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(Alliance News) - London stock prices are set for a lower open on Friday, ending an otherwise positive week on the back foot.
In early UK company news, dividend cancellations continued at pace, with Rightmove and Meggitt among those cancelling final dividend payments, as Mike Ashley apologised for his company's actions over the past week.
IG says futures indicate the FTSE 100 index of large-caps to open 26.76 points, or 0.5%, lower at 5,744.40 on Friday. The FTSE 100 index closed up 82.96 points, or 1.5%, at 5,771.16 on Thursday. The FTSE 100 has added 11% so far this week.
"Markets in Asia have played catch up this morning with decent gains across the board; however this doesn't look as if it will translate into a similar positive open for European markets this morning, as caution returns ahead of the weekend," CMC Markets Chief Market Analyst Michael Hewson said.
"A weaker open after three days of gains is not altogether surprising against such an uncertain backdrop, as cases in the US rise above those in China, while the infection rate in Italy appears to be rising again."
In Asia on Friday, the Japanese Nikkei 225 index closed up 3.9%. In China, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong is up 0.4%.
Hewson commented: "The rebound in European and US markets continued yesterday, with the Dow posting its strongest three-day winning streak since the 1930's. The gains came despite an absolute shocker of a weekly jobs number, which saw 3.3 million Americans claim for unemployment cover in the previous week."
Despite being sharply ahead of the 1.7 million consensus figure, Hewson said, markets knew this was going to be a "shocker" of a number, and so were largely expecting a number in the millions.
In the US on Thursday, Wall Street was able to shake of the dismal the US jobless numbers, ending strongly. The Dow Jones Industrial Average added 6.4%, the S&P 500 rose 6.2%,and the Nasdaq Composite 5.6%.
Hewson continued: "While US markets have seen gains in excess of 15% in the past three days, markets in Europe have lagged behind a touch, hindered to some extent by the fragmented response from various Eurozone governments to the crisis. Europe hasn't been helped by signs that the outbreak is Spain is getting worse, while the Italian situation isn't slowing down anywhere near as quickly as people originally thought."
EU leaders have agreed on a two-week timeline for eurozone finance ministers to come up with further fiscal measures following a more-than-six-hour videoconference.
"Our response will be stepped up, as necessary, with further action in an inclusive way, in light of developments, in order to deliver a comprehensive response," a joint statement read.
German Chancellor Angela Merkel, however, is keen to avoid so-called coronabonds, believing they are not the best way of shoring up Europe's economy in the current Covid-19 crisis.
"For me, the European Stability Mechanism is the preferred instrument because it was truly created for times of crisis," Merkel said, in reference to the eurozone bailout fund. Other leaders shared her point of view, she added.
In London early Friday, the raft of blue-chip firms cancelling dividend payments to preserve cash during the Covid-19 outbreak continued.
This time, it was the turn of Rightmove and Meggitt to withdraw their recommendations for a final dividend for 2019.
Flutter Entertainment said it is suspending dividend payments going forward, and has decided its 2019 final dividend will be issued in shares, instead.
Flutter, however, is still pressing ahead with its Stars Group Inc tie up, believing the merger still holds "strategic rationale" despite the ongoing uncertainty caused by Covid-19.
"The Flutter board believes that the combined group will have a robust financial profile given its strong cash generation in conjunction with expected cost, revenue and financing synergies," the gambling firm said.
Coca-Cola HBC, however, stated its intention remains to distribute the EUR0.62 final payout promised to shareholders.
"Our strong balance sheet and liquidity position, our leading market shares and largely variable cost base, together with our unique portfolio of brands and resilient and talented people will allow us to weather this unprecedented crisis," Coca-Cola HBC said.
SSE, too, said it intends to pay its previously stated 80p full year dividend, but warned this could change.
In terms of liquidity, SSE has GBP1.5 billion of committed bank facilities.
The utility firm said that for its 2020 financial year, ending March 31, adjusted earnings are expected at the lower end of its 83p to 88p guided range. Looking ahead, SSE said it is "much too early" to forecast with accuracy its financial 2021 expectations.
SSE said it will be delaying its annual results until the second half of June, following advice from UK regulators.
Among the midcaps, Domino's Pizza Group, Essentra, Hill & Smith, Marshalls, Provident Financial, FDM Group and Coats Group all cancelled their 2019 final dividends on Friday.
Balfour Beatty said it is reviewing the "appropriateness" of paying its final dividend.
Anglo American said the 21-day national lockdown in South Africa will hit its 2020 production guidance.
Based on the 21-day lockdown period in South Africa and allowing for a safe ramp-up of operations thereafter, Anglo American would expect a 2020 production volume impact of 2 million to 3 million tonnes at Kumba Iron Ore and 1.5 million to 2 million tonnes of export thermal coal.
Elsewhere, Frasers Group CEO Mike Ashley apologised for how his firm has handled the Covid-19 outbreak.
UK Prime Minister Boris Johnson told Ashley on Wednesday to "expect the consequences" if he does not obey the rules over his employees during the coronavirus crisis.
Employees had been ordered to continue turning up to work at his Frasers Group stores, which are closed to the public, during the pandemic.
"Given what has taken place over the last few days, I thought it was necessary to address and apologise for much of what has been reported across various media outlets regarding my personal actions and those of the Frasers Group business," Ashley said in a statement Friday.
Adding: "Our intentions were only to seek clarity from the government as to whether we should keep some of our stores open; we would never have acted against their advice. In hindsight, our emails to the government were ill-judged and poorly timed, when they clearly had much greater pressures than ours to deal with. On top of this, our communications to our employees and the public on this was poor."
Ashley provoked a series of controversies after initially planning to open his stores despite them being included in the ban and hiking prices of sports equipment by more than 50%.
The dollar was weaker across the board early Friday, following Thursday's disastrous jobless claim figures.
Sterling was quoted at USD1.2238 early Friday, higher than USD1.2132 at the London equities close on Thursday. The euro traded at USD1.1044 early Friday, up from USD1.1004 late Thursday. Against the yen, the dollar was quoted at JPY108.64, soft on JPY109.57.
In commodities, gold was quoted at USD1,622.00 an ounce early Friday, lower than USD1,627.35 on Thursday. Brent oil was at USD26.28 a barrel, down from USD27.06.
Global oil storage capacity is under intense pressure because of booming output from Saudi Arabia and the US while the coronavirus outbreak slams the world economy and crude demand.
However, despite evaporating demand, production has continued apace – and the resulting oil is often destined for overstretched storage facilities around the world, according to industry experts.
The economic events calendar on Friday has US personal consumption expenditure index data at 1230 GMT - the core reading is the Federal Reserve's preferred gauge of inflation.
By Paul McGowan; paulmcgowan@alliancenews.com
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