(Alliance News) - Stocks in London are called to open lower on Tuesday, after the incoming US president warned of tariffs on his neighbouring nations and China.
US President-elect Donald Trump said Monday he intends to impose sweeping tariffs on goods from Mexico, Canada and China, prompting a swift warning from Beijing that "no one will win a trade war."
In a series of posts to his Truth Social account, Trump vowed to hit some of the US' largest trading partners with duties on all goods entering the country.
"On January 20th, as one of my many first executive orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on ALL products coming into the US," he wrote.
In another post, Trump said he would also be slapping China with a 10% tariff, "above any additional tariffs," in response to what he said was its failure to tackle fentanyl smuggling.
"Overnight news of Trump planning a 25% tariff on all Mexican and Canadian goods, as well as an additional 10% on Chinese imports, has triggered a knee-jerk bout of USD demand, and could be enough to trigger a more sustained rebound in the buck," Pepperstone analyst Michel Brown commented.
The dollar rose from overnight lows against major counterparts. Sterling had bought USD1.2562 and the euro USD1.0490 during the early hours. Against the yen, the dollar perked up from a low of JPY153.67.
In early UK corporate news, Intertek said growth has picked up in recent months. Compass reported an annual revenue decline, while AO World upped its outlook.
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 0.3% at 8,265.88
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Hang Seng: down 0.1% at 19,136.78
Nikkei 225: down 0.9% at 38,442.00
S&P/ASX 200: down 0.7% at 8,359.40
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DJIA: closed up 440.06 points, 1.0%, at 44,736.57.
S&P 500: closed up 0.3% at 5,987.37
Nasdaq Composite: closed up 0.3% at 19,054.84
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EUR: lower at USD1.0477 (USD1.0488)
GBP: lower at USD1.2547 (USD1.2559)
USD: lower at JPY154.13 (JPY154.37)
GOLD: lower at USD2,613.02 per ounce (USD2,634.92)
(Brent): lower at USD72.53 a barrel (USD73.43)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
15:00 GMT UK Bank of England Chief Economist Huw Pill speaks
15:00 GMT US consumer confidence
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Shop prices in the UK continued to ease in November albeit at a slower pace than October, a survey showed. According to the BRC-Nielsen shop price index, shop price deflation was 0.6% in November on-year, up from deflation of 0.8% in the previous month. This is slightly above the 3-month average rate of 0.7%. Shop price annual growth remained at its lowest rate since September 2021. Non-food remained in deflation at 1.8% in November, up from 2.1% in the preceding month. This is in-line with levels last seen in mid-2021. Food inflation slowed to 1.8% in November, down from 1.9% in October. This is below the 3-month average rate of 2.0%. BRC Chief Executive Helen Dickinson said: "November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory. "With significant price pressures on the horizon, November's figures may signal the end of falling inflation. The industry faces GBP7 billion of additional costs in 2025 because of changes to employers' national insurance contributions, business rates, an increase to the minimum wage and a new packaging levy."
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The UK government is "not minded to fund the North correctly", Mary Lou McDonald claimed as she defended Sinn Fein's record in the power-sharing Executive. McDonald made the remarks as she seeks to lead Sinn Fein to victory in the Republic of Ireland's general election on Friday, and become the country's taoiseach. The Sinn Fein leader was responding to questioning on how the party could stand over pledges on housing delivery on the Republic of Ireland, given under supply in Northern Ireland. The housing portfolio north of the border was previously held by Sinn Fein MLA Deirdre Hargey. McDonald said Hargey had set out a "hugely ambitious, transformational plan" during her time in the role. However, she added: "The Tories, sadly, who unfortunately hold the purse strings, and now the successor government, under Keir Starmer, are not minded to fund the North correctly. "That's at the root of the problem." McDonald said the picture of the public service in Northern Ireland is generally "not good", adding that to compare the two jurisdictions is like comparing apples and oranges.
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BROKER RATING CHANGES
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RBC raises Next to 'outperform' (sector-perform) - price target 10,800 pence
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JPMorgan places Melrose on 'positive catalyst watch'
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COMPANIES - FTSE 100
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Compass Group reported annual revenue growth that topped expectations, and the contract caterer raised its dividend. In the year to September 30, pretax profit amounted to USD2.06 billion, a decline of 3.8% from USD2.14 billion. Revenue, however, rose 11% to USD42.00 billion from USD37.91 billion. Organic revenue rose 11%, beating the company-compiled consensus prediction of 10% growth. Keeping a lid on profit, finance costs rose 63% to USD325 million, while Compass registered a USD203 million loss on sales and closures of businesses, compared to a USD24 million boost a year prior. Compass lifted its annual dividend by 14% to 59.8 cents per share from 52.6 cents. Its final dividend was raised 13% to 39.1 cents from 34.7 cents. Compass said it has returned USD1.5 billion to investors through dividends and buybacks. An ongoing buyback of USD500 million is nearing completion, with USD476 million completed so far. Chief Executive Dominic Blakemore said: "2024 has been a year of strong operational and financial performance, with net new business growth accelerating in the second half as expected. The business continues to successfully capitalise on the dynamic market trends, using its proven competitive advantages to drive higher revenue and profit growth." Blakemore added: "In 2025, we expect high single-digit underlying operating profit growth, driven by organic revenue growth above 7.5% and ongoing margin progression. Longer term, we are confident in sustaining mid-to-high single-digit organic revenue growth with ongoing margin progression, leading to profit growth ahead of revenue growth."
