(Alliance News) - Stocks in London are called to open flat on Wednesday, as Chinese trade data raised concerns about a global economic slowdown.
"As broader markets remain in wait-and-watch mode ahead of CPI and next week's Fed meeting, global investors turn a wary eye toward another China data shocker," said SPI Asset Management's Stephen Innes.
The latest inflation print from the US is due on Tuesday next week, a day before the Federal Reserve's interest rate announcement.
China's exports fell in May for the first time since February, state media reported, breaking a two-month growth streak as a post-Covid rebound in the world's second-largest economy faded. Overseas shipments sank 7.5% on-year last month, a sharp drop from an increase of 8.5% in April, according to figures published by the official Xinhua news agency.
Meanwhile, imports fell 4.5% in May, according to Xinhua. Forecasts in a survey by Bloomberg showed economists expected exports to drop 1.8% and imports to shrink 8.0%.
In UK economic news, house prices saw their first annual decline in over a decade, according to Halifax data.
In early company news in London, Diageo said CEO Ivan Menezes has died following a brief illness. GSK received EU approval for its RSV vaccine in older adults. WE Soda confirmed its intention to float in London, with the potential to go straight into the FTSE 100.
Sky News reported that Lloyds Banking is planning to launch a GBP600 million auction of the Telegraph newspapers and the Spectator magazine.
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 6.8 points, 0.1%, at 7,621.3
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Hang Seng: up 0.7% at 19,225.09
Nikkei 225: closed down 1.8% at 31,913.74
S&P/ASX 200: closed down 0.2% at 7,118.00
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DJIA: closed flat at 33,573.28
S&P 500: closed up 0.2% at 4,283.85
Nasdaq Composite: closed up 0.4% at 13,276.42
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EUR: flat at USD1.0688 (USD1.0687)
GBP: up at USD1.2419 (USD1.2411)
USD: down at JPY139.22 (JPY139.77)
GOLD: up at USD1,964.00 per ounce (USD1,959.55)
OIL (Brent): down at USD75.84 a barrel (USD76.40)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
11:00 IST Ireland industrial production and turnover
09:30 BST UK narrow money and reserve balances
07:00 EDT US MBA weekly mortgage applications survey
08:30 EDT US international trade in goods and services
15:00 EDT US consumer credit
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UK Prime Minister Rishi Sunak will raise concerns about US President Joe Biden's flagship package of green technology subsidies when the pair meet in Washington on Thursday. Sunak arrived late on Tuesday night for two days of meetings with business leaders and senior figures in Congress, culminating in discussions with Biden at the White House. He will push for action on artificial intelligence regulation and seek greater economic co-operation with the US. But senior members of Sunak's government have criticised Biden's Inflation Reduction Act – a massive package of tax breaks and subsidies aimed at boosting green industries in the US – as protectionist and distorting. Despite promises from Energy Secretary Grant Shapps that the government was working with the US to smooth over "rough edges" which could hit British firms seeking to trade across the Atlantic, difficulties still remain.
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UK house prices stabilised in May from the previous month, data from Halifax showed, but saw their first annual decline in over a decade. According to the mortgage lender, average house prices were flat in May from April, after 0.4% fall in April from March. On an annual basis, prices fell 1.0% in May, after edging up 0.1% in April. According to Halifax's data, this marks the first annual decline in house prices since December 2021, when they fell 0.1%.
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BROKER RATING CHANGES
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Barclays raises Melrose Industries price target to 575 (450) pence - 'overweight'
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Goldman Sachs cuts Croda International to 'neutral' (buy) - price target 7,200 (8,700) pence
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Credit Suisse cuts Diageo price target to 3,850 (4,200) pence - 'outperform'
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COMPANIES - FTSE 100
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Guinness owner Diageo said Ivan Menezes, its chief executive for roughly a decade, died after a brief illness. Menezes, one of "Britain's longest serving and most respected FTSE chief executives", took over as CEO in July 2013 and had been due to retire at the end of this month. The London-based brewer and distiller, operating brands such as Johnnie Walker, Smirnoff and Captain Morgan, had on Tuesday named Debra Crew as interim CEO, after Menezes underwent treatment for medical conditions. Crew, formerly chief operating officer, was already due to step into the CEO role on a permanent basis. Diageo Chair Javier Ferran said: "Ivan was there at the creation of Diageo and over 25 years, shaped Diageo to become one of the best performing, most trusted and respected consumer companies. I saw first-hand his steadfast commitment to our people and to creating a culture that enabled everyone to thrive. He invested his time and energy in people at every level of the company and saw potential that others may have overlooked. This is one of many reasons why he was beloved by our employees, past and present."
