(Alliance News) - UK Chancellor of the Exchequer Rishi Sunak will hail a "new age of optimism" in his government budget on Wednesday, amid predictions he will have more money than expected to spend due to a fast bounce-back from Covid, PA reports.
Sunak is set to strike an upbeat tone as he talks up building a "stronger economy of the future", with the promise of rising wages, cash for the NHS and investment into regional transport projects. His statement to Parliament is due at 1230 BST.
Sunak's spending plans are likely to be bolstered by forecasts of faster growth than predicted in the spring as the economy roars back into life since the lifting of coronavirus restrictions, according to analysts.
The Office for Budget Responsibility, the independent body whose forecasts guide Budget spending, is expected to up its growth outlook for 2021, cut its unemployment prediction and pencil in lower borrowing thanks to higher tax receipts.
What will be contained in the budget has been heavily briefed in recent days, much to the annoyance of Commons Speaker Lindsay Hoyle, who suggested ministers should resign for dishing out details to the media before MPs have heard the speech.
The government has already confirmed that Sunak will announce a rise of the so-called "national living wage" to GBP9.50 from April – up more than 6%, increasing by 59p per hour for those aged 23 and over – and the end of the year-long pay freeze he imposed on public sector workers.
Sunak could also raise revenue to address national debt, but the Treasury is understood to have all but confirmed to MPs that he will not do this by raising fuel duty.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally lower at 7,277.43
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Hang Seng: down 1.6% at 25,613.83
Nikkei 225: closed marginally lower, down 7.77 points at 29,098.24
DJIA: closed marginally higher, up 15.73 points at 35,756.88
S&P 500: closed up 0.2% at 4,574.79
Nasdaq Composite: closed up 0.1% at 15,235.72
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EUR: up at USD1.1607 (USD1.1587)
GBP: flat at USD1.3776 (USD1.3774)
USD: down at JPY114.01 (JPY114.25)
Gold: up at USD1,790.34 per ounce (USD1,788.24)
Oil (Brent): down at USD85.44 a barrel (USD86.37)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
1000 CEST EU monetary developments in euro area
0930 BST UK capital issuance
1230 BST UK Chancellor Sunak presents autumn budget and OBR economic forecast
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US durable goods orders
0830 EDT US goods trade balance
1030 EDT US EIA weekly petroleum status report
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US President Joe Biden threw his weight behind the struggling Democratic candidate in Virginia's closely watched election for governor, urging a crowd to defeat Republican "extremism". Standing by Terry McAuliffe, whose slide in the polls has put Democrats on red alert for a wider Republican comeback in next year's midterm battle for Congress, Biden mocked the Republican opponent as an "acolyte of Donald Trump." On paper, McAuliffe, 64, should have a relatively easy run in a week's time against Republican Glenn Youngkin. Already a former Virginia governor and seeking to succeed the outgoing Democrat, McAuliffe is the closest thing to an incumbent in a state where Biden trounced Trump in the presidential election 12 months ago. Instead, Youngkin is tied with McAuliffe in the polls, eying an upset victory on November 2 that would energize his party's push to regain control of Congress in the 2022 midterms.
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BROKER RATING CHANGES
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JEFFERIES RAISES UNITE GROUP TO 'BUY' ('HOLD') - TARGET 1225 (1150) PENCE
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JEFFERIES CUTS SAFESTORE TO 'HOLD' ('BUY') - TARGET 1270 (1090) PENCE
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HSBC RAISES FIRSTGROUP TO 'BUY'
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BERENBERG CUTS PETRA DIAMONDS TO 'HOLD' ('BUY') - TARGET 2 PENCE
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COMPANIES - FTSE 100
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Engineering, design and information management software provider Aveva Group reported growth in the first half of its current financial year. Aveva said its revenue grew by 9% in the six months to September 30 on a pro forma organic constant currency basis. This increase drove significant margin leverage and growth in adjusted earnings before interest and tax, it said. For the first half of financial 2021, Aveva reported revenue of GBP332.6 million. The Cambridge-based company said all of its fee types grew, with a particularly strong contribution from the recently acquired OSIsoft business. Maintenance & Services revenue, meanwhile, increased at a low single-digit rate, while Subscription & Perpetual licence revenue grew at a mid- to high-teens rate, Aveva said.
