(Alliance News) - Stocks were called lower in London on Thursday, after a disappointing report on UK consumer confidence.
"Across the Channel... [UK Chancellor] Rachel Reeves is being seriously challenged on her budget in Davos," commented Swissquote's Ipek Ozkardeskaya. "She said that she said that she was 'absolutely relaxed' about wealth creation. How lucky!
"The truth is investors are not as relaxed and they are losing confidence in Reeves' growth-boosting plans. The sterling outlook remains negative, also backed by the expectation of two – and maybe more – rate cuts for this year."
In corporate news, Associated British Foods reported decreased revenue, while IG Group saw a jump in its half-year profit.
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 24.3 points, 0.3%, at 8,520.83
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Hang Seng: down 0.6% at 19,657.11
Nikkei 225: up 0.8% at 39,958.87
S&P/ASX 200: down 0.6% at 8,378.70
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DJIA: closed up 130.92 points, 0.3%, at 44,156.73
S&P 500: closed up 0.6% at 6,086.37
Nasdaq Composite: closed up 1.3% at 20,009.34
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EUR: lower at USD1.0398 (USD1.0417)
GBP: lower at USD1.2305 (USD1.2317)
USD: higher at JPY156.57 (JPY156.49)
GOLD: lower at USD2,753.02 per ounce (USD2,757.82)
OIL (Brent): lower at USD77.99 a barrel (USD78.31)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
08:30 EST Canada retail sales
16:00 CET eurozone consumer confidence
08:30 EST US initial jobless claims
10:30 EST US EIA natural gas stocks
11:00 EST US EIA crude oil stocks
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Consumer confidence in the UK dropped in January, as expectations around the health of the economy deteriorated. According to BRC-Opinium data, consumer expectations over the next three months of their personal financial situation dropped to minus 4 in January, down from minus 3 in December. Consumer's expectations of the state of the economy worsened to minus 34 in January, down from minus 27 in December and personal spending on retail fell to minus 9 in January, down from minus 3 in December. Personal spending expectations overall dropped to plus 4 in January, down from plus 11 in December but personal saving improved to minus 3 in January, up from minus 5 in December. Helen Dickinson, chief executive of the British Retail Consortium, said: "As the government warns of tough times ahead, it is little surprise that the public have caught the January blues...Gen Z (18-27) remain the only group to expect the economy to improve, while two-thirds of Boomers (60-78) expect things to get worse. Feelings around people's own finances fell slightly, with older generations remaining the most pessimistic. Expectations of retail spending and wider spending both fell significantly, though much of this is likely to be the end of the Christmas period, as people tightened their belts for the new year ahead."
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Opponents of major infrastructure projects will have fewer chances to "frustrate growth" through repeated legal challenges, the UK prime minister has said. Keir Starmer said he would end a "challenge culture" that saw major projects such as nuclear power plants, wind farms and roads delayed by unarguable bids for judicial review. Number 10 said the changes would prevent "cynical" or "hopeless" cases causing delays and increasing the cost of infrastructure projects. Opponents currently have three opportunities to secure permission for a judicial review against a major infrastructure project – firstly by writing to the High Court, then in an oral hearing and finally by asking the Court of Appeal. But under new plans, the written stage will be scrapped and any cases deemed "totally without merit" will be unable to ask the Court of Appeal to reconsider. The prime minister said: "For too long, blockers have had the upper hand...We're putting an end to this challenge culture by taking on the Nimbys and a broken system that has slowed down our progress as a nation. This is the government's Plan for Change in action – taking the brakes off Britain by reforming the planning system so it is pro-growth and pro-infrastructure."
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The EU could consider the UK joining a continent-wide trade agreement, as Prime Minister Keir Starmer seeks a reset with the bloc, an EU trade chief has indicated. Maros Sefcovic, who led post-Brexit negotiations for the EU, told the BBC the UK joining the Pan-Euro-Mediterranean Convention is "something we could consider". The PEM allows for tariff-free trade of goods across Europe, as well as some North African and Levantine nations. Several business groups have backed the UK joining PEM as it would help to maintain complex supply chains, but the previous Conservative government chose not to pursue it as part of a post-Brexit trade agreement. Speaking to the BBC at the World Economic Forum in Davos, Switzerland, Sefcovic said the idea had not yet been "precisely formulated" and that the "ball is in the UK's court". The UK government has begun consulting with businesses on the benefits of the PEM plan and how it could help cut red tape and improve trade, the BBC said.
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The Pentagon will begin deploying as many as 1,500 active duty troops to help secure the US-Mexico border in the coming days, officials said. The move puts in motion plans US President Donald Trump laid out in executive orders shortly after he took office to crack down on immigration. Acting defence secretary Robert Salesses was expected to sign the deployment orders on Wednesday, but it was not yet clear which troops or units will go, and the total could fluctuate. It remains to be seen if they will end up carrying out law enforcement, which would put American troops in a dramatic new role, not seen in recent history. The officials spoke on condition of anonymity because the announcement has not yet been made. Troops are prohibited by law from carrying out law enforcement duties on the border, but that may change.
