(Alliance News) - Stocks were called to open slightly higher ahead of a relatively quiet data docket, although investors will be watching for the afternoon's US producer price inflation read.
Meanwhile, pressure remains on the UK government after "Monday brought another day of selling pressure across the gilt curve, as 10- and 30-year yields both climbed as much as 6bp apiece, hitting fresh multi-year highs," Pepperstone's Michael Brown said.
He added: "Intriguingly, [Prime Minister Keir] Starmer [on Monday] refused to commit to Rachel Reeves being chancellor at the time of the next election, despite having already made the same commitment about Foreign Secretary David Lammy. Starmer also noted that Reeves has his "full confidence", a line eerily similar to that used by football club owners, just before they sack their manager.
"I wonder if this is the first sign of Starmer setting Reeves up as a 'sacrificial lamb', who will find herself out of a job if further substantial, manifesto-breaching and promise-breaking tax cuts are required in order to restore fiscal headroom," Brown mused. "Politically, ditching Reeves could be the most, if not only, palatable option, to wriggle out of the present predicament."
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called up 4.5 points, 0.1%, at 8,228.69
----------
Hang Seng: up 1.8% at 19,219.82
Nikkei 225: down 1.8% at 38,474.30
S&P/ASX 200: up 0.5% at 8,231.00
----------
DJIA: closed up 358.67 points, 0.9%, at 42,297.12
S&P 500: closed up 0.2% at 5,836.22
Nasdaq Composite: closed down 0.4% at 19,088.10
----------
EUR: higher at USD1.0256 (USD1.0209)
GBP: higher at USD1.2215 (USD1.2161)
USD: lower at JPY157.43 (JPY157.66)
GOLD: higher at USD2,667.94 per ounce (USD2,666.56)
OIL (Brent): lower at USD79.67 a barrel (USD81.25)
(changes since previous London equities close)
----------
ECONOMICS
----------
Tuesday's key economic events still to come:
10:00 CET Italy industrial production
08:30 EST US PPI
08:55 EST US Redbook index
----------
Rachel Reeves is expected at Downing Street for a Cabinet meeting on Tuesday as she continues to face pressure amid market turmoil. It comes after Keir Starmer appeared to waver in his support for the UK chancellor when he said he had confidence in her but refused to say she would keep her role until the next general election. Downing Street clarified hours later that Reeves would stay in post for "the whole of this Parliament". As the chancellor returned from her trip to China, concerns have swirled that the government is in danger of failing to meet its own fiscal rules and will need to take action to remain on track.
----------
Pension schemes in the UK are in a "robust position" to deal with market fluctuations, an industry body has said. The pound fell to a fresh 14-month low on Monday, while UK government bonds, also known as gilts, continued to see 10-year yields hit highs not seen since 2008. Yields are a key indicator of market confidence, moving inversely to bond prices. There has been speculation over potential impacts for pensions from the gilt market rout, as well as mortgages, with comparisons being drawn with the fallout from former prime minister Liz Truss's 2022 mini-budget when the pound was sent crashing due to an acute sell-off in gilts.
----------
Donald Trump called special counsel Jack Smith "deranged" after the release of his report saying the incoming US president would have been convicted for his alleged effort to overturn the 2020 election if he hadn't been elected again. "Deranged Jack Smith was unable to successfully prosecute the Political Opponent of his 'boss,' Crooked Joe Biden, so he ends up writing yet another 'Report' based on information that the Unselect Committee of Political Hacks and Thugs ILLEGALLY DESTROYED AND DELETED, because it showed how totally innocent I was," Trump said in a post on his Truth Social platform.
----------
China said that new export rules on chips used for artificial intelligence unveiled by the US were a "flagrant violation" of international trade regulations. The announcement "is another example of the generalisation of the concept of national security and the abuse of export control, and a flagrant violation of international multilateral economic and trade rules", Beijing's Ministry of Commerce said in a statement on Monday aimed squarely at President Joe Biden's administration. The EU meanwhile expressed concern due to the new rules affecting some member states and their companies. "We believe it is also in the US economic and security interest that the EU buys advanced AI chips from the US without limitations: we cooperate closely, in particular in the field of security, and represent an economic opportunity for the US, not a security risk," respective EU tech and trade chiefs Henna Virkkunen and Maros Sefcovic said.
