ST. JAMES'S PLACE PLC (Alliance News) - Stocks in London were set to open lower on Friday, after a string of interest rate hikes from a number of major central banks.
The Bank of England on Thursday raised UK interest rates by 25 basis points, as widely expected. The decision took the key UK bank rate to 4.25% from 4.00% previously.
Thursday's move by the BoE followed similar interest rate decisions by the Swiss National Bank and Norges Bank on Thursday morning, the US Federal Reserve on Wednesday, and the European Central Bank last week.
The Fed raised US interest rates by a quarter of a percentage point, resisting the urge to pause hikes in the face of banking sector turmoil, while the SNB raised rates by a more aggressive 50 basis points. The ECB raised rates by the same amount last week. The Norwegian central bank opted for a 25 basis point hike.
In UK corporate news early Friday, pub chain JD Wetherspoon swung to an interim profit, while engineering firm Smiths Group reported a sharp drop in interim 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 28.10 points, or 0.4%, at 7,471.50
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Hang Seng: down 0.8% at 19,883.98
Nikkei 225: closed down 0.1% at 27,385.25
S&P/ASX 200: closed down 0.2% at 6,955.20
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DJIA: closed up 75.14 points, 0.2%, at 32,105.25
S&P 500: closed up 0.3% at 3,948.72
Nasdaq Composite: closed up 1.0% at 11,787.40
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EUR: lower at USD1.0828 (USD1.0895)
GBP: lower at USD1.2281 (USD1.2325)
USD: lower at JPY130.36 (JPY130.73)
Gold: lower at USD1,987.29 per ounce (USD1,992.82)
Brent: lower at USD75.76 a barrel (USD76.59)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
10:00 CET EU flash purchasing managers' index
09:30 CET Germany flash PMI
09:30 GMT UK flash PMI
08:30 CDT US Fed St. Louis President James Bullard speaks
09:45 EDT US flash manufacturing PMI
09:45 EDT US flash services PMI
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UK retail sales continued to increase in February, pushing them back above their pre-pandemic level, figures from the Office for National Statistics showed. Retail sales volumes are estimated to have increased 1.2% in February from the previous month, following a rise of 0.9% in January. This came in far higher than market expectations, according to FXStreet. Markets had expected a 0.2% monthly rise in February. February's rise was the largest monthly increase since October, when retail sales volumes increased 1.4%. October's figures were boosted by the additional bank holiday for the state funeral of Queen Elizabeth II. The increase over the month to February returns sales volumes to February 2020 pre-pandemic levels, the ONS said.
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BROKER RATING CHANGES
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HSBC raises St James's Place to 'buy' - price target 1,430 pence
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Jefferies starts Bytes Technology with 'buy' - price target 480 pence
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JPMorgan raises Hunting to 'overweight' ('neutral') - price target 350 (340) pence
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COMPANIES - FTSE 100
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Smiths Group said it delivered an improved performance in the first half of its financial year, delivering double-digit revenue growth and an increased dividend. Pretax profit from continuing operations rose to GBP167 million in the six months ended January 31, from GBP160 million the previous year. Total profit after tax fell sharply to GBP109 million from GBP1.12 billion. Revenue from continuing operations increased 26% to GBP1.50 billion from GBP1.19 billion the year prior. The engineering firm proposed an interim dividend of 12.9 pence per share, up 5% from the previous year. Chief Executive Paul Keel said, with the company's order book healthy and trading strong, Smiths is raising its financial 2023 organic revenue growth guidance to "at least 8%, with moderate margin improvement."
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COMPANIES - FTSE 250
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JD Wetherspoon swung to a pretax profit in the six months that ended January 29, as it noted that supply and delivery issues have "largely disappeared, for now". The pub chain reported profit before tax and separately disclosed
items of GBP4.6 million, swinging from a loss of GBP26.1 million in the
equivalent period the previous year. Pretax profit after separately disclosed items was GBP57.0 million, swinging from a loss of GBP13.0 million. Revenue climbed by 13% to GBP916.0 million from GBP807.4 million. Chief Executive Tim Martin said that inflationary pressures on the pub industry have been "ferocious", particularly in regard to energy, food, and labour. Nonetheless, he said, having experienced a "substantial improvement" in sales and profits, the company is "cautiously optimistic" about further progress in its current financial year. Trading in the recent seven weeks were up 9.1% against the equivalent period of financial 2019, and 15% above the equivalent period in financial 2022.
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OTHER COMPANIES
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Ceres Power suffered a widened annual loss in 2022 and posted reduced revenue in-line with guidance. The clean energy technology developer reported a pretax loss of GBP49.0 million in 2022, widened from a loss of GBP23.4 million the year prior. Revenue dropped sharply to GBP22.1 million from GBP30.8 million, though Ceres noted this was in-line with previous guidance. Gross margin reduced to 59% from 62%, reflecting the reduction in high-margin licence fee income recognised in the year compared with 2021. Ceres said its investment increased by 67% in 2022, rising to GBP58.4 million from GBP34.9 million the previous year. This was in-line with its strategy to expand into electrolysis for green hydrogen and deliver the "next generation" of fuel cell technology, it said.
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By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
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