Morning Note: Market news and an update from Halma.
Market News
President Trump vowed to respond to the EU’s countermeasures to his metals tariffs, while Mexico is delaying its response until 2 April to US tariffs on steel and aluminium. Meanwhile, companies worldwide are planning for the worst, with many setting up task forces to mitigate the impact on sales, profits, and market shares
US equities rose last night – S&P 500 (+0.5%); Nasdaq (+1.2%) – following cooler-than-forecast US inflation data. However, underlying inflation components—which feed into PCE data, the Federal Reserve’s preferred inflation gauge—came in higher than anticipated. Intel surged 10% post-market after naming semiconductor veteran Lip-Bu Tan as CEO.
Senate Democrats will block a Republican spending bill to avert a US government shutdown Saturday, Chuck Schumer said. He urged the GOP to accept his party’s plan to provide 30 days of interim funding instead. Treasuries edged higher, with the 10-year currently yielding 4.32%. Gold and oil moved up to $2,940 an ounce and $71 a barrel, respectively.
In Asia this morning, equities fell – Nikkei 225 (-0.1%); Hang Seng (-0.6%); Shanghai Composite (-0.4%) – and US futures rolled over (S&P currently down 0.5%). The yen strengthened after Bank of Japan Governor Kazuo Ueda said he expects real wages and consumer spending to improve.
The FTSE 100 is currently little changed at 8,533. Companies trading ex-dividend today include Anglo American (0.76%), Entain (1.44%), NatWest (3.58%), and Tritax Big Box REIT (1.55%). Sterling trades at $1.2960 and €1.1910.
London’s housing market will see the biggest price drop in the UK over the next three months, a RICS report showed.
Source: Bloomberg
Company News
Halma has today released a scheduled trading update ahead of its financial year end on 31 March 2025. The group now expects its margin to come in slightly better than forecast, leaving it on track for its 22nd consecutive year of record adjusted profit. In response, the shares have been marked up by 2% in early trading.
Halma is a global group of life-saving technology companies, with a focus on safety, health, and the environment. The group’s technology is used to save lives, prevent injuries, and protect people and assets across a broad range of sectors including commercial and public buildings, utilities, healthcare/medical, science/environment, process industries, and energy/resources. The main growth drivers include increasing health and safety regulation, demand for healthcare from an ageing population, and demand for life-critical resources. Strong market positions deliver upgrade and replacement sales opportunities as customers seek to maintain regulatory compliance and conform with best practice. As a result, customer spending is often non-discretionary and drives sustained demand throughout the economic cycle.
Over recent months, the company has made good progress in varied trading conditions across its end markets amidst an evolving economic and geopolitical backdrop.
Organic revenue growth has been supported by order intake which remains ahead of both revenue in the year to date and the comparable period last year. As a result, the company has reiterated its guidance for ‘good’ organic constant currency revenue growth for the full year to end March 2025.
The adjusted operating profit (EBIT) margin has benefitted from a better-than-expected performance across all three sectors, reflecting favourable product and portfolio mix and good operational delivery.
Based on this progress to date and current forecasts, the company now expects a margin modestly above 21% for the full year to end March 2025, compared to prior guidance of around 21%.
The appreciation of Sterling in the financial year, especially against the dollar, is expected to have a negative currency translation effect on the group’s results
In what was a brief statement, there was little detail on the group’s performance by sector or region – more clarity is expected at the time of the results in June.
The balance sheet is robust with substantial capacity for future investment and cash conversion for the full year is expected to be strong. Halma has a fantastic dividend track record, having increased the payout by 5% or more every year for the last 45 years. The half-year dividend was raised by 7% and we would expect a similar progression to be announced for the final dividend with the results in June.
News flow on the M&A front has been quiet over the last few months. The group has completed seven acquisitions in the year to date across all three sectors, for a maximum total consideration of £158m – the same amount as reported at the half-year stage. However, the pipeline remains healthy.
Source: Bloomberg