DIRECT LINE INSURANCE GROUP PLC (Alliance News) - Stocks in London were called to open flat on Thursday, as tepid trade in equities continued globally.
A largely robust set of earnings from big US banks helped to alleviate fears of worse to come in the sector, but gave little positive to get investors excited.
"On average, we can say that the US big banks have had a relatively good first quarter, considering that a couple of banks collapsed in March. And the soothing bank results certainly help investors leave the bank stress behind. That's good news," said Swissquote Bank's Ipek Ozkardeskaya.
"But of course, it doesn't mean that all is well, because yesterday's inflation figures from Britain came as a warning that the inflation headache is not over, and the central banks' fight against inflation may last a little longer than many expected," she added.
In early company news, GSK consumer healthcare spin-off Haleon said it expects annual revenue growth to be at the upper end of guidance, following a strong start to the year. Babcock warned of a potential GBP50 million to GBP100 million hit to annual profit from a contract dispute with the UK Ministry of Defence.
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 0.7 point at 7,899.47
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Hang Seng: up 0.2% at 20,417.61
Nikkei 225: closed up 0.2% at 28,657.57
S&P/ASX 200: closed down 3.3 points at 7,362.20
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DJIA: closed down 79.62 points, 0.2%, at 33,897.01
S&P 500: closed flat at 4,154.52
Nasdaq Composite: closed flat at 12,157.23
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EUR: firm at USD1.0963 (USD1.0958)
GBP: up at USD1.2437 (USD1.2424)
USD: flat at JPY134.71 (JPY134.69)
GOLD: flat at USD1,993.54 per ounce (USD1,993.72)
OIL (Brent): down at USD82.17 a barrel (USD83.68)
(changes since previous London equities close)
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ECONOMICS
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Thursday's key economic events still to come:
11:00 CEST EU foreign trade
13:30 CEST EU ECB accounts of monetary policy discussions
16:00 CEST EU FCCI consumer confidence indicator
08:30 EDT US Philadelphia Fed business outlook survey
08:30 EDT US unemployment insurance weekly claims report
10:00 EDT US leading indicators
12:00 EDT US Federal Reserve Governor Christopher Waller speaks
12:00 EDT US Fed Cleveland President Loretta Mester speaks
16:30 EDT US foreign central bank holdings
16:30 EDT US federal discount window borrowings
17:00 EDT US Fed Atlanta President Raphael Bostic speaks
19:45 EDT US Fed Philadelphia President Patrick Harker speaks
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German producer price inflation cooled to 7.5% on an annual basis in March from 15.8% in February, according to Destatis. On a monthly basis, prices fell 2.6%, accelerating from the 0.3% fall in February. Destatis noted this was the sixth consecutive month when prices had fallen.
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UK buyer interest in new electric cars has slumped by nearly two-thirds since the start of last year, new figures have suggested. Online vehicle marketplace Auto Trader said it recorded a 65% drop in inquiries for the vehicles last month compared with January 2022. The company's Road to 2030 report attributed the reduction to several factors, including the cost-of-living crisis, higher interest rates for borrowing and the rise in energy prices. It noted the market for new electric vehicles is being hampered by a lack of affordable choices, with the number of models costing between GBP20,000 and GBP30,000 decreasing.
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US President Joe Biden and Republican leader Speaker Kevin McCarthy fought Wednesday for the moral high ground at the start of an epic battle over the national debt limit that will determine the fate of the US economy and set the stage for the 2024 election. Biden called Republican plans "wacko" and McCarthy said Biden was "bumbling" into a US debt default. But both leaders also claimed to be presenting the most responsible plans to exit the impasse and protect the world's largest economy. Addressing Congress, McCarthy introduced a proposed law that would allow the annual debt increase in return for the kind of substantial spending cuts demanded by the Maga branch of the party, loyal to former president and 2024 candidate Donald Trump.
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BROKER RATING CHANGES
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Jefferies raises Direct Line Insurance to 'buy' (hold) - price target 210 (175) pence
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COMPANIES - FTSE 100
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Consumer healthcare company Haleon updated on its first quarter performance, ahead of its annual general meeting. Organic revenue grew 9.9%, with most of this - 7.1% - coming from price rises, with volume mix up 2.8%. "Growth was seen across Respiratory Health, Pain Relief, Oral Health and Digestive Health and Other," Haleon said. Growth was strong across geographies, with Asia Pacific boosted by pain relief sales in China following the end of lockdowns and the outbreak of Covid, cold and flu. Haleon now expects annual revenue at the upper end of guidance of 4% to 6% growth. All other annual guidance remains unchanged, it said.
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Rentokil Initial said its first quarter started well, with revenue rising 65%, thanks to mergers & acquisitions such as Terminix, while organic revenue was up 6.7%. "The performance has been underpinned by resilient demand and effective pricing, which has continued to offset inflationary pressures," the pest-control firm explained. It reiterated its annual expectations.
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COMPANIES - FTSE 250
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Defence contractor Babcock said its cash flow in the financial year that ended March 31 was "significantly" ahead of expectations, and now expects to reinstate dividend payments in financial 2024. Underlying profit was in line with its expectations, excluding the potential one-off hit from a contract dispute. The dispute relates to a Type 31 contract with the UK Ministry of Defence back in 2019 for five Inspiration Class frigates for the Royal Navy. Through the past year, Babcock said it has been in discussions with the MoD about additional costs, but the parties have been unable to reach an agreement on who is responsible for the costs under the contract. Should the costs not be recovered, the contract would be loss-making, and Babcock estimates the need for a GBP50 to GBP100 million provision in its results for financial 2023. "Any settlement or arbitral award would reverse the provision in part or in full," it said.
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OTHER COMPANIES
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Digital privacy and security company Kape Technologies' majority shareholder Unikmind announced an increased and final offer to acquire Kape's shares that it does not already hold. Unikmind raised the cash offer to USD3.60 per share from its previous offer of USD3.44. Kape had previously said the USD3.44 offer "materially undervalues" the company. Unikmind currently owns or has acceptances of offer for 67.2% of Kape Technologies shares. Unikmind said its new offer is worth 290p per share. Kape shares closed at 286.00p on Wednesday, giving it a market capitalisation of GBP1.23 billion.
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By Elizabeth Winter, Alliance News senior markets reporter
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