(Alliance News) - Stocks in London were called to open higher on Tuesday, after numbers showed that the UK unemployment rate edged lower in the three months to August, but wage growth abated.
In early corporate news, Applied Nutrition set the price range for its planned initial public offering, implying an estimated market capitalisation at admission of between GBP340 million and GBP400 million.
Meanwhile, De La Rue, a provider of authentication software and currency printing services, said it will sell its authentication division to Crane NXT at an enterprise value of GBP300 million.
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 21.6 points, or 0.3%, at 8,307.50
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Hang Seng: down 3.6% at 20,330.55
Nikkei 225: closed up 0.8% at 39,910.55
S&P/ASX 200: closed up 0.8% at 8,318.40
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DJIA: closed up 201.36 points, 0.5%, at 43,065.22
S&P 500: closed up 0.8% to 5,859.85
Nasdaq Composite: closed up 0.9% at 18,502.69
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EUR: down at USD1.891 (USD1.0910)
GBP: down at USD1.3049 (USD1.3052)
USD: down at JPY149.38 (JPY149.83)
Gold: down at USD2,644.50 per ounce (USD2,646.29)
(Brent): down at USD74.39 a barrel (USD77.19)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
08:30 EDT Canada CPI
11:00 CEST eurozone ZEW economic sentiment survey
11:00 CEST eurozone industrial production
11:00 CEST Germany ZEW economic sentiment survey
11:00 IST Ireland trade balance
09:00 CEST Spain CPI
08:30 EDT US New York empire state manufacturing index
08:55 EDT US Redbook index
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The UK unemployment rate edged lower in the three months to August, but wage growth abated, numbers on Tuesday showed. According to the Office for National Statistics, the jobless rate faded to 4.0% in the three months to August, from 4.1% in the three months to July. The latest figure compared to FXStreet-cited consensus of 4.1%. Wage growth eased. Averages earnings excluding bonuses rose 4.9% in the three months to August, cooling from 5.1% in the three months to July. Annual growth in total earnings, so including bonuses, was 3.8%. Growth in earnings including bonuses eased from 4.0% in three months to July. Separate estimates indicated the number of payrolled employees rose by 0.4% in September, when compared with the same month a year prior. Provisional figures indicate that median monthly pay increased by 5.3% in September when compared with a year prior.
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Rachel Reeves warned her budget on October 30 would be "tough" as she gave the clearest signal yet that businesses will face a hike in national insurance. The chancellor stressed that Labour manifesto's promise to not increase national insurance contributions was related to taxes paid by working people – the employee element – rather than the sum paid by employers. The chancellor was speaking to reporters at the government's International Investment Summit, where deals worth more than GBP60 billion were hailed as a sign that the UK is open for business. Reeves told reporters at the summit that there would be no increase in investment unless the government could reassure the markets that it offered stability. Indicating that employer national insurance contributions were in her sights, she said: "We were really clear in our manifesto that we weren't going to increase the key taxes paid by working people: income tax, national insurance and VAT and, on the business side of commitment, that we would cap corporation tax at its current rate of 25% which was the lowest in the in the G7 and we will stick to the commitments we made in our manifesto."
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Water firms must not use increases in bills to line the pockets of executives and shareholders, Chancellor Reeves said. Regulator Ofwat has proposed letting firms hike bills by GBP94 on average per customer over the next five years, subject to a final decision in December. The chancellor hit out at past regulation of the industry and said firms must increase investment. She told reporters at the International Investment Summit in London: "I think water regulation has failed in the past, and that's why we're in the mess we are in today. "That investment was not prioritised by the regulators, and as a result, we haven't built any new reservoirs in something like 30 years in Britain, and the infrastructure is crumbling. "So that's why we are in the state that we are in today. It's clear that more investment is needed. "But prices are going to go up, and the regulator obviously has recommended price increases, although not as high as industry had wanted. "It's really important that all of that money goes into investment rather than share buybacks, dividends and bonus payments.
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Industrial production and shipments in Japan decreased in August after rising in July, according to revised figures from the Ministry of Economy, Trade & Industry. The seasonally adjusted industrial production index posted 99.7 points in August, down 3.3% from July. The original index was down 4.9% at 91.4 from August 2023. This was after the seasonally adjusted index rose 3.1% on-month and rose 2.9% annually in July. Shipments fell 4.1% from July and 6.5% annually, having grown in July by 2.7% monthly and 2.0% from the previous year. The unadjusted production capacity index posted 97.3 points, down 0.3% from July and down 1.0% from August 2023.
