(Alliance News) - London's FTSE 100 is set to open in an underwhelming fashion on Friday, after falls in New York and Asia on US economic nerves.
Chipmakers were also in focus, after poor earnings and a job cut announcement from Intel. Technology stocks in Tokyo fell in a negative read across. Meanwhile, Amazon shares slipped after hours following its earnings, but Apple nudged higher.
US markets struggled after tepid economic data, as a pair of manufacturing purchasing managers' index and the jobless claims readings were worse than expected.
Investors now anxiously await the US jobs report. The nonfarms payrolls data is expected to show the pace of hiring eased to 175,000 in July, from 206,000 in June, according to FXStreet cited consensus.
"The signal to derisk was opened with the weekly jobless claims coming in at a higher-than-expected 249,000 although the punchy cross-asset moves really came alive once the US ISM manufacturing report came in 30 minutes after US equity trade was underway," Pepperstone analyst Chris Weston commented.
"From here, we saw a move that would last right through the session and that sets Asia up on a dark and sinister footing."
Westin continued: "With the market firmly moving to a mantra that bad news is bad news for risky assets and sentiment, where swaps are pricing an element of more emergency cuts, poor US job numbers will not be digested well at all."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 0.6% at 8,235.76
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Hang Seng: down 2.3% at 16,904.17
Nikkei 225: down 5.8% at 35,909.70
S&P/ASX 200: down 2.1% at 7,944.20
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DJIA: closed down 494.82 points, 1.2%, at 40,347.97
S&P 500: closed down 1.4% at 5,446.68
Nasdaq Composite: closed down 2.3% at 17,194.14
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EUR: up at USD1.0802 (USD1.0787)
GBP: down at USD1.2736 (USD1.2771)
USD: down at JPY148.92 (JPY150.09)
GOLD: up at USD2,465.14 per ounce (USD2,448.60)
OIL (Brent): down at USD80.05 a barrel (USD80.48)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
12:15 BST UK Bank of England Chief Economist Huw Pill speaks
13:30 BST US unemployment
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Footfall declined for the 12th month in a row as fewer customers visited UK shopping centres in a pre-election lull, figures showed. Total UK footfall decreased by 3.3% in July, picking up speed from a 2.3% fall in June, the British Retail Consortium's Sensormatic IQ footfall monitor showed. High Street footfall increased by 2.7% in July after a 3.1% drop in June. Retail Park footfall decreased by 0.8% in July, after a 0.4% dip in June. Shopping Centre footfall decreased by 3.9% in July, the same pace of decline seen in May. All UK nations saw a drop in footfall year-on-year. In Scotland footfall fell by 2.3%; Northern Ireland eased by 2.2%; England declined by 3.4%; and Wales ebbed by 3.2%. BRC Chief Executive Helen Dickinson said many people have chosen to increase their spending on holidays and leisure activities rather than shopping. "Election week also saw particularly weak footfall, as political electioneering peaked, creating uncertainty for many consumers." "With the election now over, many retailers will be making decisions about how and where to invest in the coming years. Retailers welcomed Labour's promises to reform both business rates and planning laws – two major factors that often hold back much needed local investment. If Labour can address these effectively, they could help breathe new life into retail destinations."
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BROKER RATING CHANGES
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Jefferies starts Frasers Group with 'buy' - price target 1,300 pence
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Peel Hunt cuts Man Group to 'add' (buy) - price target 290 (310) pence
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COMPANIES - FTSE 100
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Intertek hailed a "strong" first-half, registering revenue and profit growth. The consumer product testing and certification agency said revenue in the first half of 2024 grew 1.8% on-year to GBP1.67 billion, from GBP1.64 billion. Like-for-like revenue rose 1.3%. Pretax profit climbed 7.6% to GBP206.2 million from GBP191.7 million a year prior. "We enter the second half of the year with confidence, given the day-adjusted like-for-like growth rate acceleration in the May/June period and we expect the group will deliver a strong performance in 2024 with mid-single digit LFL revenue growth at constant currency, margin progression and a strong cash flow performance," Chief Executive Officer Andre Lacroix said. It expects mid-single-digit like-for-like constant currency revenue growth from the Consumer Products division, in line with an outlook given in May. Intertek lifted its interim dividend by 43% to 53.9 pence per share from 37.7p a year prior.
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GSK on Thursday said the US Food & Drug Administration expanded the use of its cancer medicine Jemperli, also known as dostarlimab, when combined with chemotherapy. The London-based pharmaceutical company said the "approval now includes mismatch repair proficient/microsatellite stable tumours, which represent majority of endometrial cancer cases". GSK said the approval is for all adults with primary advanced or recurrent endometrial cancer, a cancer that affects the uterus. GSK said it was the first and only immuno-oncology-based treatment to show an overall survival benefit, citing phase 3 trial data. At the 2.5-year landmark, 61% of patients in the Jemperli plus chemotherapy group compared to 49% in the chemotherapy group were alive.
