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A lacklustre UK gross domestic product reading for February on Monday raised fears over a further slowdown in the months ahead amid the country's cost of living crisis.
GDP grew by 0.1% month-on-month in February, slowing from 0.8% growth in January, and coming in behind market consensus - according to FXStreet - for 0.3% growth.
The Office for National Statistics said services output grew by 0.2% and was the main contributor to February's growth in GDP - though this was partially offset by industrial production, which fell by 0.6% and construction output, which fell by 0.1%.
The services growth in February was mainly driven by tourism-related industries.
‘The economy was little changed in February with the easing of restrictions for overseas travel - and increased confidence in booking holidays in the UK - triggering strong growth in travel agencies, tour operators and hotels,’ said Darren Morgan, director of Economic Statistics for the ONS.
However, he noted that this was partially offset by the reduction of the Test and Trace and vaccination programmes, as well as manufacturers struggling with supply chain disruptions.
Dutch bank ING said: ‘With the growth backdrop deteriorating, we expect the Bank of England to pause its tightening cycle by the summer following one or two more 25bp rate rises. Policymakers subtly began to lay the groundwork for this at the March meeting, where the overall tone was more cautious and the decision to raise rates was not unanimous.’
Focus now turns to Wednesday's UK inflation data, which is expected to show the consumer price index surged 6.7% on an annual basis in March, accelerating from 6.2% in February.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.5% at 7,632.72
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Hang Seng: down 3.1% at 21,188.98
Nikkei 225: closed down 0.6% at 26,821.52
S&P/ASX 200: closed up 0.1% at 7,485.20
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DJIA: closed up 137.55 points, or 0.4%, at 34,721.12
S&P 500: closed down 11.93 points, or 0.3%, at 4,488.28
Nasdaq Composite: closed down 186.30 points, or 1.3%, at 13,711.00
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EUR: up at $1.0881 ($1.0875)
GBP: down at $1.3004 ($1.3020)
USD: up at JP¥125.35 (JP¥124.33)
Gold: down at $1,942.30 per ounce ($1,945.10)
Oil (Brent): down at $100.59 a barrel ($101.33)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's factory-gate inflation was higher than expected in March, official data showed Monday, as Russia's war on Ukraine pushes up oil prices while a domestic Covid-19 resurgence strains food supplies and consumer costs. The producer price index measuring the cost of goods at the factory gate grew 8.3% annually, National Bureau of Statistics figures showed. This was slightly more than a Bloomberg poll of economists expected, while PPI also rose month-on-month. ‘Geopolitical and other factors have pushed global commodity prices to continue increasing, driving the prices of oil, non-ferrous metals and other related industries to rise further domestically,’ NBS senior statistician Dong Lijuan said in a statement. China's consumer price index, a key gauge of retail inflation, rose more than expected as well, by 1.5% year-on-year in March, the NBS said. Although consumer demand eased after festive periods earlier in the year, some food prices have picked up due to ‘rising international prices of wheat, corn and soybeans’ and domestic Covid-19 outbreaks, Dong said.
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French President Emmanuel Macron and his far-right rival Marine Le Pen were on Monday preparing for two weeks of tough campaigning after they reached a run-off of presidential elections that promises to be far tighter than their encounter five years ago. With more than 90% of the vote counted in the first round, projections showed Macron scoring 28-29%, with Le Pen on 22-24%. As the top two finishers, they will progress to a second round on April 24. Despite entering the campaign late and holding just one rally, Macron performed slightly better than expected and won immediate support from most of his defeated rivals ahead of the run-off. ‘Make no mistake: nothing is decided,’ he told cheering supporters at his campaign headquarters. ‘The debate that we are going to have over the next fortnight will be decisive for our country and Europe.’ Far-left candidate Jean-Luc Melenchon came close to qualifying for the second round after a late surge gave him a projected score of around 21%.
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Ukraine said Sunday it had found more than 1,200 bodies in the Kyiv region, the scene of atrocities allegedly committed by Russian troops, as residents in the country's east braced or fled ahead of an expected massive offensive. Heavy bombardments hammered Ukraine through the weekend, adding to mounting casualties six weeks into Russia's invasion of its neighbour. Shelling claimed two lives in northeast Kharkiv on Sunday morning, regional governor Oleg Synegubov said, the day after 10 civilians, including a child, died in bombings southeast of the city. ‘The Russian army continues to wage war on civilians due to a lack of victories at the front,’ Synegubov said on Telegram. In Dnipro, an industrial city of around a million inhabitants, a rain of Russian missiles nearly destroyed the local airport, causing an uncertain number of casualties, local authorities said.
