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(Alliance News) - The FTSE 100 is called to open higher on Friday, following some confident trade in Asia and a rise for US stocks overnight, and some better UK economic data.
The index is set to suffer a weekly loss, however, in what has been a nervy end to the final quarter.
A favourable reading of a key US inflation gauge later, however, could add some impetus.
The US core personal consumption expenditures inflation gauge is expected to have faded to 2.6% in May, from 2.8% in April, according to FXStreet cited consensus. A tamer than expected reading could take some steam out of the dollar, which is looking like it will the month on the front foot.
"No major news is expected from today's PCE deflator, which is likely to show a slight easing on the price front in May. However, the sentiment indicators (Chicago PMI, Uni Michigan Index) could once again underpin the resilience of the US economy, meaning that the dollar could head into the weekend on a stronger footing before a series of data heavyweights next week provide even more information on the strength of the economy and could cause some stronger movement in the dollar," Commerzbank analyst Antje Praefcke commented.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.4% at 8,209.18
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Hang Seng: up 0.1% at 17,735.40
Nikkei 225: up 0.6% at 39,583.08
S&P/ASX 200: up 0.1% at 7,767.50
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DJIA: closed up 36.26 points, 0.1%, at 39,164.0
S&P 500: closed up 0.1% at 5,482.876
Nasdaq Composite: closed up 0.3% at 17,858.68
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EUR: down at USD1.0695 (USD1.0710)
GBP: down at USD1.2637 (USD1.2650)
USD: up at JPY160.93 (JPY160.67)
GOLD: down at USD2,326.31 per ounce (USD2,327.60)
OIL (Brent): up at USD85.71 a barrel (USD85.13)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
08:55 BST Germany unemployment
13:30 BST US personal consumption expenditures
15:00 BST US Michigan consumer sentiment index
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The UK economy grew at a slightly sharper pace than expected at the start of the year, according to a revision from the Office for National Statistics. UK gross domestic product grew by 0.7% quarter-on-quarter in the three months to March, recovering after falls of 0.3% and 0.1% in the previous two quarters, and topping the prior estimate of a 0.6% increase. Year-on-year, growth was upwardly revised to 0.3% from 0.2%. The UK economy had declined 0.2% on-year in the final quarter of 2023. "In output terms, services grew by 0.8% on the quarter with widespread growth across the sector; elsewhere the production sector grew by 0.6% while the construction sector fell by 0.6%," the ONS said. An estimate earlier this month showed the UK economy registered no growth at the start of the second-quarter. GDP was unchanged on-month in April, following a rise of 0.4% in March, the ONS said earlier this month.
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Tory minister Steve Baker will mount a bid to replace Rishi Sunak as party leader should he lead the Conservatives to defeat in the UK election on July 4 as expected, it is understood. The Northern Ireland minister hinted at a leadership run if he retains his Wycombe seat – where he was re-elected with a slim 4,214 majority in 2019 – at the general election. He told the PA news agency: "One thing at a time. I want to represent the people of Wycombe the best that I can, as I always have done. "Then let's see what happens." It is understood that he will announce his intentions if the electoral hammering the polls are predicting occurs and Sunak is forced to give up the party's reins. Baker joins other hopefuls – including Business Secretary Kemi Badenoch and Home Secretary James Cleverly – in jostling for the position with a week to go until polling day. Labour said the manoeuvring showed the Tories were putting "their self-interest and leadership ambitions first". The contest to pick Sunak's successor could shape the party for years to come as right-wingers and more centrist Tories battle it out. Security minister Tom Tugendhat on Thursday twice refused to rule out taking a tilt at the top job, when asked in an ITV interview.
