Early Morning Call: FTSE 100 outperforms other European indices as ITV, Haleon report

Equity indices overview

Equity markets recorded small losses overnight in the APAC region, following the lead of US markets yesterday.

In Japan, consumer confidence marginally rose to 31.1 in February, from 31 the previous month. Economists had expected on average the index to rise to 32.

USD

The US dollar trades lower against major currencies this morning, in the wake of strong China data and stronger than expected inflation in France and Germany. Still, the greenback remains on a upward trend in place for a month now, and could well rise again ahead of the Jerome Powell testimony next week.

Recent data in the US shows that inflation is not slowing as fast as expected, and the job market remains hot, prompting US policymakers to question the policy in place. Shall the Federal Reserve (Fed) be more restrictive or show patience and maintain its tight monetary policy for a longer period of time?

Two Fed board members expressed their views yesterday. Minneapolis Fed President Neel Kashkari said he was inclined to continue to raise further, beyond the 5.4% level that he previously thought would be adequate to lower inflation. Raphael Bostic recommends patience. In an essay released yesterday, the Atlanta Fed President still feels a federal funds rate set in a range between 5% to 5.25% would be adequate, but it would need to be kept at that level "until well into 2024".

Macroeconomic indicators

A few macroeconomic indicators are expected today. Later this morning, eurozone consumer price index (CPI) is expected to rise 8.2% in February year-on-year (YoY), after 8.6% the previous month, although that figure could be stronger than thought, after the latest inflation data in France, Germany and Spain that came in higher than forecast.

Also, at 10am, the unemployment rate is forecast to remain at 6.6% in January.

In the US, initial jobless claims are expected at 1.30pm. Economists expect 195,000 new claimants for last week.

Corporate calendar

On the corporate front, ITV adjusted group EBITA was down 12% at £717 million largely reflecting the planned investment in M&E to drive future growth.

Taylor Wimpey flagged weaker sales and a lower order book this year, down to £2.15 billion from £2.90bn a year earlier, and CRH increased its share buyback programme after a record 2022.

In the US Tesla shares fell 7% in extended trading, following the company's investor day yesterday. The electric vehicle (EV) company has flagged a paradigm shift in the way cars are built, saying that manufacturing improvements can lead to a 50% reduction in production costs and pave the way for a "new generation" of electric vehicles, including the long hinted-at "low cost" Tesla.

In a four-hour presentation that began with a look at how the global economy can switch to electric from combustion engines, and save money and resources, Tesla outlined how it plans to scale, massively, its electric vehicle and stationary battery storage production to accelerate the world's transition to carbon neutral. But it seems that investors and traders believe it will all come at a cost to margins.

In terms of US earnings, electronics retailer Best Buy, an all-session stock on the IG platform, is expected to post fourth quarter (Q4) earnings before the US market opens. Analysts anticipate earnings of $2.10 per share on revenue of $14.70bn.

Also expected today, Broadcom and Costco Wholesale.

Commodities

US crude oil inventories rose for the 10th week in a row, to their highest level since May 2021. Crude oil inventories rose by 1.2 million barrels last week.

Gasoline stocks fell by 900,000 barrels and distillate inventories were up by 200,000 barrels.