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BROKER RATING CHANGES
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Goldman Sachs raises Rio Tinto to 'buy' (neutral) - price target 7300 (5460) pence
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Goldman Sachs cuts WPP to 'neutral' (buy) - price target 1235 (1450) pence
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Goldman Sachs reinitiates Pearson with 'buy' - price target 1026 pence
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COMPANIES - FTSE 250
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Media firm Ascential - responding to media reports - confirmed it is actively discussing ‘the merits’ of separating some of its assets. ‘As discussions are exploratory at this stage, they may or may not lead to the board making a decision to undertake a managed separation of these businesses in due course. The board is committed to open and transparent engagement with all of its stakeholders and will communicate further if and as appropriate,’ the company added. This followed Sky News reporting on Saturday that Ascential was looking at demerging its digital operations and listing them separately in the US.
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Business park owner Sirius Real Estate said its German portfolio's annual rent roll grew by 18% in financial 2021. In the year to March 31, the rent roll for its German properties rose to €113.7 million from €96.5 million. Like-for-like, its annualised rent was up 6.4%, building on the 5.2% growth seen the year prior. ‘The increase in organic growth reflected the effect of approximately 13,000 sqm of net move ins together with an increase in the average rate per sqm of 5.3%. This highlights the way in which flexible space can attract premium pricing, together with the continuing ability of the Company's internal operating platform to capture reversionary potential,’ Sirius explained. Looking ahead, the company is excited by its move into the UK market - following its £245 million acquisition of BizSpace in November 2021. It added: ‘BizSpace has provided Sirius with an opportunity to diversify geographically at scale through the single acquisition of an established platform. The transaction provides a number of organic growth opportunities, overlayed with meaningful operational and financial synergies.’
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COMPANIES - SMALL CAP
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Guarantor loans provider Amigo noted it has made a ‘significant improvement’ to its scheme redress proposals - after the UK regulator told the company it will not appear at the upcoming sanction hearings. The scheme is being proposed to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints. ‘The FCA has made clear that it will continue to engage closely with Amigo, taking into account the outcome of the sanction hearings,’ Amigo said on Monday. It noted, however, the FCA has told the company it does not consider it ‘necessary to appear at the sanction hearings either to oppose the schemes or to present any evidence of its own concerning the schemes unless the court requests or otherwise requires assistance from it.’ Chief Executive Gary Jennison said: ‘We thank the FCA for its confirmation that there has been a significant improvement in the fairness of the schemes compared with Amigo's first Scheme, which was rejected by the court in May 2021. There remain significant obstacles to overcome, including the need for a significantly dilutive equity issue, to recapitalise the ongoing business given the requirements of the schemes for the transfer of virtually all existing assets to the redress creditors.’
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COMPANIES - GLOBAL
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Tesla's Chief Executive Officer Elon Musk will not longer be joining Twitter's board, CEO Parag Agrawal Tweeted late Sunday. ‘Elon Musk has decided not to join our board,’ Agrawal announced. ‘We believed the best path forward was having Elon as a fiduciary of Twitter where he, like all board members, must act in the best interests of our company and our shareholders. The board offered him a seat (contingent on a background check and formal acceptance). The effective date was 4/9, but the same day Elon shared that he will no longer be joining,’ he continued.
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Pfizer said on Friday that updated results evaluating Lorbrena demonstrated meaningful improvement in progression-free survival in lung cancer patients when compared to Xalkori, another cancer medication. The New York-based pharmaceutical company explained that Lorbrena, also known as Lorviqua in Europe, a 73% reduction in the rate of progression or death compared to Xalkori in data after a three-year follow-up. In the analysis, 64% of people treated with Lorbrena were without disease progression after three years compared to 19% for people treated with Xalkori after the same amount of time. Additionally, Lorbrena treatment resulted in a 92% reduction in the rate of intracranial progression. The safety profile observed in the three-year follow-up analysis was consistent with the previously established safety profiles of both cancer medications.
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Monday's shareholder meetings
MC Mining Ltd - EGM
Gore Street Energy Storage Fund PLC - GM re investment and dividend policy
TruFin PLC - GM re equity raise
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By Lucy Heming; lucyheming@alliancenews.com
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