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Property values are likely to rise more slowly than UK incomes over the next couple of years, with the typical house price currently sitting at nearly GBP20,000 above the level that would generally be affordable to households, according to Zoopla. However, rising incomes and longer mortgage terms are helping to improve affordability, meaning the "over-valuation" of properties is expected to have disappeared by the end of the year, the website said. Zoopla's over-valuation estimate was reached by comparing the actual average house price in its index with an "affordable" price, which was calculated based on households' disposable incomes, average mortgage rates and average deposit sizes for home buyers. Its report said: "House prices still look expensive on various measures of affordability. "We expect house price inflation to remain muted, likely to rise more slowly than household incomes over the next one to two years." Zoopla said the average house price is around GBP264,900 – but according to its calculations, the affordable price is GBP245,200 – making the average home nearly GBP20,000 over-valued.
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BROKER RATING CHANGES
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Goldman Sachs raises Intertek to 'buy' (neutral) - price target 6,350 (5,650) pence
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Morgan Stanley cuts Safestore to 'equal-weight' - price target 850 pence
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COMPANIES - FTSE 100
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BP has halted new offshore wind projects as its new Chief Executive Officer Murray Auchincloss for now puts a focus on oil and gas and not energy transition measures, Reuters reported on Thursday. Reuters citing, sources at the company, said the measures are part of an effort by Auchincloss to trim down investments in expensive low-carbon projects. Reuters reported BP has imposed a largely company-wide hiring freeze, with the exception of frontline and safety workers.
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COMPANIES - FTSE 250
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Window and door components supplier Tyman said shareholders will receive a special dividend, in addition to a takeover consideration from Quanex, following investor engagement. In a bid to soothe investor concern over the Quanex stock price since the cash and shares deal was announced, as well as adverse currency movements, Tyman shareholders also stand to receive a special interim dividend of 15 pence per share. That will be in addition to the agreed consideration of 240p cash plus 0.05715 of a Quanex share, for each Tyman share owned. "The Tyman directors believe that the transaction, as amended by this announcement, is in the best interests of Tyman shareholders as a whole and continue to recommend unanimously that Tyman shareholders vote or procure votes in favour of the scheme at the court meeting and to vote or procure votes in favour of the special resolution," Tyman added. The agreement for Quanex to acquire Tyman was struck in April.
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OTHER COMPANIES
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Keywords Studios said it would be "minded to accept" a takeover proposal from private equity firm EQT Group, which values the provider of technical and creative services for video game production at GBP1.96 billion. The proposal prices each Keywords share at 2,450p. It followed a revised cash offer of 2,430p made on Wednesday. Keywords in May, however, had said it received a cash bid of 2,550p per share from EQT. On current trading, Keywords said: "The board is confident in delivering strong overall revenue and profit growth in 2024, with performance expected to be second half weighted as the sector emerges from the slower content creation trends that are currently dampening industry spend and therefore group growth." It said a "small number of larger game development projects" have been deferred or cancelled. It added: "This, together with ongoing softer demand in Globalize and the relatively slow ramp-up in content production in Hollywood, has meant that first half organic growth is now expected to be slightly negative during H1. Reported revenue is still expected to grow by around 7% in the first half. The group is, however, increasingly seeing positive signs across the industry with spend from larger clients continuing to grow strongly, and anticipates a stronger recovery from the US strikes, which reinforces its confidence in the second half performance. As a result, H2 organic growth is expected to be around 10%, in-line with our medium-term guidance."
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Currency and asset manager Record reported annual revenue growth and said assets under management hit a record high. Assets under management jumped 17% on-year to USD102.2 billion at the end of March, from USD87.7 billion. Annual revenue rose 1.6% to GBP45.4 million from GBP44.7 million. However, pretax profit fell 12% to GBP12.9 million from GBP14.6 million. "The underlying financial performance of the group remains strong, with material growth in AUM, which rose to its highest ever level of USD102.2 billion, new fund launches and the repeat of last year's high level of performance fees of GBP5.8 million," Chief Executive Officer Jan Witte said. Record maintained its final dividend at 2.45p per share, meaning its annual ordinary dividend totalled 4.60p per share, up 2.2% from 4.50p. In addition, it declared a special dividend of 0.60p per share, having "reviewed the current level of group capital against its ongoing requirements for regulatory and investment purposes". It means that the total proposed dividend for the year is 0.4% higher at 5.20p from 5.18p.
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By Eric Cunha, Alliance News news editor
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