(Alliance News) - Stocks in London are seen staging a slight recovery at the end of a difficult week, but the monthly US jobs report due later in the day could bring further market volatility.
"This week's economic data out of the US has merely served to bolster the message in respect of the Fed's determination to raise rates and mitigate any concern their actions might have on the US economy," said Michael Hewson, chief market analyst at CMC Markets.
He added: "Today's US payrolls report has the potential to add another layer to the US dollar strength narrative, as well as equity market weakness in the event we get another strong number this afternoon."
Consensus, according to FXStreet, expects the US economy to have added 300,000 net jobs in August, slowing from the 528,000 added in July.
IG says futures indicate the FTSE 100 index of large-caps to open up 16.70 points, or 0.2%, at 7,165.20 on Friday. The FTSE 100 closed down 135.65 points, or 1.9%, at 7,148.50 on Thursday, marking a fourth consecutive trading day of losses.
In early UK company news, the UK competition watchdog confirmed it has cleared Avast's takeover by Tempe, Arizona-based NortonLifeLock, Ashmore said assets under management were hit by the risk-off mood in the second half of its recent financial year, and Ryanair reported passenger growth in August.
The UK Competition & Markets Authority said it has cleared the acquisition of cybersecurity firm Avast by bigger peer NortonLifeLock following an in-depth merger investigation.
In its phase one probe, the CMA concluded the tie-up raised "a realistic prospect of a substantial lessening of competition", and referred the deal to an in-depth phase two investigation. In August, the CMA said it had provisionally cleared the deal, finding that the enlarged firm still faces stiff competition from McAfee, Microsoft and others.
On Friday, the CMA confirmed this view and cleared the deal.
"After reviewing the evidence in an in-depth review, we are now satisfied that this deal won't worsen the options available to consumers. As such, we have concluded that the deal can go ahead," said Kirstin Baker, chair of the CMA inquiry group.
Emerging markets investment manager Ashmore said assets under management were hit by "widespread risk aversion" in the second half of its financial year.
Assets under management fell to USD64.0 billion as at June 30 from USD94.4 billion a year before. This 32% decline was due to negative investment performance of USD16.6 billion and net outflows of USD13.5 billion.
"The combination of geopolitical tension, high inflation figures and central banks tightening monetary policy, including the Fed in the second half of the year, with the consequent negative impact on market levels, meant that investor risk appetite was markedly lower as the period developed," it said, adding that mood was further soured by the war in Ukraine.
Pretax profit tumbled to GBP118.4 million from GBP282.5 million, as management fees fell to GBP247.0 million from GBP276.4 million. "Second-half market weakness resulted in GBP49.9 million unrealised mark-to-market loss on seed capital investments," it said, leading to the drop in profit.
Still, Ashmore maintained the year's dividend at 16.90 pence, having declared an unchanged final payout of 12.10p.
"While the global macro environment still presents some near-term uncertainty, the situation in Emerging Markets is improving and the breadth of investment opportunity helps to mitigate the risks...Risk appetite will improve as some of the recent macro headwinds abate, supporting a recovery in Emerging Markets asset prices and higher investor allocations," said Chief Executive Mark Coombs.
Ryanair said passenger numbers in August were up 52% on a year before, rising to 16.9 million from 11.1 million. Load factor also showed a significant improvement, growing to 96% from 82%.
August's traffic figure was slightly higher than the July number of 16.8 million.
Upmarket fashion retailer Ted Baker cautioned over falling consumer confidence heading into its peak trading period, but it has seen recent revenue growth.
Revenue in the 14 weeks to July 29 was up 3.4% on a year before, but down 28% on pre-pandemic levels. This was led by a stronger in-store performance, with stores revenue up 20% year-on-year and e-commerce down 13%.
Online sales were "impacted by challenges following the launch of the new e-commerce platform alongside consumers returning to shop in stores."
Ted Baker expects to see a drag on traffic and conversion rates until the e-commerce platform issues are resolved. "Work continues at pace to ensure that the system is fully functional and optimised ahead of peak trading, although risk remains that certain milestones may not be met in this period," it warned.
Further, the retailer is "mindful" of the weaker economic backdrop, falling consumer confidence and supply chain challenges as it heads into the event-led peak trading season.
Ted Baker gave the update ahead of a shareholder meeting later this month to vote on its GBP211 million takeover by Reebok-owner Authentic Brands Group. The Ted Baker board unanimously recommends shareholders back the deal.
Alliance Pharma said it has appealed against the CMA's decision to seek a competition disqualification order against its chief executive, Peter Butterfield.
The CMA is seeking the disqualifications against a total of seven directors from four companies, including Alliance's Butterfield, over allegations of anti-competitive agreements in relation to the sale of prescription prochlorperazine.
"Whilst this action is in line with the CMA's stated policy to consider [competition disqualification orders] in all cases where the CMA has found an infringement, the company is very disappointed, in light of the facts, with the CMA's decision to take such action against Mr Butterfield," Alliance said.
Alliance said it "fundamentally disagrees" with the CMA's actions and insisted that Butterfield did not participate in, or profit from, any market sharing arrangement. He retains the full confidence and support of the Alliance board, it added.
The dollar was mixed ahead of the nonfarm payrolls data but has had a strong run so far this week.
Sterling was quoted at USD1.1536 early Friday, a touch higher than USD1.1534 at the London equities close on Thursday. The pound has fallen 2.2% so far this week.
The post-Covid recovery in UK shopper footfall slowed in August as cost of living pressures discouraged consumers, figures showed on Friday. Total UK footfall was down 12% in August on three years ago – a comparison made to even out Covid-related distortions – according to British Retail Consortium-Sensormatic IQ data.
The euro traded at USD0.9967 early Friday, dipping from USD1.0044 late Thursday. Against the yen, the dollar was quoted at JPY140.33, up versus JPY139.94.
In the US on Thursday, Wall Street ended mostly higher, with the Dow Jones Industrial Average ending up 0.5%, the S&P 500 up 0.3% and the Nasdaq Composite down 0.3%
In Asia on Friday, the Japanese Nikkei 225 index closed slightly lower. In China, the Shanghai Composite was down 0.3%, while the Hang Seng index in Hong Kong was down 1.1%. The S&P/ASX 200 finished down 0.3%.
Gold was quoted at USD1,700.85 an ounce early Friday, up from USD1,694.00 on Thursday.
Brent oil was trading at USD93.73 a barrel, higher than USD92.53 late Thursday but still more than USD10 off the week's peak.
In the international economic calendar on Friday, there are eurozone producer prices at 1000 BST.
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.