(Alliance News) - Stocks were called lower on Thursday in London, while UK firms are reportedly struggling under the weight of soaring energy bills, tax and wage hikes.
As for the US and continued trade policy tensions, Pepperstone's Michael Brown said that New York's equity market "wants to rally" but "risks remain".
"Speaking of risks, progress towards a US-China trade deal is still rather sluggish, with there also having been little by way of concrete news regarding the Trump-Xi call that had been rumoured to take place this week. Trump did, though, rant away on 'Truth Social' yesterday about how, although he "likes" the Chinese leader, he is "very tough to make a deal with". Not exactly friendly rhetoric, but at the same time no real escalatory action here either. Even if there was, 'TACO' is probably going to ring true again anyway.
"Another risk is a potential softening in incoming economic data, and some cracks did perhaps emerge on that front yesterday."
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 4.7 points, 0.1%, at 8,796.59
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Hang Seng: up 0.5% at 23,774.03
Nikkei 225: down 0.5% at 37,551.61
S&P/ASX 200: down 0.1% at 8,537.50
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DJIA: closed down 91.90 points, 0.2%, at 42,427.74
S&P500: closed up 0.44 points at 5,970.81
Nasdaq Composite: closed up 0.2% at 19,460.49
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US 10-year Treasury yield: 4.37% (4.38%)
US 30-year Treasury yield: 4.89% (4.90%)
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EUR: lower at USD1.1409 (USD1.1425)
GBP: lower at USD1.3545 (USD1.3566)
USD: higher at JPY143.15 (JPY142.98)
GOLD: lower at USD3,361.26 per ounce (USD3,374.32)
OIL (Brent): higher at USD64.75 a barrel (USD64.65)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:30 CEST eurozone construction PMI
11:00 CEST eurozone PPI
14:15 CEST eurozone interest rate decision
14:45 CEST eurozone ECB press conference
09:30 CEST France construction PMI
08:00 CEST Germany factory orders
09:30 CEST Germany construction PMI
11:00 BST Ireland unemployment
11:00 BST Ireland current account
11:00 BST Ireland GDP
09:00 BST UK new car sales
09:30 BST UK construction PMI
08:45 BST UK Bank of England Monetary Policy Committee member Megan Greene speaks
08:30 EDT US trade balance
08:30 EDT US initial jobless claims
10:30 EDT US EIA natural gas stocks
12:00 EDT US Federal Reserve Governor Adriana Kugler speaks
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Confidence in the strength of the UK economy has fallen to 28% from 45% in May 2015 following a cost-of-living crisis, Brexit, Covid and geopolitical upheaval, according to a long-running survey. But confidence in non-essential spending has held strong, at an average of 53% from 2015 to now, the Barclays 10 Years Of Spend report found. Despite financial pressure, households' discretionary spending has grown by 9.2% annually on average between 2021 and 2024, outpacing essential spending's 5% growth. The study, based on billions of transactions and more than 200,000 consumer confidence surveys since 2015, found that 66% of consumers pay more attention to their budget than they did a decade ago. 45% of UK adults say they do not feel better off than they did 10 years ago.
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The UK must address soaring energy tariffs as firms struggle under the weight of crippling power bills on top of tax and wage hikes costing them an extra GBP24 billion a year, the boss of the Confederation of British Industry is set to warn. Rain Newton-Smith, chief executive of the business group, will tell business leaders and politicians at the CBI's business dinner on Thursday that sky-high energy costs are an "anchor on our ambition". The CBI said almost 90% of British businesses have seen their energy bills rise over the past three years, with a third seeing them rocket by more than 50%. Four in 10 firms are reducing investment as a result, according to the group.
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Investment in clean energy technologies is set to strike a record this year despite global economic uncertainty, double the spending on fossil fuels that will dip for the first time since 2020, the International Energy Agency said Thursday. While the Trump administration has been hostile to renewable energy sources and trumpets boosting oil production, the IEA said security concerns as well as rising demand for electricity – including from artificial intelligence and data centres – is driving investment in clean energy sources. "Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment this year to a record USD3.3 trillion as countries and companies seek to insulate themselves from a wide range of risks," Executive Director Fatih Birol said as the IEA published its latest annual World Energy Investment report. It expects investment in clean technologies, including nuclear and electricity distribution grids, to hit a record USD2.2 trillion this year. Meanwhile, investment in oil, natural gas and coal is set to dip to USD1.1 billion, as companies react to falling prices and lower demand expectations. Most of drop is due to investment in US oil production, while investment in liquefied natural gas, LNG, projects there and elsewhere is expected to lead to the largest-ever capacity growth in 2026-2028.