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Mexican gold and silver miner Fresnillo expressed confidence in its full-year guidance amid a higher volume of ore processed and an increase in silver ore grades in the three months to September 30. The miner reported year-to-date attributable silver production of 40.2 million ounces in line with the prior year due to a higher ore grade at the San Julian disseminated ore body in Mexico and, to a lesser extent, the contribution of development ore from the Juanicipio mine, also in Mexico. Year-to-date attributable gold production of 600,900 ounces was up 8.5% year-on-year, primarily due to the higher volume of ore processed at Herradura mine in Mexico following the lifting of Covid-19 restrictions, which had resulted in lower volumes of ore deposited last year. Fresnillo said it remains on track to meet its 2021 full-year guidance of 53.5 million to 59.5 million ounces of silver and 675,000 to 725,000 ounces of gold.
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Shares in Wm Morrison Supermarkets will be suspended from trading in London on Wednesday and cancelled on Thursday. Clayton, Dubilier & Rice's GBP7 billion takeover of Morrisons was approved by shareholders last week, with some 99% of Morrison shareholders backing the deal. Darktrace will replace Morrisons in the FTSE 100 index.
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COMPANIES - FTSE 250
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Transport operator FirstGroup opened a tender offer for shares at 105 pence per share, to return up to GBP500 million to shareholders. FirstGroup shares were up 4.8% at 100.72p early Wednesday. Importantly, FirstGroup said activist shareholder Coast Capital Management has agreed to support the plan and tender all its shares. The buyback comes after FirstGroup sold its First Student and First Transit businesses in the US to EQT Infrastructure for USD3.12 billion earlier this year. Additionally, last week FirstGroup said it had sold its US coach business Greyhound Lines to a subsidiary of FlixMobility. This completed the company's refocus back on the UK.
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Payments firm Network International Holdings reported strong trading in its United Arab Emirates merchant business, resulting in 19% group revenue growth in the third quarter of 2021. However, when compared to the third quarter of 2019, revenue was still down 1%. Network International said the UAE business traded strongly during the quarter and total direct processed volume fully recovered to 2019 levels. "This is a reflection of our enhanced sales strategies, faster merchant onboarding and new capability launches; as well as improving underlying market dynamics. Consumer spending in the region has continued to improve, supported by the ongoing return of tourism and growing domestic consumer confidence," said Chief Executive Nandan Mer. Network International said its market entry to Saudi Arabia is on-track. The company said it has made progress in the building of its technology platform and a pipeline of customer commitments, and it expects to launch services in early 2022. "Our efforts are laying the foundations for future growth and we remain confident in our outlook," added Mer.
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COMPANIES - MAIN MARKET AND AIM
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Food and flavourings firm Kerry Group reported business volume growth of 6.6% in the third quarter of 2021, with its Taste & Nutrition division posting 6.3% growth and the Consumer Foods arm a 7.5% rise. It said group trading profit margin improved by 60 basis points. Kerry reaffirmed its full-year earnings guidance. "We are pleased with overall performance through the period, reflecting continued good growth in our retail channel and strong performance in foodservice," Chief Executive Officer Edmond Scanlon said.
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Holiday retailer On the Beach Group reported suppressed trading in the second half of its most recent financial year, which ended on September 30. While demand for international leisure travel currently remains below pre-pandemic levels, the company highlighted that its specific initiatives, including its 'free Covid tests' promotion, combined with a further softening of government restrictions, have stimulated bookings in the final weeks of the financial year. Going forward, On The Beach said it remains committed to investing for long-term market share gains in its current financial year, ahead of full market recovery. "The strategic initiatives we have taken throughout the year to best navigate the crisis and manage risk while investing in our brand, people and technology, ensure On the Beach is in a strong position as we head into our typically busiest booking period," said Chief Executive Simon Cooper.
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COMPANIES - GLOBAL
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Chinese authorities have told Evergrande founder Xu Jiayin, once the country's richest man, to use his personal wealth to alleviate the embattled company's debt crisis, according to media reports.
Last week, the group unexpectedly paid interest on an offshore bond just before a Saturday deadline, averting a default and giving it a much-needed reprieve. Evergrande also reported that it had resumed work on more than 10 stalled projects. But Bloomberg News reported Tuesday that Beijing has pushed Xu – also known as Hui Ka Yan in Cantonese – to dip into his own pocket to help pay off some of the company's debts, citing people familiar with the matter. However, it is unlikely that Xu's personal sacrifice would make much of an impact on Evergrande's liabilities of more than USD300 billion, with Bloomberg reporting his fortune at less than USD8 billion.
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Wednesday's Shareholder Meetings
Cap-XX Ltd - AGM
Frontier Developments PLC - AGM
Hargreaves Services PLC - AGM
Ideagen PLC - AGM
Investment Co PLC - AGM
Invinity Energy Systems PLC - AGM
JPMorgan Global Growth & Income PLC - AGM
Mirada PLC - AGM
Pantheon International PLC - AGM
Puma VCT 11 PLC - GM re winding up
Springfield Properties PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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