Early Morning Call: British Land to leave FTSE 100, replaced by IMI
Property developer British Land lost its position on the index, ending a 21-year run in the FTSE 100.
US debt ceiling
The US debt ceiling bill passed its first hurdle last night in the US House of Representatives. A coalition of Democrats and moderate Republicans overcame an opposition led by hardline conservatives. The House voted 314-117 to send the legislation to the Senate. Now the bill has to pass the Senate to be signed into law.
China factory activity
China's factory activity unexpectedly swung to growth in May, according to the Caixin survey, which covers small and medium-sized enterprises. This was a surprise after the official NBS survey showed yesterday that the manufacturing sector contracted faster than expected. The official NBS PMI survey covers large and state-owned companies.
The Caixin/S&P Global manufacturing purchasing managers' index (PMI) rose to 50.9 in May from 49.5 in April, above the 50-point index mark that separates growth from contraction. However, business confidence for the coming 12 months fell to a seven-month low.
In the eurozone, headline consumer price index (CPI) is expected to fall to 6.3% in May year-on-year (YoY), from 7% in April. Since its October 2022 peak, CPI has almost constantly declined, but remains more than three times above the European Central Bank (ECB) target.
Core CPI, which excludes energy, food, alcohol and tobacco prices, is forecast to decline for a second straight month to 5.5%, from 5.6% in April, which suggests that, now that last year's higher energy prices are being phased out, EU consumers face stickier than expected broad-based inflation.
In the US, it was also a shorter week, as Americans celebrated Memorial Day on Monday, which means the ADP employment change will exceptionally take place this afternoon at 1.15pm. The markets expect 170,000 job creations in the US private sector, fewer than the 296,000 recorded the previous month.
Also, at 3pm the market awaits ISM manufacturing PMI which should marginally fall to 47 in May, from 47.1 in April. This would mean a seventh straight month of contraction for the US manufacturing sector.
The quarterly reshuffle of the FTSE indices is upon us again and was confirmed last night. Property developer British Land lost its position on the index, ending a 21-year run in the FTSE 100. Its value has been hit by rising interest rates and the disruption caused by last autumn's mini budget. The swap brings engineering company IMI into the FTSE 100.
The reshuffle will take effect from the start of trading on Monday 19 June.
British boot maker Dr. Martens posted a drop in its annual profit. Profit before tax slumped 26% to £159.4 million dented by supply chain issues that ramped up operational costs. Revenue rose 10% to £1 billion. The group proposes a total dividend of 5.84 pence, up 6% on last year.
In the US, Broadcom is due to report second quarter (Q2) numbers after the market close. The street anticipates earnings of $10.12 per share on revenue of $8.7Bln.
After NVIDIA's earnings report last week and its market capitalisation reaching $1 trillion, investors now look at how every semiconductor maker could benefit from the AI boom. And according to some analysts, Broadcom is underestimated among its peers. Its networking segment is said to present significant opportunities in the AI space.
Like other chip makers, Broadcom stock jumped in the past few days, taking it to an all-time high.
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