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Donald Trump on Thursday will star in an eagerly-anticipated online appearance at the World Economic Forum in Davos, addressing global elites whose annual gabfest has been consumed by the US president's days-old second term. Davos will finally hear from the man himself during a live video appearance, with chief executive officers given the chance to lob questions at Trump, himself a businessman who made his fortune in real estate. He already gave Davos a taste of what is to come since his inauguration on Monday, which coincided with the WEF's first day: tariff threats against Mexico and Canada, the US withdrawal from the Paris climate pact, a threat to take the Panama Canal, just to name a few. His plans to cut taxes, reduce the size of the federal government and deregulate industries will find a sympathetic ear amongst many businesses.
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BROKER RATING CHANGES
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Bernstein cuts easyJet price target to 600 (625) pence - 'market-perform'
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HSBC raises FirstGroup to 'buy' - price target 190 pence
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COMPANIES - FTSE 100
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Shell said its Downstream, Renewables & Energy Solutions Director Huibert Vigeveno will step down "to pursue other opportunities" with effect from March 31. He will be succeeded by Machteld De Haan from April 1. De Haan has been Shell's Chemicals & Products executive vice president since 2023.
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Associated British Foods said revenue for the first quarter ended January 4 totalled GBP6.73 billion, down 2.2% on-year. Retail sales edged down 0.4% to GBP3.36 billion; Grocery decreased 1.8% to GBP1.39 billion; and Sugar revenue saw the largest fall of 6.0% to GBP751 million. UK & Ireland sales declined 4%, while sales in Spain, Portugal, France, Italy and the US grew, among others. Primark's sales grew 2%, AB Foods said, but its womenswear performance was hit by weaker sales in cold-weather and seasonal clothing and its Christmas product range traded well. Going forward, the firm said Primark is now targeting low-single digit sales growth in 2025 through its store rollout programme in growth markets in Europe and the US. "Despite the market conditions in the UK and Ireland, we remain confident in the Primark proposition and continue to focus on initiatives across product, digital and brand to drive underlying growth," AB Foods said.
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British Airways' parent company has warned it would not support Heathrow expansion without an overhaul of how passenger fees are set. International Consolidated Airlines Chief Executive Luis Gallego said the regulatory model used to determine the west London airport's charges is "not fit for purpose". He made the comments amid speculation Chancellor Rachel Reeves is preparing to back the building of a third runway at Heathrow. Speaking at an event held by trade association Airlines UK in central London, Gallego said: "I think the regulatory model that we have is not fit for purpose. "All the investments in Heathrow are too high and in the end we transfer that to the customers. "As a consequence of that, Heathrow is the most expensive airport in the world but the experiences of customers are not comparable to other places. "So we want to develop Heathrow and we support the development if we have the right regulatory model."
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COMPANIES - FTSE 250
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IG Group reported total revenue of GBP522.5 million for the first half ended November 30, up 11% from GBP472.6 million the previous year. Pretax profit rose 41% on-year to GBP249.3 million from GBP176.4 million, while adjusted pretax profit rose 30% to GBP266.8 million from GBP205.7 million. Basic earnings per share increased to 51.7 pence from 33.4p. IG Group also intends to pay an interim dividend of 13.86p per share, increased from 13.56p. "First half performance reflected more supportive market conditions, but we have work to do to grow active customers which will be necessary to deliver sustainably stronger growth," said Chief Executive Officer Breon Corcoran, who added: "Current trading has been satisfactory, and we remain confident of meeting consensus revenue and profit before tax expectations in FY25."
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CMC Markets, in its trading update for the third quarter ended December 31, said it remains on track to achieve annual net operating income in line with previous guidance. "Management also remains confident in meeting its cost guidance of approximately GBP225 million, excluding variable remuneration and non-recurring charges," the company added.
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OTHER COMPANIES
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Angle expects to report GBP2.9 million in revenue for 2024, up 31% from GBP2.2 million the prior year. It also expects a reduced loss of around GBP14 million, "in line with guidance", against the previous year's GBP20.1 million. Its cash balance at the year's end totalled GBP10.4 million, showing that its "cash position...remains solid, and stronger than market expectations". Going forward, it said 2025 revenue growth should be higher than in 2024, and that it is "pleased with how the sales pipeline is developing and the rate of revenue growth is expected to increase significantly over time". CEO Andrew Newland says: "We enter 2025 with confidence that our current large pharma contracts are progressing well and have the potential to lead to larger scale opportunities with the same customers coupled with an ability to secure additional new pharma contracts. Despite the challenging market conditions, the adoption of liquid biopsy by large pharma is progressing and Angle is uniquely differentiated and well positioned in this growth market."
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By Emma Curzon, Alliance News reporter
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