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A cybercrime gang that is thought to be based in Russia has warned more than 100,000 staff at major British companies to email them before June 14 or stolen data will be published. According to the BBC, whose employees were victims in the hack, the Clop group made the threat in broken English on the dark web. Also targeted in the hack were the payrolls of International Consolidated Airlines Group's British Airways, Walgreens Boots Alliance, Ireland's flag carrier Aer Lingus which is also part of IAG, Nova Scotia government, and the University of Rochester after the gang broke into a piece of popular business software called MOVEit and used that access to get into the databases of potentially hundreds of other companies.
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Lloyds Banking Group will hire bankers within days to launch a GBP600 million auction of the Telegraph newspapers and the Spectator magazine, according to a report by Sky News late Tuesday. The news comes amid a bitter row between the Edinburgh-based bank and the titles' long-standing owners, Sky News said, with Lloyds being advised by financial consultancy Lazard on its options. Sky cites "industry sources" as saying that Lloyds planned to appoint another large investment bank to kick off an immediate process to sell the Daily and Sunday Telegraph titles.
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GSK announced its respiratory syncytial virus vaccine Arexvy has been authorised by the European Commission for use in older adults. The approval is the first in the EU for an RSV vaccine for older adults. The first launches are planned for the 2023/2024 RSV season, which usually starts in the autumn, GSK said. "Our strong manufacturing capability and scale, including from our vaccine manufacturing site in Belgium, means we are ready to deliver the vaccine as countries begin to launch," said Chief Scientific Officer Tony Wood.
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Three ads for Shell promoting its low-carbon products have been banned for failing to make any mention of the energy giant's ongoing "large-scale" investment in oil and gas. The UK's Advertising Standards Authority found that Shell "misleadingly omitted" information about the proportion of its business made up of lower-carbon activity when oil and gas made up the "vast majority" of its operations. Shell said it strongly disagreed with the ASA's decision, claiming it could slow the UK's move towards renewable energy.
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COMPANIES - FTSE 250
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Customised electronics manufacturer discoverIE announced its annual results for the financial year that ended March 31. Revenue rose 18% to GBP448.9 million from GBP379.2 million, while pretax profit surged 70% to GBP29.1 million from GBP17.1 million. discoverIE raised its annual dividend to 11.45p from 10.80p, with a final dividend proposed at 7.9p per share. "The group has made further good progress towards our medium-term goals, with excellent sales growth and significant operational efficiencies resulting in 20% growth in underlying earnings per share," said CEO Nick Jefferies. The group is well-positioned for future growth, given its strong acquisition pipeline and robust balance sheet, he adds, and the new financial year has started well, with continued organic sales growth.
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OTHER COMPANIES
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Kew Soda, known as WE Soda, confirmed its intention to float on the premium segment of London Stock Exchange's main market. The company said the final offer price and the maximum number of shares to be sold in the offer will be determined following a book-building process. It expects indirect net proceeds to the company of the initial public offering to be around USD800 million, with around USD500 million to be used to pay down debt, and USD300 million for general corporate purposes. Following admission, it will target a free float of at least 10%, with a further 15% of the offer to be made available in an over-allotment option. WE Soda is the world's largest natural soda ash producer. Based in London with production facilities in Turkey, the company manufactured 5.0 million metric tonnes of product last year, including 4.6 million metric tonnes of the alkali salt ingredient. Soda is ash an ingredient used for glass manufacturing, but also in solar photovoltaic glass, the production of lithium carbonate used in electric vehicle batteries, and silicates and other sodium chemicals.
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By Elizabeth Winter, Alliance News senior markets reporter
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