(Alliance News) - Stocks prices in London are called to open sharply higher on Thursday, after a rip-roaring climb for US tech shares overnight helped settle the mood in equities before a eurozone interest rate decision.
The European Central Bank is expected to announce a second interest rate cut of the cycle, but analysts expect forward guidance to be scarce.
The Frankfurt-based official lender is expected to trim its key deposit rate by 25 basis points to 3.50%, from 3.75% currently.
The ECB in July kept rates unchanged. The interest rate on the main refinancing operations, the marginal lending facility, and the deposit facility stand at 4.25%, 4.50% and 3.75%, respectively.
The decision is at 1315 BST. A US producer price index reading, as well as the latest weekly jobless claims data, are released at 1330 BST.
The US PPI reading follows Wednesday's consumer price index data.
According to the US Bureau of Labor Statistics, annual consumer price inflation faded to 2.5% in August, from 2.9% in July.
A less tame reading of 2.6% was expected for August, according to consensus cited by FXStreet.
The BLS said it was the softest inflation reading since February 2021.
Excluding food and energy, the annual core inflation rate remained at 3.2% in August, where it stood in July. The reading met the FXStreet cited consensus.
"The latest US CPI data, and the reaction to data was mixed on Wednesday. The good news is that the headline inflation fell from 2.9% to 2.5% in August, and sank significantly below the 3% level where it was resisting since last summer. The drop in food and energy prices helped easing pressure in the headline figure. But core inflation – which excludes volatile food and energy prices – came in line with the expectations on a yearly basis, and slightly higher-than-expected on a monthly basis," Swissquote analyst Ipek Ozkardeskaya commented.
"While the retreat in food prices is the continuation of the post-pandemic supply chain improvement story, and easing in energy prices is due to global geopolitical and economic factors, the stickiness in housing remains an issue that the Federal Reserve must address with its rate policy. Therefore, yesterday's data came to wave goodbye to the 50bp cut hopes at next week's FOMC meeting. The probability of a 50bp cut melted to 13%, pulling the probability of a 100bp cut this year down with it."
In early UK corporate news, Trainline raised its outlook, Kier Group reported earnings growth and GSK hailed positive trial findings.
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 1.2% at 8,294.84
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Hang Seng: up 1.0% at 17,274.73
Nikkei 225: up 3.4% at 36,833.27
S&P/ASX 200: up 1.1% at 8,075.70
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DJIA: closed up 124.75 points, 0.31%, at 40,861.71
S&P 500: closed up 1.1% at 5,554.13
Nasdaq Composite: closed up 2.2% at 17,395.53
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EUR: higher at USD1.1019 (USD1.1013)
GBP: higher at USD1.3051 (USD1.3026)
USD: higher at JPY142.63 (JPY141.58)
GOLD: higher at USD2,520.03 per ounce (USD2,512.09)
(Brent): higher at USD71.54 a barrel (USD70.32)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
13:15 BST eurozone interest rate decision
11:00 BST Ireland CPI
09:00 BST UK Bank of England Deputy Governor Sarah Breeden speaks
13:30 BST US initial jobless claims
13:30 BST US PPI
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UK house prices are showing signs of increasing for the first time in nearly two years as market activity picks up, according to surveyors. Price growth moved into positive territory last month for the first time since October 2022, the Royal Institution of Chartered Surveyors (Rics) said. A net balance of 1% of professionals reported prices rising rather than falling in August – and a balance of 14% expect a steady increase over the next three months. Many lenders have made cuts to their mortgage rates in recent weeks, with the Bank of England also recently cutting the base rate. August's survey results also indicated a rise in the number of house hunters, with a net balance of 15% of professionals noticing an improvement in this survey indicator, up from a balance of 4% in July. On the supply side, the number of new property listings has also shown an increase, with a balance of 7% of professionals seeing a rise in August, up from 3% in July. In the rental market, demand from tenants is continuing to rise, although the pace of growth has slowed compared with previous months, Rics said. It added that the supply of rental properties remains sluggish, with new landlord instructions falling.
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BROKER RATING CHANGES
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Berenberg starts GlobalData with 'buy' - price target 295 pence
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Berenberg cuts Shell price target to 3,100 (3,400) pence - 'buy'
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Berenberg cuts BP price target to 470 (510) pence - 'hold'
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COMPANIES - FTSE 100
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GSK hailed a "significant advancement" as it reported promising findings from a probe on a possible flu vaccine. The phase two trial probed a range of messenger RNA formulations in older and younger adults to evaluate jab candidates that can boost immune responses to A and B strains of the flu, when compared to the current standard of care. "A vaccine candidate formulation demonstrated positive A and B strain immune responses relative to standard of care in both younger and older adults," GSK said. "These results build on the previous phase II trial and confirm the mRNA platform elicits strong overall antibody titres with an acceptable safety profile. With these results, the GSK mRNA seasonal influenza vaccine programme will progress into late-stage clinical development." GSK's Chief Scientific Officer Tony Wood commented: "This marks a significant advancement in our mRNA programme and these data support moving into late-stage development. Ultimately, our goal is to develop a new best-in-class vaccine to bring greater protection to people through the influenza season."
