LONDON BRIEFING: Shares to follow US down; Lloyds sets share buyback

(Alliance News) - Stocks in London were called lower on Wednesday, after Wall Street succumbed to selling pressure amid renewed fears about higher-for-longer interest rates.

Investors were looking ahead to the minutes from the US central bank's last policy meeting, which are due out at 1900 GMT.

"We know that the Fed officials will sound concerned with the strong jobs market and will point at the resilience of the economy to continue hiking the rates," said Swissquote Bank's Ipek Ozkardeskaya.

"So, the chances are that the minutes will be hawkish, and could further weigh on sentiment. But there is always a chance that the market sees the glass half full than half empty."

Asian markets fell less steeply than New York had. The dollar was higher.

In early corporate news, Lloyds Banking announced a GBP2.0 billion buyback, and the UK competition watchdog cleared the merger of landlords Capital & Counties Properties and Shaftesbury.

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 28.0 points, 0.4%, at 7,949.75

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Hang Seng: down 0.4% at 20,453.75

Nikkei 225: closed down 1.3% at 27,104.32

S&P/ASX 200: closed down 0.3% at 7,314.50

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DJIA: closed down 697.10 points, 2.1%, at 33,129.59

S&P 500: closed down 2.0% at 3,997.34

Nasdaq Composite: closed down 2.5% at 11,492.30

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EUR: down at USD1.0660 (USD1.0673)

GBP: down at USD1.2111 (USD1.2121)

USD: up at JPY134.84 (JPY134.74)

Gold: down at USD1,835.56 per ounce (USD1,837.01)

Oil (Brent): down at USD82.57 a barrel (USD82.73)

(changes since previous London equities close)

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ECONOMICS

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Wednesday's key economic events still to come:

08:00 CET Germany consumer price index

10:00 CET Germany Ifo business climate index

11:00 GMT Ireland wholesale price index

07:00 EST US MBA mortgage applications survey

08:55 EST US Johnson Redbook retail sales index

16:30 EST US API weekly statistical bulletin

14:00 EST US Federal Open Market Committee meeting minutes published

US Fed New York President John Williams speaks

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Heathrow aims to triple usage of greener aviation fuel at the airport this year, but warned the UK risks falling behind other nations in developing production facilities. Chief Executive John Holland-Kaye told the PA news agency that the west London airport has "led the way on decarbonising aviation" through sustainable aviation fuel but supportive government policy is "needed now" to compete with the US and the rest of Europe. Heathrow fears a tax credit scheme in the US designed to lure investors in SAF production puts the UK at risk of missing out.

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A final inflation reading in Germany confirmed a slight acceleration in the rise of prices in January. Destatis confirmed its preliminary reading, saying consumer prices in Germany rose 1.0% in January from the month before, reversing a 0.8% monthly decline in December. Annual inflation ticked up slightly to 8.7% from 8.6% at the end of 2022. On a harmonised basis - which allows for EU-wide comparison - prices rose 0.5% on a monthly basis, compared to a 1.2% fall in December. Harmonised annual inflation eased to 9.2% from 9.6% a month before, however.

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BROKER RATING CHANGES

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Credit Suisse raises WPP to 'outperform' (neutral) - price target 1260 (950) pence

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Deutsche Bank cuts InterContinental Hotels to 'hold' (buy) - price target 5,850 (5,730) pence

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COMPANIES - FTSE 100

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Lloyds Banking said net interest income rose 49% to GBP13.96 billion in 2022. Total income, net of insurance claims and changes in contract liabilities, rose 12% to GBP18.21 billion. Pretax profit was little changed at GBP6.93 billion, compared to GBP6.90 billion. Lloyds said "higher net income and lower total costs [were] offset by impairment charges as a result of the revised economic outlook (versus a significant write-back in 2021)". The bank proposed a final dividend of 1.60 pence, bring the total to 2.40p, which is up 20% on 2021. It also announced the launch of a GBP2.0 billion share buyback.

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Rio Tinto reported a sharp drop in annual profit, as it scaled back payouts. The Anglo-Australian mining and metals company said pretax profit in 2022 was USD18.66 billion, dropping from USD30.83 billion a year before. Annual revenue came in at USD55.55 billion, which was down from USD63.50 billion. Rio Tinto proposed a final dividend of USD2.25, compared to USD4.17 a year before, bring the annual total to USD4.92, down from USD7.93. "Despite challenging market conditions, we remain resilient because of the quality of our assets, our great people and the strength of our balance sheet," said CEO Jakob Stausholm.

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COMPANIES - FTSE 250

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Primary Health Properties reported a sharp drop in annual profit, due to a revaluation deficit. The healthcare-focused property investor said net rental income edged up to GBP141.5 million in 2022 from GBP136.7 million the year before. Pretax profit dropped 60% to GBP56.9 million from GBP141.6 million. This was due to a revaluation deficit on its property portfolio of GBP64.4 million, compared to a surplus of GBP110.2 million a year before. Dividend payments rose 4.8% to 6.5p from 6.2p. "We are encouraged by the increasingly firmer tone of rental growth and believe PHP in the medium term will be a beneficiary of the current inflationary environment both through open market and index-linked reviews," said Chair Steven Owen.

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Future appointed Jon Steinberg as its new chief executive officer. The specialist magazine publisher and digital media firm said Steinberg will join in April, replacing long-time chief Zillah Byng-Thorne. Steinberg was most recently president of Altice USA's News & Advertising Division, and was formerly CEO of DailyMail.com North America.

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The UK Competition & Markets Authority unconditionally cleared the merger of Capital & Counties Properties and Shaftesbury. In June last year, the two property groups agreed final terms for their all-share merger to create a London-focused property investor with a combined portfolio value of GBP5.0 billion. On Wednesday, the CMA confirmed it won't refer the merger for a Phase 2 investigation.

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OTHER COMPANIES

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Sanderson Design announced a "major" licensing deal with retailer Next for its Clarke & Clarke brand. Under the agreement, Next will hold exclusive rights to produce a "very broad range" of Clarke & Clarke homeware products. Sanderson will recognise accelerated licensing income of GBP2.6 million in the current financial year relating to the agreement. "Clarke & Clarke is already the company's largest brand by revenue and this agreement brings further multi-year income potential along with the endorsement of a major UK retailer," said CEO Lisa Montague.

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By Elizabeth Winter, Alliance News senior markets reporter

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