementation of charging non-residents GBP1 for admission to the pier during peak trading periods (both of which have alleviated some of the trading pressures on the pier), the group now anticipates that full year sales for the pier will be lower than previously expected," it warned. "The group has yet to trade the remaining six weeks of the summer season through to the end of August. This period has typically contributed a significant portion of annual group sales and earnings. However, despite the earnings from admission revenue, and the potential for improved weather in August, the group no longer believes the year to date sales and earnings shortfall will be recovered." It now expects earnings before interest, tax, depreciation and amortisation for the full-year will be below market expectations.
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By Eric Cunha, Alliance News news editor
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