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US defence chief Pete Hegseth on Thursday pushed NATO to agree a deal on ramping up defence spending that can satisfy President Donald Trump at a summit later this month. Trump has demanded that alliance members agree to boost defence budgets to five percent of their GDP at the June 24-25 meeting in The Netherlands. NATO chief Mark Rutte has put forward a compromise agreement for 3.5% of GDP on core military spending by 2032, and 1.5% on broader security-related areas such as infrastructure. "We're here to continue the work that President Trump started, which is a commitment to five percent defence spending across this alliance, which we think will happen, we think has to happen by the summit at The Hague," Hegseth said at the start of a meeting with NATO counterparts in Brussels. "That's our focus. Five percent, combat credible and capable forces, and then making sure NATO is focused on its core mission, continental defence, where its comparative advantage exists." Multiple diplomats say that Rutte looks on track to secure the deal for the summit in The Hague – but that some allies are still hesitant about committing to such levels of spending. "I'm really, absolutely, positively convinced that at the summit with the 32, we will come to an agreement when it comes to this really big increase in defence spending," the NATO chief said on Wednesday. Most vocal in its reluctance is Spain, which is only set to reach NATO's current target of two percent of GDP by the end of this year.
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US President Donald Trump signed a new travel ban Wednesday targeting 12 countries including Afghanistan, Iran and Yemen, reviving one of the most controversial measures from his first term. Trump said the measure was spurred by a makeshift flamethrower attack on a Jewish protest in Colorado that US authorities blamed on a man they said was in the country illegally. The move bans all travel to the US by nationals of Afghanistan, Myanmar, Chad, Republic of the Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan and Yemen. Trump also imposed a partial ban on travelers from seven countries: Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan and Venezuela. Some temporary work visas from these countries will be allowed. The bans go into effect on Monday, the White House said. The White House unveiled the new ban with virtually no warning, minutes after Trump had addressed some 3,000 political appointees from his balcony at a celebratory "summer soiree."
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German Chancellor Friedrich Merz is scheduled to meet US President Donald Trump at the White House on Thursday in his first visit to the US capital since becoming chancellor a month ago. The one-to-one meeting is scheduled for 1130 EDT, or 1630 BST, followed by a press event in the Oval Office and a working lunch. Previous visits to the Oval Office by Ukrainian President Volodymyr Zelensky and South African President Cyril Ramaphosa were marked by controversies. Merz's meeting will focus on efforts to end the war in Ukraine, NATO's response to growing external threats, and the trade dispute between the US and the EU. Merz has already made it clear that he is not travelling to the US capital begging for support but as a confident representative of European positions. The chancellor has only briefly met Trump once before, many years ago in New York. However, since taking office four weeks ago, he has spoken with Trump several times about Russia's war against Ukraine - both individually and in larger groups with other European leaders.
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Passengers will have more choice of international train services through the Channel Tunnel, regulator the Office of Rail & Road, ORR, said. It said it will allocate spare capacity at Eurostar's Temple Mills maintenance depot in north-east London to either one new operator or Eurostar itself, which has plans to grow. Eurostar holds a monopoly in running passenger services through the Channel Tunnel. Other organisations developing proposals to launch rival services include billionaire entrepreneur Richard Branson's Virgin Group, Italy's state-owned railway company FS Italiane Group, and Gemini Trains, which is chaired by Labour peer Tony Berkeley. Access to depot space for maintaining and storing trains is a critical requirement for new operators or Eurostar to boost services. From London St Pancras, Eurostar serves Paris, Brussels and Amsterdam, as well as running seasonal ski trains to the French Alps. Getlink – the French owner of the Channel Tunnel – believes there is the potential for services between London and locations such as Bordeaux, Cologne, Frankfurt, Geneva, Marseille and Zurich.
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The introduction of a digital euro could cost European banks between EUR18 billion and EUR30 billion, according to a new study by consultancy firm PwC. The study, commissioned by the European Credit Sector Associations, ECSAs, analysed 19 banks in detail, estimating their combined adaptation costs at over EUR2 billion. It then projected the figures to represent the potential costs across the entire eurozone. The digital euro aims to provide a European alternative to dominant US-based digital payment providers like PayPal, Mastercard and Visa. In Germany, many banks remain sceptical, questioning the added value over existing fast and secure payment systems such as real-time transfers. PwC highlights that banks will face significant expenses updating mobile banking apps, online platforms, physical payment cards and payment terminals. Adjusting ATM infrastructure alone is expected to cost around EUR9 million per bank on average. The study also warns that implementing the digital euro will require a substantial share of banks' skilled workforce over several years, potentially slowing innovation in the payments sector.