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British Airways owner International Consolidated Airlines on Thursday said it has abandoned plans to buy Spain's Air Europa, citing regulatory concerns. The airline also paid its first dividend since 2019 despite a marginal fall in half-year profit. It had been expected to report results on Friday. "The board of directors has concluded that in the current regulatory environment it would not be in the best interests of shareholders to continue with the transaction," IAG said in a statement. IAG will pay Air Europa owner Globalia EUR50 million as a result of the termination. In addition, IAG announced results for the three and six months to June 30. Pretax profit in the second quarter fell 2.2% to EUR1.13 billion from EUR1.16 billion a year prior. Operating profit eased 0.8% to EUR1.24 billion from EUR1.25 billion. Revenue climbed 7.8% to EUR8.30 billion from EUR7.69 billion. Within this, passenger revenue rose 9.9% to EUR7.41 billion from EUR6.74 billion. For the six months period, pretax profit rose 0.9% to EUR1.05 billion from EUR1.04 billion. Revenue jumped 8.4% to EUR14.72 billion from EUR13.58 billion. IAG also paid an interim dividend of 3 euro cents. IAG last paid an interim dividend in late 2019, months before the global pandemic grounded airlines around the world causing financial havoc.
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COMPANIES - FTSE 250
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Virgin Money UK said it performed in line with guidance in its third-quarter, as its takeover by Nationwide nears. Its net interest margin in the third-quarter to June 30 edged down on-year to 1.89% from 1.93%. It was down from the 1.94% achieved in the half-year. "Our strategy remains on track, with financial performance in line with guidance. We delivered continued growth in deposits and unsecured lending in Q3 and remain focused on developing innovative new products for customers and maintaining good momentum into Q4. The acquisition by Nationwide is progressing as anticipated with the recent CMA clearance, and we expect it to complete in the final quarter of the calendar year," CEO David Duffy said. Customer loans declined 0.9% on-year to GBP72.05 billion, "reflecting lower mortgage balances", it explained. Mortgage lending fell 1.1%, business lending at the same speed, but unsecured lending rose 1.3%. For the full-year, it still expects a net interest margin in the range of 190 to 195 basis points. Virgin Money agreed to a GBP2.9 billion takeover from building society Nationwide in March.
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Budget carrier Wizz Air said seat capacity and passenger numbers declined in July, as it continues to be hurt by GTF engine-related woes. The GTF engine is made by manufacturer Pratt & Whitney, whose customers include plane maker Airbus. Capacity in July fell 0.3% on-year to 6.3 million seats, from 6.4 million. Passenger numbers declined 1.4% to 5.9 million from 6.0 million. Its load factor slipped to 93.8% from 94.9%. On a rolling 12-month basis, capacity and passenger numbers are 12% higher at 68.9 million and 62.0 million, respectively. Wizz Air also noted it was hurt by the global IT outage last month, which disrupted around 1% of its scheduled flights in July. Dublin-listed Ryanair reported traffic growth, however. Passenger numbers rose some 8% to 20.2 million in July, from 18.7 million a year prior.
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OTHER COMPANIES
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AIB Group upped its guidance and said it is in talks with the Irish government to reduce the state's stake in the company further. For the half-year ended June 30, the lender reported total operating income of EUR2.48 billion, a rise of 13% from EUR2.20 billion a year prior. Net interest income alone surged 18% on-year to EUR2.08 billion. Pretax profit jumped 31% year-on-year to EUR1.29 billion from EUR987 million. AIB said it received regulatory approval for a EUR505 million share buyback. It said it intends to transact a EUR500 million directed buyback with the Irish government. "AIB Group delivered a very strong financial performance with profit after tax of EUR1.1 billion in the first half of the year as we embed our strategic priorities of enhancing our customer focus, further greening our business and driving greater operational efficiency. Given our strong capital position, we are pleased to announce our first post-[great financial crisis] mid-year distribution, with discussions underway with the Department of Finance for a EUR500m directed share buyback, which would bring payments to the state to EUR3 billion so far this year," CEO Colin Hunt said. The state's stake in AIB was trimmed to 25.5% in June. It had stood at just under 40.8% at the end of December. Looking to the full-year, AIB now expects net interest income of around EUR4.0 billion, its outlook raised from the over EUR3.65 billion it previously predicted.
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By Eric Cunha, Alliance News news editor
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