Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
It's set to be a busy end to an abbreviated week in financial markets, with Thursday's focus lying on the European Central Bank and a raft of US banking earnings before traders head off for the Easter break.
The latest interest rate decision from the ECB is due at 1245 BST, followed by ECB President Christine Lagarde holding a press conference at 1330 BST.
Amid intensifying inflation pressures and the ongoing war in Ukraine, the ECB will be facing pressure to act. But analysts expect the central bank will stand pat on policy for the time being as it awaits more data.
ING said April's ECB meeting is unlikely to see any major policy shifts due to a lack of hard data to judge the fallout of the Ukraine conflict on the single currency bloc.
‘In our view, reiterating the Asset Purchase Programme scheduled reduction announced in March, with a somewhat firmer commitment to end APP after June, as well as data-dependency, appears the only viable option for now,’ said ING.
Around the same time, traders will be watching earnings from the likes of banking titans Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo roll in.
JPMorgan kicked things off on Wednesday on a cautious note. First quarter net income slumped 42% to $8.28 billion from $14.30 billion and revenue slipped 5% to $30.72 billion from $32.27 billion.
‘We remain optimistic on the economy, at least for the short term - consumer and business balance sheets as well as consumer spending remain at healthy levels - but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine,’ cautioned Chief Executive Jamie Dimon.
Chris Beauchamp, chief market analyst at IG, said: ‘JPMorgan's numbers revealed that dealmaking was down and credit losses had increased, as the bright outlooks of 2021 give way to the gloomier performance of 2022...the usual bugbears of inflation, central bank policy and the Ukraine war combined to produce a very cautious forecast for the months to come, something that may well be echoed by other banks.’
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 7,558.48
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Hang Seng: up 0.6% at 21,491.57
Nikkei 225: closed up 1.2% at 27,172.00
S&P/ASX 200: closed up 0.6% at 7,523.40
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DJIA: closed up 344.23 points, or 1.0%, at 34,564.59.
S&P 500: closed up 1.1% at 4,446.59
Nasdaq Composite: closed up 2.0% at 13,643.59
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EUR: up at $1.0913 ($1.0863)
GBP: up at $1.3133 ($1.3060)
USD: down at JP¥125.29 (JP¥125.69)
Gold: down at $1,972.56 per ounce ($1,977.64)
Oil (Brent): up at $107.57 a barrel ($106.79)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's key economic events still to come
13:45 CEST European Central Bank rate decision
14:30 CEST ECB President press conference
11:00 BST Ireland goods exports and imports
09:30 BST UK Bank of England quarterly bank liabilities survey
09:30 BST UK Bank of England credit conditions survey
08:30 EDT US import & export price indexes
08:30 EDT US initial unemployment insurance weekly claims
08:30 EDT US advance monthly sales for retail & food services
10:00 EDT US manufacturing & trade
10:30 EDT US EIA weekly natural gas storage report
10:00 EDT US University of Michigan survey of consumers
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UK Prime Minister Boris Johnson was braced to potentially receive further fines for breaches of coronavirus laws after a justice minister resigned over the ‘repeated rule-breaking’ in Downing Street. Conservative peer David Wolfson said he had ‘no option’ other than to quit because the scale and nature of the events determined by police to be breaches so far are ‘inconsistent with the rule of law’. Multiple newspapers carried reports suggesting the prime minister could receive further fixed penalty notices after he accepted a fine for attending a birthday party held for him in No 10 during Covid restrictions in June 2020. Downing Street sources said they were awaiting the outcome of the ongoing Scotland Yard inquiry after Johnson conceded more fines could follow, having reportedly attended six of the 12 events under investigation. The prime minister will attempt to move on from the scandal with a major speech on Thursday setting out new plans for the asylum system, including sending individuals more than 4,000 miles to Rwanda for processing.
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US President Joe Biden announced an $800 million military aid package for Ukraine on Wednesday as international prosecutors declared the war-torn Western ally a ‘crime scene’ amid fears of a massive revamped Russian assault. The announcement came with the Russian military threatening to strike Ukraine's command centers in the capital Kyiv if Ukrainian troops continue to attack Russian territory. ‘We are seeing Ukrainian troops' attempts to carry out sabotage and strike Russian territory. If such cases continue, the Russian armed forces will strike decision-making centers, including in Kyiv,’ the Russian defense ministry said in a statement. The warning sparked alarm in Ukraine's largest city, as Moscow was believed to be refocusing its war aims withdrawing from Kyiv after failing to capture it and shifting attention to the south and east. Biden has accused President Vladimir Putin of genocide a claim dismissed as ‘unacceptable’ by the Kremlin as Russia comes under increasing scrutiny over atrocities discovered in towns since abandoned by its forces.
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BROKER RATING CHANGES
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Berenberg cuts Bunzl to 'hold' (buy) - price target 2950 (2750) pence
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COMPANIES - FTSE 100
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National Grid has upped its earnings guidance as it said higher inflation in the UK has delivered a better than expected performances from its UK Electricity Transmission and Electricity Dstribution businesses. The London-based power infrastructure firm expects its underlying earnings per share to be ‘modestly higher’ than previous guidance - which was raised in November to be seen ‘significantly’ above the top end of a 5% to 7% range. It also noted underlying operating profit across its New England, New York, and National Grid Ventures units will be in line with previous guidance. ‘The sale of our Rhode Island business to PPL continues to make progress. While all regulatory approvals have been obtained, the Rhode Island Attorney General has appealed one of the approvals and we now expect the sale to complete in the first quarter of this financial year,’ the firm added.
