(Alliance News) - London's FTSE 100 is called to open higher on Monday, after decent trade in Asia at the start of the week, while the yen sank on political uncertainty in Japan.
"The yen took a beating after Japan's ruling coalition fell short of a parliamentary majority, sparking concerns that political instability could delay the Bank of Japan's rate-hike plans well into 2025," SPI Asset Management analyst Stephen Innes commented.
"For local investors, however, the weaker yen is a silver lining. It boosts exporters and tempts traders back to Japanese stocks, weighed down by political uncertainty last week. Tokyo trading houses most likely expected this outcome and swooped in on bargain-priced stocks. Much of the yen's recent weakness reflects Japan's ultra-low interest rates compared to the US and other major economies—a dovish stance likely to hold as Japan's new prime minister faces the hot seat of political challenges."
Focus also remains on the UK, ahead of the budget announcement on Wednesday.
Swissquote's Ipek Ozkardeskaya commented: "There will certainly be tax increases for big companies and wealthy individuals on the menu. Lately, the British 10-year gilt yield has been pushing higher – along with the other Western economies' yields. If there is no major surprise, or an overreaction to the budget announcement, the market's attention should remain on the Bank of England's policy easing plans, which became sensibly more pronounced over the past few weeks due to Chief Bailey's unusually confident and dovish remarks.
"As such, cable could see a relief rebound on a potentially smooth budget announcement but sterling offers will likely remain strong near the 1.30 level against the US dollar, unless, of course, the US dollar eases unexpectedly due to soft economic data at their home."
In early UK corporate news, Lloyds noted the outcome of a motor finance-related court case, while drugmaker AstraZeneca hailed a European approval. Elsewhere, Trainline raised its guidance.
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 8,263.84
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Hang Seng: up 0.2% at 20,625.62
Nikkei 225: up 1.8% at 38,605.53
S&P/ASX 200: up 0.1% at 8,221.50
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DJIA: closed down 259.96 points, 0.6%, at 42,114.40
S&P 500: closed marginally lower at 5,808.12
Nasdaq Composite: closed up 0.6% at 18,518.60
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EUR: lower at USD1.0797 (USD1.0826)
GBP: lower at USD1.2964 (USD1.2983)
USD: higher at JPY153.32 (JPY151.87)
GOLD: higher at USD2,736.91 per ounce (USD2,722.18)
OIL (Brent): lower at USD72.68 a barrel (USD74.83)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
14:30 GMT US Dallas Fed Manufacturing Index
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The UK budget will embrace the "harsh light of fiscal reality" but "better days are ahead", UK Prime Minister Keir Starmer will say in a speech ahead of one of the most significant financial statements in recent history. The PM will warn of "unprecedented" economic challenges and invite the public to judge him on his ability to rise to them as he sets the tone for Wednesday's announcement. He is expected to promise the budget will "ignore the populist chorus of easy answers" amid a series of expected tax hikes, including an increase to employer national insurance by at least one percentage point. Starmer will say: "We have to be realistic about where we are as a country. This is not 1997, when the economy was decent but public services were on their knees. And it's not 2010, where public services were strong, but the public finances were weak. These are unprecedented circumstances.
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Starmer has denied misleading the public at the general election over tax plans for the UK budget after he indicated that people who make money from shares and property could face greater levies. The prime minister rejected claims he was waging a "war on middle Britain" amid speculation he could increase the burden for those who have income from assets. Labour had pledged in its manifesto to not hike taxes on what it described as "working people," explicitly ruling out increases to VAT, national insurance, and income tax.
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A UK government minister said she "can't speculate on this budget or budgets to come" when pressed on Sky News on Sunday about whether a pledge to not raise income is for the whole of the five-year term. On the Sky News Sunday Morning with Trevor Phillips show, Labour MP Bridget Phillipson also said the budget on Wednesday is a choice between "investment and decline". Labour has previously ruled out raising value added tax, income tax and national insurance. But Education Secretary Bridget Phillipson, MP for Houghton & Sunderland South, did not say whether the pledge is for the whole of this parliament. "I can't speculate on this budget or budgets to come, if I was to do that I would get into a lot of trouble," she told the Sky News Sunday morning show.