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COMPANIES - FTSE 250
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Trainline said it is performing ahead of expectations and the rail ticketing platform upped its outlook. Revenue in the half-year ended August 31 climbed 16% to GBP229 million from GBP197 million. Net ticket sales amounted to GBP3.00 billion, a rise of 13% on-year from GBP2.65 billion. "As Europe's number one rail app, our strong performance shows how our relentless focus on innovation is helping more customers to choose digital ticketing. Competition between rail carriers is growing across Europe and as the aggregator of choice we deliver the value and convenience customers want. This is most clearly demonstrated in Spain, where we have tripled net ticket sales in the last two years, with over one million customers transacting in the last 12 months alone," Chief Executive Officer Jody Ford said. In May, the firm forecast full-year net ticket sales growth between 8% and 12% and a revenue rise between 7% and 11%. It predicted adjusted earnings before interest, tax, depreciation, and amortisation of between 2.4% and 2.5% of net ticket sales. Now, Trainline expects net ticket sales and revenue to be at the top end of the forecast, and the adjusted Ebitda to exceed it.
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Infrastructure firm Kier Group reported annual earnings growth and announced a new long-term plan to drive further progress. Revenue in the year to June 30 totalled GBP3.91 billion, a rise of 16% from GBP3.38 billion. Pretax profit increased 31% to GBP68.1 million from GBP51.9 million. "The past three years have seen the group achieve significant operational and financial progress. The strong results for FY24 are testament to the hard work and commitment of our people who have enhanced our resilience and strengthened our financial position in-line with our medium-term value creation plan. Our order book remains strong and growing at GBP10.8 billion and provides us with good multi-year revenue visibility. The contracts within our order book reflect the bidding discipline and risk management now embedded in the business," CEO Andrew Davies said. The firm resumed its dividend during the financial year. It proposed a final dividend of 3.48p per share, taking its total payout to 5.15p. The period saw it pay its first dividend since financial 2019. Kier added it is currently "trading in-line with board expectations". The firm also set out a "new long-term sustainable growth plan". "Our core businesses are well-placed to benefit from UK government and regulated industry spending commitments to invest in UK infrastructure. We believe UK infrastructure spending commitments are driven by structural demand which have a positive influence on Kier's chosen markets. Population growth, transportation pressures, aged infrastructure, energy security and climate change are substantial and largely non-discretionary," it explained.
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OTHER COMPANIES
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Fevertree Drinks reported weaker half-year revenue, as the mixers maker was hurt by a "subdued consumer backdrop and poor weather in the second quarter across the UK and Europe". Revenue in the half-year to June 30 fell 1.5% to GBP172.9 million from GBP175.6 million. Pretax profit, however, jumped to GBP13.2 million from GBP1.4 million. Cost of sales were 8.9% lower at GBP110.9 million from GBP121.8 million. "The Fever-Tree brand performed well against a tough market backdrop. We continued to deliver double digit revenue growth in the US at constant currency, as well as a strong performance in our ROW region. The first half performance in the UK and Europe was impacted by unseasonable weather at the start of summer alongside distributor order phasing in Europe, but we have seen a strong improvement in these regions as the summer belatedly arrived," CEO Tim Warrillow said. The firm explained it has made a "strong start to the second half of the year across all of our regions". It expects to deliver Fever-Tree brand revenue growth of 7% to 10% on-year in the half, giving it growth of 4% to 5% for the whole of 2024. Fevertree upped its interim dividend by 1.9% to 5.85p per share from 5.74p.
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Marlowe announced it will demerge its occupational health division, which will join the AIM market. The unit, a provider of "technology enabled corporate health and wellbeing solutions", will take on the name Optima Health and the plan is for it to begin trading on AIM later this month. Marlowe, a provider of software and services for safety and regulatory compliance, said the demerger will be completed via a dividend in specie. Shareholders are to receive one Optima Health share for every existing Marlowe share owned. "The demerger will allow Marlowe, as a market-leading testing, inspection and certification business and Optima Health as the UK's leading provider of technology enabled corporate health and wellbeing solutions, as two distinct entities, to fully focus on their respective end markets and future strategic objectives," Marlowe explained. Optima Health, which is set for an AIM debut on September 26, "has no intention to raise new capital", it added. Panmure Liberum will be its nominated adviser and corporate broker in relation to the admission. Optima Health CEO Jonathan Thomas said: "Optima Health is the UK leader in the management of workplace and employee health. Optima Health offers a comprehensive range of flexible and progressive occupational health services supported by statutory driven workplace health requirements, and we are proud to help people and the organisations they work for be the best that they can be, working across a range of sectors, both public and private, from manufacturing, construction, professional and transport and logistics services to the UK's blue light organisations, Civil Service and NHS."
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By Eric Cunha, Alliance News news editor
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