(Alliance News) - Stock prices in London are called to open higher on Friday, rounding off a week mired by tariff uncertainty and US political worries with a gain.
US President Donald Trump on Thursday threatened to impose 200% tariffs on wine, champagne and other alcoholic beverages from EU countries, in retaliation against the bloc's planned levies on American-made whiskey.
Eyes remain on the US, as the government could begin shutting down entirely this weekend.
With a Friday night deadline to fund the government or allow it to start winding down, the Senate is set for a crunch vote ahead of the midnight cut-off on a Trump-backed bill passed by the House of Representatives.
Top Senate Democrat Chuck Schumer – who has long insisted that it is bad politics to shut down the government – indicated he would vote for the bill, raising hopes for its success.
In the UK, numbers showed the ecomomy unexpectedly declined at the start of the year, on production woe.
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 0.3% at 8,567.16
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Hang Seng: up 2.4% at 24,028.90
Nikkei 225: closed up 0.7% at 37,053.10
S&P/ASX 200: closed up 0.5% at 7,789.70
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DJIA: closed down 537.36 points, 1.3%, at 40,813.57
S&P 500: closed down 1.4% at 5,521.52
Nasdaq Composite: closed down 2.0% at 17,303.01
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EUR: down at USD1.0836 (USD1.0874)
GBP: down at USD1.2925 (USD1.2957)
USD: up at JPY148.83 (JPY147.65)
Gold: up at USD2,984.34 per ounce (USD2,982.53)
(Brent): up at USD70.57 a barrel (USD70.13)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
14:00 GMT US Michigan consumer sentiment index
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The UK economy registered a surprise decline at the start of the year, numbers on Friday showed, with minor growth in the service sector more than offset by decline elsewhere. The Office for National Statistics said UK gross domestic product shrank by 0.1% in January from December, confounding FXStreet-cited market expectations of a 0.1% rise. In December, the UK economy had grown 0.4% from November. The ONS said the decline was "mainly caused by a fall in the production sector". "Monthly services output grew by 0.1% in January 2025, following growth of 0.4% in December 2024, and grew by 0.4% in the three months to January 2025," the statistics agency explained. "Production output fell by 0.9% in January 2025, following growth of 0.5% in December 2024, and fell by 0.9% in the three months to January 2025, with manufacturing output driving both the monthly and three-month falls. Construction output fell by 0.2% in January 2025, following a fall of 0.2% in December 2024, but grew by 0.4% in the three months to January 2025." The production decline in January was worse than expected. A less steep 0.1% fall was forecast, according to FXStreet. "Monthly production output in January 2025 was at its lowest level since May 2020," the ONS added. On an annual basis, production declined 1.5% in January, easing from a 1.9% drop in December. The January figure still was worse than consensus of a lesser 0.7% decline.
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The UK foreign secretary has said it would be "wrong" for Vladimir Putin to place conditions on a ceasefire between Russia and Ukraine. David Lammy said a pause in fighting would be a "first step" to allow talks to start on "a full settlement" to end the war. Talks between the US and Ukraine produced the idea of a 30-day truce, with the US president sending envoy Steve Witkoff to Moscow to discuss the plans with the Kremlin. The Russian leader said "the idea itself is correct, and we certainly support it", but at a press conference in Moscow he added that "there are issues that we need to discuss, and I think that we need to discuss it with our American colleagues and partners". The foreign secretary, who is meeting G7 counterparts in Canada, said there is an "opportunity" for "a just and lasting peace" in Ukraine. "The US and Ukraine have called for a full, immediate and unconditional 30-day ceasefire," he told The Mirror. "This would be a first step so that talks can start on a full settlement that protects Ukraine's security and sovereignty. President Zelensky has shown that Ukraine is the party of peace. "It would be wrong for Putin to lay conditions. Our support for Ukraine, and that of other partners, remains ironclad." Putin and his allies have suggested Ukraine wants the ceasefire to allow its forces to regroup and rearm at a time when they are on the back foot and being forced out of the Kursk region after their incursion into Russian territory.
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The British government said Friday that it would increase its export credit facilities for weapons manufacturers by GBP2 billion to boost overseas sales. The new funds "will see billions of pounds unlocked for UK defence companies that export overseas, driving economic growth and creating jobs across the UK," it said in a statement. Already the UK Export Finance agency has a lending capacity of GBP8 billion specifically for government clients of defence contractors, bringing the new total to GBP10 billion. Like other countries across Europe, Britain is racing to beef up its military production capabilities in the face of an expansionist Russia, pressure on European members of Nato to spend more on defence, and questions over President Donald Trump's commitment to US protection of Europe. British Prime Minister Keir Starmer pledged ahead of a White House visit in February to boost defence spending to 2.5% of the economy by 2027, with the aim of hiking it to 3.0% in the next parliament. "The world is changing, and we must bring about a new era of security and renewal that protects working people and keeps our country safe," Chancellor of the Exchequer Rachel Reeves said in the statement.