----------
US and Arab mediators have made significant progress towards brokering a ceasefire in the Israel-Hamas war and the release of scores of hostages held in the Gaza Strip, but a deal has not been reached yet, officials said. Four officials acknowledged progress has been made and said the coming days would be critical for ending more than 15 months of fighting that has destabilised the Middle East. A US official briefed on the negotiations said all sides are "closer than we've ever been, but it could still fall apart." The official declined to predict the timing of a potential agreement because he said it is too uncertain, with multiple moving parts still in play. Two other officials, including one associated with Hamas, said there were still a number of hurdles. Another person familiar with the talks said there had been a breakthrough overnight and there was a proposed deal on the table. Israeli and Hamas negotiators will take it to their leaders for final approval, the person said. An Egyptian official said there had been good progress, but it would likely take a few more days and the sides were aiming for a deal before Trump's inauguration on January 20.
----------
Donald Trump has said Monday that he believed a hostage and ceasefire deal could be completed by the end of the week. "And I understand it's, it's been – there's been a handshake and they're getting it finished," Trump said in a Newsmax interview. "But it has to take place." He did not further elaborate. Trump's incoming Middle East envoy Steve Witkoff is in the region and has met with Israeli and Qatari officials in recent days. He is closely co-ordinating with President Joe Biden's outgoing Middle East envoy Brett McGurk, who has been in Doha for several days.
----------
BROKER RATING CHANGES
----------
Bernstein raises Lloyds to 'market-perform'
----------
Berenberg cuts Johnson Matthey price target to 1,380 (1,500) pence - 'hold'
----------
Jefferies raises Kerry group to 'buy' (hold) - price target 110 (93) EUR
----------
COMPANIES - FTSE 100
----------
Persimmon released a trading update ahead of its 2024 results which will be out on March 11. It says completions increased 7% on-year to 10,664 and its forward sales position increased 8% to GBP1.15 billion from GBP1.06 billion. Adds that it expects underlying pretax profit "to be around the upper end of market expectations", which range from GBP349 million to GBP390 million. The underlying operating profit margin was in line with that in 2023.
----------
BP has updated its fourth-quarter guidance, saying it expects oil & production segment realizations to have an unfavourable impact of between approximately GBP200 million and GBP 400 million compared with the third quarter. It also expects upstream production to decrease on-quarter, "with production lower in oil production & operations and in gas & low carbon energy". The average Brent oil price for the quarter was USD74.73 per barrel, down from USD80.34 in the third quarter.
----------
COMPANIES - FTSE 250
----------
Ocado released a fourth-quarter trading statement for the 13 weeks to December 1. It says Retail revenue for the quarter grew 18% on-year to GBP715.8 million "as we continued to deliver on our strategy of unbeatable choice, unrivalled service and reassuringly good value". Volumes increased 17% to 271.6 million total items on Ocado.com, while average orders also rose 17% to 476 per week. For the full year, Ocado says Retail revenue grew 14% to GBP2.69 billion while volumes and average orders per week both grew 13%. Adds that it has achieved "strong Ebitda growth" due to topline growth "as well as continued focus on cost and efficiency". Further, Ocado celebrates "another record-breaking Christmas, with our highest ever level of sales over the peak Christmas trading period." Looking ahead, the company says: "We have confidence that the business will continue to show market-leading sales growth and volume momentum in FY25. Moreover, we expect to make further progress on driving operational efficiency and scale leverage, continuing on our journey towards a high mid-single digit adjusted Ebitda margin in the mid-term."
----------
OTHER COMPANIES
----------
US steel companies Cleveland-Cliffs Inc and Nucor Corp are preparing a joint proposal to potentially acquire US Steel Corp after the White House blocked a takeover by Japan's Nippon Steel Corp, CNBC reported Monday. Under the possible transaction, Cleveland-Cliffs would purchase US Steel in cash and then sell off its Big River subsidiary to Nucor, said CNBC, which cited unnamed sources. US Steel's shares would be priced in the "high USD30s a share," the CNBC story said. Outgoing US President Joe Biden on January 3 blocked the USD14.9 billion sale of US Steel to Nippon, citing a strategic need to protect domestic industry. Nippon and US Steel, which have filed a lawsuit challenging Biden's order, said Sunday that US authorities have extended the deadline for Nippon to abandon the transaction until June 18. A second lawsuit by Nippon and US Steel accused Cleveland-Cliffs, Cleveland-Cliffs CEO Lourenco Goncalves and United Steelworkers Union President David McCall of conspiring to torpedo the Nippon transaction "as part of an illegal campaign to monopolise critical domestic steel markets," Nippon and US Steel said in a January 6 news release.
----------
By Emma Curzon, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2025 Alliance News Ltd. All Rights Reserved.
