(Alliance News) - London's FTSE 100 is called to open lower after tariff worries rocked Asian equities and US stocks endured less-than-stellar trade on Thursday.
"It was almost a 'Turnaround Thursday', yesterday, until President Trump took to social media to confirm that tariffs on Mexico and Canada will indeed be going into place on 4th March," Pepperstone analyst Michael Brown commented.
"It had looked as if a degree of 'tariff fatigue' had set in, though clearly participants aren't prepared to ignore this apparent escalation in Trump's protectionist stance, with stocks violently and rapidly selling-off as the headlines crossed."
China vowed to take "all necessary countermeasures" after Trump said he would impose an additional 10% tariff on Chinese imports.
Conversely, the US and Britain will end up with a "great" trade agreement, Trump said on Thursday during a joint press conference with UK Prime Minister Keir Starmer.
"We're going to have a great trade agreement, one way or the other," Trump told reporters in Washington. "We're going to end up with a very good trade agreement for both countries, and we're working on that as we speak."
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 0.8% at 8,690.31
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Hang Seng: down 3.7% at 22,841.26
Nikkei 225: down 2.9% at 37,155.50
S&P/ASX 200: down 1.2% at 8,172.40
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DJIA: closed down 193.62 points, 0.5%, at 43,239.50
S&P 500: closed down 1.6% at 5,861.57
Nasdaq Composite closed down 2.8% at 18,544.42
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EUR: lower at USD1.0392 (USD1.0407)
GBP: lower at USD1.2586 (USD1.2626)
USD: lower at JPY149.94 (JPY149.97)
GOLD: lower at USD2,858.95 per ounce (USD2,873.26)
(Brent): lower at USD72.87 a barrel (USD73.76)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
13:00 GMT Germany CPI
11:00 GMT Ireland CPI
11:00 GMT Ireland retail sales
13:30 GMT US trade balance
13:30 GMT US wholesale inventories
13:30 GMT US personal consumption expenditures
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Keir Starmer will welcome Volodymyr Zelensky to Downing Street this weekend as he follows up his visit to see Donald Trump with efforts to bridge the gap between the US and Europe over a potential deal to end the Ukraine war. Leaders from across Europe will gather in London on Sunday, following a week which will have seen Starmer, France's Emmanuel Macron and the Ukrainian president travel for talks with Trump. The US president continues to resist calls to fully commit American military might to guarantee any Ukraine peace deal, but he has suggested closer economic ties and an agreement on mineral access between Kyiv and Washington would effectively act as a security "backstop".
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Starmer returned to the UK following a trip to the White House which reportedly went as well as No 10 could have hoped, with Trump clearly pleased with the King's invitation for an unprecedented second state visit, giving an indication that he would not block the Chagos Islands deal and suggesting a trade deal could spare British exports from US tariffs. Sunday's intensive diplomatic activity will see Zelensky and Italy's Giorgia Meloni separately visit No 10, the prime minister chair a call with the Baltic countries – Latvia, Lithuania and Estonia – before hosting the summit of European leaders. Zelensky, Macron and Meloni have been invited to the summit along with leaders from Germany, Denmark, the Netherlands, Norway, Poland, Spain, Turkey, Finland, Sweden, the Czech Republic and Romania, as well as the Nato secretary general and the presidents of the European Commission and European Council. They will discuss the next steps in planning for security guarantees if a Ukraine peace deal is reached – something Starmer believes will have to involve the US.
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Annual UK house price growth eased slightly in February, with the market remaining "resilient" in the face of "affordability challenges". According to numbers from Nationwide, UK house prices rose 3.9% on-year this month, the pace of growth fading from 4.1% in January. On a monthly basis, prices rose 0.4% in February, after a 0.1% improvement in January from December. It is the sixth-successive monthly rise in prices. "Housing market activity has also remained resilient in recent months, despite ongoing affordability challenges. Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023. However, taking 2024 as a whole, transactions were still modestly (6%) lower than the levels prevailing before the pandemic struck in 2019," Nationwide analyst Robert Gardner commented.