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The US Federal Reserve should be more careful with its pace of rate cuts than it was in September, a senior bank official said, pointing to "disappointing" recent inflation data. Federal Reserve Governor Christopher Waller told a conference in California, the latest inflation figures were "disappointing," according to prepared remarks. A Labor Department report last week showed US consumer inflation cooled in the year to September, but a measure stripping out volatile food and energy costs rose slightly. Economic growth and employment have meanwhile remained strong despite the Fed's elevated interest rates. "This data is signalling that the economy may not be slowing as much as desired," he said. "While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting," he added.
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Democratic presidential candidate Kamala Harris is set to give her first interview to the conservative television channel Fox News, less than three weeks before the US presidential election on November 5. The conversation with moderator Bret Baier is scheduled to air on Wednesday evening at 2200 GMT, the channel announced. It will take place in the battleground state of Pennsylvania. It will be Harris' first major television interview with a conservative media outlet since she was officially named the Democratic candidate in August. Since then, Harris has spoken to CNN, CBS and ABC News, along with non-traditional news outlets like the advice and comedy podcast Call Her Daddy.
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EU foreign policy chief Josep Borrell announced on Monday he wants EU foreign ministers to debate possible violations of international humanitarian law by Israel at their next meeting, warning trade ties could be at risk. Borrell said the discussion was necessary as the status of international humanitarian law in Lebanon and Gaza was "very much worrisome." The outgoing top EU diplomat was making a last push for the EU to address Israel's conduct in its response to the October 7 Hamas terror attacks. Spain and Ireland had already suggested several months ago that a partnership agreement covering industry, energy, transport and tourism between the EU and Israel should be scrutinised. According to Borrell's previous statements, the European Commission could propose suspending the agreement if Israel no longer adheres to its basic principles.
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BROKER RATING CHANGES
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Jefferies raises NatWest to 'buy' ('underperform') - target 425 (140) pence
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Royal Bank of Canada raises Bodycote to 'outperform' ('sector perform') - target 700 (720) pence
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Berenberg cuts Atalaya Mining price target to 460 (480) pence - 'hold'
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COMPANIES - FTSE 250
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Bellway reports pretax profit of GBP183.7 million for the year ended July 31, down 62% from GBP483.0 million a year prior. Underlying pretax profit comes to GBP226.1 million, down 58% from GBP532.6 million the year before, while revenue falls 30% to GBP2.38 billion from GBP3.41 billion. Accordingly, the firm slashes total dividend to 54.0 pence from 140.0p the previous year, though is more positive on forecast, with the order book totalling 5,144 homes, up from 4,411 year-on-year. Order book value on July 31 was GBP1.41 billion, up from GBP1.19 billion the year before. Private reservation rate was up 49% in 9 weeks since August 1 to 147 per week, while the private reservation rate per outlet per week since August is 0.59, up from 0.41 a year prior. Bellway is targeting at least 8,500 homes in financial 2025, up from 7,654 in financial 2024.
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OTHER COMPANIES
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De La Rue's wholly owned subsidiary, De La Rue Holdings, enters into an agreement for the sale of the group's authentication division to Crane NXT and its related entities for a cash consideration representing an enterprise value of GBP300 million. Of this, 5% will be held in escrow for up to 18 months following completion. Proceeds will go towards repaying De La Rue's existing revolving credit facility in full and reducing leverage to a net cash position; and reducing the deficit on the group's legacy defined benefit pension scheme by paying GBP30 million as an accelerated contribution on completion. The transaction is expected to complete in the first half of 2025.
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Applied Nutrition set the price range for its planned initial public offering at 136 to 160 pence per share, implying an estimated market capitalisation at admission of between GBP340 million and GBP400 million. The offer comprises up to 137.4 million existing shares to be sold by certain existing shareholders of the company. Applied Nutrition will apply for admission of its shares to the equity shares category of the official list of the FCA and to trading on the main market for listed securities of London Stock Exchange.
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By Holly Beveridge, Alliance News senior reporter
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