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Smiths Group has appointed former Goldman Sachs executive Clare Scherrer as chief financial officer. Scherrer spent 25 years at the New York investment bank, and was most recently co-head of the Global Industrials business. ‘She has particularly relevant experience in the technology sectors in which Smiths Group has strong positions, including energy, safety & security and aerospace. Clare has been a close advisor to Smiths Group for the past seven years, including advising on the sale of Smiths Medical as well as development of the strategy announced at the November Capital Markets Event,’ the diversified engineering business said. Current CFO John Shipsey will step down from the role on April 29.
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COMPANIES - FTSE 250
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discoverIE Group raised expectations following a ‘strong’ trading performance in the firm's final two months of its financial year, which ended March 31. The maker of customised electronics, for sectors such as renewables and transport said orders remain ‘well ahead’ of sales, rising organically by 13% year on year, and are up 27% on the period two years ago. Group sales in the final 2 months are up 20% on the year prior and 22% on the same period two years ago. As a result, group orders for the annual period are up 36% year on year, as sales rise 25%. discoverIE ended its financial year with an order book of £224 million, a record for the company.
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Budget airline Wizz Air said it expects a widened annual loss but saw a better than expected fourth quarter performance. In the final three months of the company's financial year, ended March 31, it expects to report an operating loss between €190 million and €210 million - which would beat previous expectations, thanks to a ‘stronger trading environment’. For the full-year, however, its net loss is guided between €632 million and €652 million, which would be widened from the €576.0 million posted for the 2021 financial year - which was its annual loss since 2012. To begin financial 2023, Wizz said it is ramping up operations for a ‘busy’ summer programme with the firm expecting to operate available seat kilometres 30% ahead of the April to June 2019 quarter and more than 40% ahead of the July to September 2019 quarter. ‘We have been encouraged by demand trends in recent weeks and given the shorter booking horizon expect the bookings for this summer to build significantly after Easter,’ the airline added.
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Dunelm's third quarter sales shot up, it said, thanks to the reopening of its stores, leading the firm to confirm its confidence in meeting market expectations for its annual profit. In the 13 weeks to March 26, total sales rose 69% year on year to £399 million, with year-to-date sales up 25% to £1.20 billion. It noted in the third quarter last year its store estate was closed to customers and only Click & Collect and home delivery services were available. The homeware retailer said: ‘Customers responded well to our Winter Sale held in the first few weeks of the quarter, with a very strong sales performance across most categories. We have continued to refresh our product ranges, with our new 'Summer Living' products performing particularly well during March, as customers looked to ready their homes and gardens for summer.’ For financial 2022, Dunelm notes the latest range of analyst forecasts puts its pretax profit between £195 million to £215 million, with consensus at £207 million. In financial 2021, it posted a pretax profit of £157.8 million.
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COMPANIES - GLOBAL
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A ‘significant’ shareholder in Peloton Interactive on Wednesday reiterated its call for company's board to sell the firm. Blackwells Capital took issue with the leadership of the New York City-based home fitness company, as well as its ‘severe and lingering governance issues’. Blackwells Chief Investment Officer Jason Aintabi took aim at former chief executive officer John Foley, who now holds the role of executive chair, believing him to be ‘financially distressed’ and unable to deliver value for shareholders. Barry McCarthy, who served as chief financial officer at Spotify as well as at Netflix Inc, took over the CEO position on February 9. Aintabi put forward that shareholders had lost $2 billion in value in the first 60 days under the new leadership.
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E-cigarette firm Juul Labs has agreed to pay $22.5 million in a US lawsuit that alleged the company deliberately targeted teenagers and lied about how addictive its products are, Washington state's attorney general said Wednesday. The company, whose wide range of exotic flavoured vapes including mango and creme brulee made it a byword for e-cigarettes in the US, did not admit any wrongdoing but agreed to rein in its advertising. In 2018, Altria Group closed a $12.8 billion investment in Juul, snapping up a 35% stake. In the latest such multi-million-dollar suit it has settled with a US state, Juul Labs agreed to pull commercials that appeal to young people, including on social media. It will also work to ensure stores in the state are not selling its products to anyone underage.
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A Covid-19 vaccine effective against multiple variants is possible before the end of 2022, the head of US pharmaceutical giant Pfizer said Wednesday. Chair Albert Bourla said the firm was also working on producing a vaccine that could provide good protection for a whole year, meaning people would come back annually for boosters, as with influenza shots. ‘I hope, clearly by autumn... that we could have a vaccine’ that worked against not only the dominant Omicron but all known variants, he said. ‘It is a possibility that we have it by then. It is not a certainty,’ he told a media briefing organised by the International Federation of Pharmaceutical Manufacturers & Associations big pharma lobby group.
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Thursday's shareholder meetings
AIQ Ltd - AGM
Helios Towers PLC - AGM
Porvair PLC - AGM
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By Lucy Heming; lucyheming@alliancenews.com
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