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BROKER RATING CHANGES
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Barclays cuts WPP to 'equal weight' - price target 780 pence
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COMPANIES - FTSE 100
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International Consolidated Airlines Group announced a EUR1.00 billion share buyback and reported an increase in annual earnings. The British Airways parent hailed its "transformation". Revenue in 2024 amounted to EUR32.10 billion, rising 9.0% from EUR29.45 billion, helping push pretax profit 17% higher at EUR3.56 billion from EUR3.06 billion. Operating profit before exceptional items increased by 27% to EUR4.44 billion, beating the company-compiled consensus of EUR4.08 billion. For the final quarter alone, operating profit before exceptional items more than doubled to EUR1.12 billion from EUR502 million, beating consensus of EUR754 million. Final quarter revenue rose 11% to EUR8.05 billion. "These results highlight the quality of our businesses and effectiveness of our strategy, underpinned by the successful execution of our transformation programme across the group. We are delivering world-class margins and returns, in line with the targets we set out to the market just over a year ago," Chief Executive Officer Luis Gallego said. The firm, which also owns Aer Lingus, Iberia and Vueling, proposed a EUR0.06 per share final dividend. It takes its annual dividend to EUR0.09. IAG's EUR0.03 interim dividend was its first since 2019. In addition, it announced a EUR1.00 billion share buyback, returning excess capital to shareholders over the next 12 months. It had announced a EUR350 million buyback back in November. Looking to 2025, it exepcts to deliver "sustainable earnings per share growth". Its basic EPS in 2024 rose 3.5% to 55.7 cents, from 53.8 cents.
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IMI announced a new share buyback and posted 2024 profit growth, hailing "another strong year". The engineering firm said its Process Automation offering enjoyed an "outstanding performance". Pretax profit in 2024 rose 9.3% to GBP330.4 million from GBP302.4 million. Revenue improved 0.6% to GBP2.21 billion from GBP2.20 billion. Revenue beat company-compiled consensus of GBP2.20 billion. Adjusted operating profit also beat consensus, rising 6.1% to GBP435.5 million from GBP410.6 million. Consensus was for adjusted operating profit of GBP434 million. "2024 has been another strong year for IMI, with record profits, good organic growth and strong cash generation. We delivered 4% organic sales growth and 10% adjusted operating profit growth, supported by an outstanding performance in Process Automation and continued demand for our energy-saving technology in Climate Control," CEO Roy Twite said. "I would like to thank all our people for delivering this result. It demonstrates the strength and quality of our business and success of the growth strategy we launched in 2019. IMI is now a higher quality, more resilient and more innovative business, with a well-balanced geographic mix of revenues more closely aligned to attractive, long-term growth markets in fluid and motion control. Over the past five years we have built a track record of sustainable, profitable growth, delivering 11% compound annual adjusted EPS growth." IMI announced a 21.1 pence per share final dividend, rising 9.9% from 19.2p. Its total dividend amounted to 31.1p per share, also a rise of 9.9%, from 28.3p. The CEO added: "Given the strength of our cash flow, disciplined approach to capital allocation, strong balance sheet and confidence in our future performance, we today announce a further GBP200 million share buyback and a 10% increase to the final dividend. Over the next three years, we expect to generate in excess of GBP1 billion in free cash flow."
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COMPANIES - FTSE 250
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Spectris hailed a "robust finish to the year" but said it is too soon to say it is in the middle of a "sustained recovery". The supplier of precision instrumentation and controls reported pretax profit of GBP302.7 million for 2024, a rise of 63% from GBP185.6 million. Adjusted pretax profit was 27% lower, however, at GBP191.5 million from GBP263.6 million. Sales fell 10% to GBP1.30 billion from GBP1.45 billion. "We ended the year strongly, with full year profit slightly ahead of our revised guidance, and I would like to thank all of my Spectris colleagues for delivering such a robust finish to the year. While it is too early to state that we are seeing a sustained recovery in end markets, we are encouraged by the positive demand signals observed in the final quarter," CEO Andrew Heath commented. "We take confidence from the quality of our portfolio, which has been significantly strengthened by three highly synergistic acquisitions. Their contribution, alongside our accelerated value-realisation plan, in the form of our profit improvement programme, will underpin a significant increase in profit in 2025 and 2026. While the pace of end market recovery remains unclear, the decisive actions we have taken on cost and our focused portfolio, mean we entered 2025 with good momentum, underpinning progress towards our medium-term financial targets." Spectris raised its total dividend by 5.1% to 83.2p per share from 79.2p.
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OTHER COMPANIES
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Science Group, a science and technology consultancy, said it has snapped up a more than 8% stake in environmental and engineering consulting company Ricardo. Science Group said it will "engage with the Ricardo board and major shareholders" also. As of the London close on Thursday, it owns 5.26 million shares in Ricardo, just under an 8.5% holding, a stake valued at GBP12.4 million at current prices. The shares were acquired through open market purchases between February 16 and 27. Including broker fees, Science Group has forked out a total investment of around GBP12.2 million, at an average cost of 231p per share. Ricardo shares closed at 235p on Friday. "Science Group may or may not increase its shareholding in Ricardo. Science Group will engage with the Ricardo board and its major shareholders in relation to managing this strategic investment, noting that prior to Science Group initiating its share purchase, the Ricardo share price was around 15 year lows," Science Group said. "In comparison the FTSE Small Cap index has increased by over 130% over that same time period and Science Group shareholders have benefitted from a more than 15-fold shareholder return from its consultancy and systems strategy since March 2010."
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By Eric Cunha, Alliance News news editor
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