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Intertek said it is on track to deliver a strong 2024, as growth picked up in recent months. The consumer product testing and certification services provider said like-for-like revenue rose 6.6% on-year at constant currency between July and October, picking up speed from a 6.1% climb in the first-half of 2024. Year-to-date, like-for-like revenue is up 6.3% at constant currency. At actual rates, overall revenue was 1.8% higher on year at GBP1.15 billion in the four months to October. It rose 1.6% like-for-like at actual rates. Intertek hailed a revenue acceleration in the Consumer Products arm, where like-for-like, constant currency growth spiked to 9.4% in the four months, from 6.0% in the first-half. "We delivered a strong performance in the July-Oct period with Consumer Products, Corporate Assurance and Health & Safety, which represent 74% of group earnings, growing like-for-like revenue 9.5%, while trading performance in Industry and Infrastructure and the World of Energy was in line with guidance." CEO Andre Lacroix said. "Given our first half performance and the high quality of earnings in this latest four-month period, the group is well on-track to deliver a strong performance in 2024, with mid-single digit LFL revenue growth at constant currency, strong margin progression and an excellent free cash flow performance."
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Barclays said it plans to establish a new private banking booking centre in Singapore. The London-based bank said the city state is a "key wealth hub for Barclays Private Bank", with the centre aimed at supporting its growth of Asian ultra-high-net-worth and global family office clientele. Barclays expects the new booking centre to be operational by 2026. Through the Singapore booking centre, Barclays Private Bank will offer comprehensive wealth management offering with the ability to book assets locally. "Asia Pacific is one of the fastest growing wealth markets, and this strategic investment in Singapore underscores our commitment to expand in the region. Establishing the new booking centre further strengthens our global proposition, allowing us to better serve our clients," said Sasha Wiggins, chief executive officer of Barclays Private Bank & Wealth Management.
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COMPANIES - FTSE 250
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Electricals retailer AO World reported growth in half-year earnings, but warned of an increase in costs due to UK government budget measures announced last month. AO World said it will "work hard to mitigate the impact of this to overall profitability". "Following the budget in October 2024, our estimate of the annual impact is an additional [around] GBP4 million of direct costs but, including indirect costs where the impact remains to be seen, this will likely be more than GBP8 million," the firm explained. In the six months to September 30, revenue rose 6.3% to GBP512.1 million, from GBP481.7 million a year prior. Pretax profit improved 23% to GBP16.2 million from GBP13.2 million. Adjusted pretax profit spiked 30% year-on-year to GBP17 million, AO said. Profit is growing faster than revenue, "as planned", it explained. CEO John Roberts said the summer sales period saw AO play out somewhat of a stalemate. "We've had a Morecambe & Wise summer sales period; all the right volumes just not in the right categories. The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned. Overall, our team did a fantastic job to play this out as a satisfying score draw," Roberts said. Roberts added: "We're now well into peak trading with customers responding positively to the thousands of unbeatable deals we're offering for the Black Friday period." AO World upped its outlook. It now expects adjusted pretax profit between GBP39 million and GBP44 million, a rise of at least 14% from GBP34.3 million. It had previously expected adjusted pretax profit between GBP36 million and GBP41 million.
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Telecom Plus reported a rise in half-year profit, despite revenue weakening due to lower energy prices. In the half-year to September, pretax profit shot up 9.2% on-year to GBP39.0 million from GBP35.7 million. Revenue fell 21% to GBP697.8 million from GBP883.6 million "due to lower retail energy prices". Telecom Plus provides a "wide range of utility services" to domestic customers. Its offering includes energy, broadband, mobile and insurance. CEO Stuart Burnett said: "We are pleased to see continuing double digit compound growth in customer numbers for the third consecutive year, by continuing to help households to stop wasting time and money. Our unique multiservice model means we can continue to provide market-leading savings, and sustainably outcompete, in a wide range of market conditions. With a new, market-leading EV charging tariff and full fibre broadband offering, our Partners have even more ways to help their friends and family to save, whilst building a valuable long-term additional income for themselves." Telecom Plus upped its interim dividend by 2.8% to 37.0 pence from 36.0p. The firm backed its outlook, expected organic customer growth between 12% and 14%.
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OTHER COMPANIES
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Television broadcaster and content producer STV Group said it has performed in line with market expectations despite "continued challenging advertising and commissioning" conditions. Total advertising revenue in the third-quaretr rose 5%, ahead of guidance. TAR is expected to decline around 10% during the fourth-quarter, however, as the prior year included a boost from the Rugby World Cup. For the full-year, TAR growth of 2% to 3% is expected. "I joined STV on 1 November and have been very impressed by its strong foundations and prospects for future growth. I've been struck by the creativity, dynamism and commitment of the team and I look forward to working closely with them to build on recent successes," Chief Executive Rufus Radcliffe said. "The winter schedule brings the return of entertainment juggernaut, I'm A Celebrity Get Me Out Of Here, and The 1% Club. And looking further ahead, we have a strong drama offering at the start of 2025 on STV and STV Player."
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Chinese tech firm Huawei launched its first smartphone equipped with a fully homegrown operating system, a key test in the firm's fight to challenge the dominance of Western juggernauts. Apple's iOS and Google's Android are currently used in the vast majority of mobile phones, but Huawei is looking to change that with its newest Mate 70 devices, which run on the company's own HarmonyOS Next. The launch caps a major turnaround in the fortunes of Huawei, which saw its wings clipped by gruelling US sanctions in recent years but has since bounced back with soaring sales. More than three million have been pre-ordered, according to the firm's online shopping platform, though that does not require them to be purchased.
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By Eric Cunha, Alliance News news editor
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