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BROKER RATING CHANGES
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Bernstein raises Reckitt Benckiser to 'outperform' (mp) - price target 6500 (5500) pence
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Berenberg cuts Ferguson Enterprises to 'hold' (buy) - price target 215 (200) USD
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COMPANIES - FTSE 250
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Wizz Air announced its results for the year ended March 31, saying it carried 63.4 million passengers during the period, up 2.2% from 62.0 million the prior year. Total revenue rose 3.8% to EUR5.27 billion from EUR5.07 billion. Preatx profit however dropped 94% to EUR19.7 million from EUR341.1 million. The company declined to give guidance for the current year due to "the lack of visibility across our trading seasons" although it said it expects higher revenue. "I describe our fiscal year F25 with two words: resilience and transformation," commented Chief Executive Officer Jozsef Varadi. "In an environment where rare challenges have become recurrent, Wizz Air has evolved structurally, embedding increased flexibility into our standard operating model. While often dismissed as 'easier said than done,' the past year's events tested both our company and management. We emerged stronger, wiser, and better prepared."
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CMC Markets reported its full-year results for the financial year ended March 31, saying pretax profit rose 33% to GBP84.5 million from GBP63.3 million the year before. Basic earnings per share rose 35% to 22.6p from 16.7p. Net operating income rose 2% to GBP340.1 million from GBP332.8 million, while total revenue rose slightly to GBP360.1 million from GBP359.8 million but trading & investing revenue decreased 2% to GBP313.3 million from GBP320.1 million. CMC declared a final dividend of 8.3p per share, up from 7.3p while the full-year total payout rose 37% to 11.4p from 8.3p. Looking ahead, CMC's "strategic vision remains firmly on track" and "recent trading conditions have also been supportive, providing good momentum into FY 2026". Also, CMC announced that Deputy Chief Executive Officer David Fineberg will not stand for re-election at the 2025 annual general meeting. Instead, he will "transition into the newly created role of Global head of strategic partnerships". Moreover it confirmed that Senior Independent Director Paul Wainscott will succeed James Richards as chair.
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As well as agreeing an acquisition offer for AIM-listed Marlowe (see below), Mitie Group reported its full-year results. In the year ended March 31, Mitie's revenue increased 13% to GBP5.09 billion from GBP4.51 billion. Mitie said this includes a 4% contribution from acquisitions and 9% organic growth "primarily driven by new contract wins and scope increases, pricing and projects upsell". Pretax profit, however, decreased to GBP145.4 million from GBP156.3 million. Mitie declared a final dividend of 3.0p per share, taking the total to 4.3p which was up 8% from 4.0p the year before. "We have entered FY26 with good sales momentum, and a record order book and pipeline of bidding opportunities. With this positive outlook, we have growing confidence in delivering our ambitious Facilities Transformation Three-Year Plan targets and creating increasing value for our stakeholders," Chief Executive Phil Bentley. Also, Mitie announced that it is suspending, with immediate effect, its GBP125 million share buyback programme launched on April 16. It had repurchased two million shares at an average price of 140p. "Following the Marlowe acquisition, the group expects leverage to quickly reduce through cash generation and increasing profitability, enabling the resumption of surplus funds being returned to shareholders via share buyback programmes," Mitie said.
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OTHER COMPANIES
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Marlowe and Mitie Group announced that they have agreed on "a unanimously recommended" cash and share takeover offer by which a Mitie subsidiary will acquire Marlowe's entire share capital. Each Marlowe shareholder will be entitled to receive, for each of their shares, 1.1 new Mitie shares and 290p in cash. Mitie said that based on its closing price of 160p on Wednesday, the offer values Marlowe's shares at 466p each and its entire share capital at around £366 million. The offer represents a premium of approximately 26.5% to Marlowe's closing price of 368p on Tuesday, the last day before market speculation of Mitie's approach.
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Troubled Thames Water is "contemptible" and lies to the public, Parliament has heard. The scathing assessment was made at Westminster by Labour former MP John Cryer as peers discussed a collapsed deal to rescue the debt-laden utility. Britain's biggest water supplier, which has 16 million customers, chose New York-based private equity firm KKR at the end of March to be its preferred bidder under plans to invest around GBP4 billion of new equity to help keep the financially stricken company afloat. But Thames Water said this week KKR was now not "in a position to proceed". Meanwhile, the government has said public ownership is "not the answer" and warned it would divert money away from other public services such as the NHS. Thames Water is about GBP19 billion in debt and faced going bust earlier this year before it secured a GBP3 billion loan deal designed to keep it running into 2026. "Can we scotch this myth that has been put out by Thames Water for years that it has not been paying dividends?" Cryer told Parliament. "It has been paying what are, in effect, dividends to the parent company. Technically they may not be dividends but, in effect, they are. When Thames Water makes these claims, we should call it out for what it is doing: telling lies to the British public."
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By Emma Curzon, Alliance News reporter
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