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The UK chancellor will cut back right to buy discounts as part of next week's UK budget to boost council housing supply. Rachel Reeves will announce plans to consult on a new five-year social housing rent settlement and to reduce Right to Buy, which allows tenants renting local authority-owned homes to buy them at a discounted rate, in order to protect existing council stock and keep council homes in the sector. The moves are part of a housing package that includes GBP500 million in new funding for up to 5,000 new affordable social homes and GBP128 million to support delivering 33,000 new homes through projects across the country.
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An estimated GBP113 billion-worth of homes are in the sales pipeline – marking the highest level of new sales agreed since autumn 2020, according to a property website. Across the UK, around 306,000 homes are working their way through the buying process to completion, 62,250 (26%) more than a year ago, Zoopla said. Momentum in new sales remains strong and looks set to continue into December, supported by a high supply of homes for sale, with many of the most recent sales completing in the first half of 2025, the website added. Zoopla said first-time buyers and existing homeowners who previously delayed moving decisions until mortgage rates fell are helping to drive sales. It said a rapid growth in rental prices, combined with mortgage rates edging down, has shifted the "renting versus buying" dynamics, supporting more first-time buyer purchases.
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BROKER RATING CHANGES
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HSBC raises Glencore to 'buy' - price target 465 pence
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COMPANIES - FTSE 100
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Lloyds Banking Group noted the outcome of a motor finance case which saw a UK court side with consumers. "The Court of Appeal has determined that motor dealers acting as credit brokers owe certain duties to disclose to their customers commission payable to them by lenders, and that lenders will be liable for dealers' non-disclosures," Lloyds said. The firm said it is assessing the potential impact of the decision. On the verdict, it said: "This sets a higher bar for the disclosure of and consent to the existence, nature, and quantum of any commission paid than had been understood to be required or applied across the motor finance industry prior to the decision."
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AstraZeneca said its Fasenra treatment has been backed in the EU as an add-on treatment for adult patients with relapsing or refractory eosinophilic granulomatosis with polyangiitis. The immune condition can result in damage to multiple organs and can be fatal if left untreated. "We remain committed to helping patients with some of the hardest-to-treat diseases. Today's approval of Fasenra, with its convenient, single-monthly injection is a positive step forward for patients with EGPA. Fasenra has been a well-established treatment for many years in thousands of people with severe eosinophilic asthma and we are pleased to now offer a much-needed treatment option for those living with EGPA in Europe," said Ruud Dobber, executive vice president of Astra's BioPharmaceuticals business unit.
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COMPANIES - FTSE 250
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Rail ticketing platform operator Trainline raised its annual outlook. It now expects annual net ticket sales of 12% to 14%, its outlook bumped up from the top end of an 8% to 12% growth range. A revenue rise between 11% and 13% is now expected, the forecast raised from the top end of a 7% to 11% range. It now expects adjusted earnings before interest, tax, depreciation and amortisation to be around 2.6% of net ticket sales. Its previous guidance was for it to exceed 2.5%. In the six months to August 31, net ticket sales were up 14% year-on-year GBP3.0 billion, and revenue rose 17% GBP229 million. Its adjusted Ebitda shot up 44% to GBP82 million.
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OTHER COMPANIES
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Wise said the UK Financial Conduct Authority has found Kristo Kaarmann is "fit and proper" to continue with his role in the company, although the chief executive has been slapped with a GBP350,000 penalty. Kaarmann was on a UK "list of individuals and businesses who received penalties for a deliberate default regarding their tax affairs". "This publication was in relation to Kristo's personal tax affairs for the tax year 2017/2018," Wise explained. Wise added: "The FCA has not made any adverse findings regarding Kristo's continued fitness and propriety to perform his current roles at Wise, nor found that he acted with a lack of integrity. The FCA has, however, said that Kristo did not adequately consider the significance of his communications with HMRC and should, by February 2021, have notified Wise's regulated subsidiaries and the FCA of these matters." Wise continued: "The FCA is imposing a penalty of GBP350,000 on Kristo, discounted by 30% from GBP500,000 as a result of Kristo and the FCA resolving the case by agreement at the earliest opportunity."
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By Eric Cunha, Alliance News news editor
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