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BROKER RATING CHANGES
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Barclays raises Relx to 'overweight' (equal-weight) - price target 4,275 (4,220) pence
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JPMorgan cuts AIB to 'neutral' (overweight) - price target 7.3 (6) EUR
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COMPANIES - FTSE 100
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Berkeley Group backed profit guidance and said it is "hugely encouraged" by UK government planning reforms. The housebuilder, in a trading statement for the four months to February 28, reaffirmed its aim to achieve total pretax profit of GBP975 million in the current and next financial year combined. It expects pretax profit in the current financial year of GBP525 million. Pretax profit in the year to April 30 last year had declined 7.7% to GBP557.3 million. For financial 2026, it expects pretax profit of GBP450 million. Berkeley added: "Enquiries are at a consistently good level, and we have seen the modest improvement in sales reservations that we noted at the time of the interim results continue through this trading period with sales rates ahead of those achieved last year. For this improvement to continue and sales rates to return closer to the levels of three years ago, there needs to be greater confidence in the trajectory of interest rate reductions and wider economic stability." It added: "We remain hugely encouraged by the change in mind-set over planning, brought about by the government's planning reforms and housing delivery ambitions which we fully support. In the period, Berkeley has made good progress, securing important amendments on 10 of our long-term regeneration sites." Nonetheless, it warned that the "extent and pace of regulatory changes of recent years" has put pressure on new home deliveries. "We now await details of the new building safety levy," it said. Berkeley said there is GBP156.1 million of residual shareholder returns to complete by the end of September 2025. "To the extent this amount is not delivered as share buy-backs, it will be returned in September as a dividend," it added.
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COMPANIES - FTSE 250
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Bodycote raised its dividend, despite a decline in revenue and profit in 2024. The supplier of heat treatments and specialist thermal processing services booked exceptional items of GBP78.3 million, hurting profit. Pretax profit in 2024 fell by three-quarters to GBP28.4 million from GBP111.7 million. Exceptional charges included a GBP28.4 million write-down of its enterprise resource planning system, a GBP31.9 million hit from optimisation actions and a GBP18.0 million goodwill impairment at its North American automotive and industrial focused operations. Bodycote's revenue fell 5.7% in 2024 to GBP757.1 million, from GBP802.5 million in 2023. Adjusted pretax profit declined 0.5% to GBP119.5 million from GBP120.1 million. It excludes the exceptional charges. "We delivered a resilient performance in 2024, with our core business growing organically pre-surcharges and good margin improvement despite challenging conditions in many of our end markets. This was driven by Specialist Technologies where we saw good growth and strong margin improvement, as well as decisive cost control actions taken in our Automotive and Industrial Precision Heat Treatment businesses," Chief Executive Officer Jim Fairbairn said. Bodycote upped its final dividend by 0.6% to 16.1 pence per share from 16.0p. Its total dividend increased 1.3% to 23.0p from 22.7p. Looking ahead, the firm said: "End markets remain mixed, with challenging conditions in Automotive and Industrial. Structural demand in Aerospace & Defence remains strong, although there continues to be a temporary impact from industry-wide supply chain disruption. Reflecting this backdrop, current run-rate profit performance is at a broadly similar level to H2 2024. We are successfully executing our Optimisation programme, which will deliver additional profit benefits as we move into H2 2025. Our continued focus on cost control and progressing our strategic actions is ensuring we are well positioned to capitalise when markets recover. We remain confident in the delivery of our medium-term financial targets."
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OTHER COMPANIES
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Vanquis Banking Group reported a wider annual loss, as it booked a write-off at its Moneybarn vehicle finance offering. The specialist bank said the write-off is not related to a recent Court of Appeal verdict in the motor finance sector. On the ongoing vehicle finance saga, where a key verdict looms, "Vanquis believes its position is differentiated on a number of grounds versus the three cases subject to the judgment", it said. Its pretax loss in 2024 stretched to GBP136.3 million from GBP12.0 million, amid the GBP71.2 million Moneybarn goodwill write-off. Total income slipped 6.2% to GBP458.5 million from GBP488.8 million. It reported impairment charges of GBP191.0 million, up 15% from GBP165.5 million. The impairment was driven by a vehicle finance receivables review. The UK Financial Conduct Authority on Tuesday said it is no longer planning a further update on its review into past use of motor finance discretionary commission arrangements in May. The FCA intends to outline the next steps within six weeks of a Supreme Court verdict. This will include whether the FCA is proposing a redress scheme and if so, how it will take it forward. The Supreme Court is due to hear an appeal brought by car loan providers challenging an October ruling that sided with consumers. Vanquis added: "The future application of the Court of Appeal judgment in Johnson v Firstrand Bank Ltd, Wrench v Firstrand Bank Ltd, and Hopcraft v Close Brothers Ltd, relating to motor finance commission disclosure practices, remains highly uncertain with the Supreme Court having agreed to hear the appeal of the two lenders involved." It added: "Vanquis believes its position is differentiated on a number of grounds versus the three cases subject to the judgment and all customers signed a pre-contractual document that confirmed a commission 'will' be paid." Vanquis did not pay a dividend in 2024. It had paid 6.0p per share for 2023.
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By Eric Cunha, Alliance News news editor
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