(Alliance News) - London's FTSE 100 is called to open higher on Friday, while the pound and euro struggled ahead of a series key purchasing managers' index readings.
The euro sunk to a more than one-year low of USD1.0462 earlier, as a rip-roaring rise for the dollar continues.
Tepid German data did little to soothe eurozone growth fears early Friday. UK retail sales, meanwhile, painted a grim picture on consumer spending ahead of the key festive period.
"The US dollar is extending its rally, not necessarily on Fed expectations but on a fair amount of safe haven demand amid the mounting geopolitical tensions in Ukraine. The latest news suggest that Russia launched 'a new kind of ballistic missile in to Ukraine' as a response to Ukraine's use of US missiles on Russia earlier this week," Swissquote analyst Ipek Ozkardeskaya commented.
"Elsewhere in energy, the mounting geopolitical tensions give a hand to oil bulls. The barrel of US crude has stepped above the USD70pb level, but faces a thick layer of offers between the USD70 and 73pb range. The combination of weak global demand and ample supply keeps the macro-focused bears in appetite near these levels. But, the environment turns positive for tactical longs and US energy companies that will see the additional opportunity to increase their market share in Europe."
In early UK corporate news, pharmaceutical firm GSK reported an RSV vaccine approval in Japan, office space provider Workspace reported a swing to interim profit, while miniature wargames maker Games Workshop is trading ahead of expectations.
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 0.6% at 8,195.77
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Hang Seng: down 2.0% at 19,209.85
Nikkei 225: up 0.7% at 38,283.85
S&P/ASX 200: up 0.9% at 8,393.80
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DJIA: closed up 461.88 points, 1.1%, at 43,870.35
S&P 500: closed up 0.5% at 5,948.71
Nasdaq Composite: closed up 6.28 points at 18,972.42
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EUR: lower at USD1.0483 (USD1.0491)
GBP: lower at USD1.2570 (USD1.2605)
USD: higher at JPY154.80 (JPY154.52)
GOLD: higher at USD2,693.71 per ounce (USD2,665.01)
(Brent): higher at USD74.44 a barrel (USD73.52)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
08:30 GMT eurozone European Central Bank President Christine Lagarde speaks
09:00 GMT eurozone flash composite PMI
08:30 GMT Germany flash composite PMI
09:30 GMT UK flash composite PMI
14:45 GMT US flash composite PMI
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UK retail sales growth fell short of expectations last month, numbers on Friday showed, as non-food sales were hurt by pre-budget uncertainty. According to the Office for National Statistics, UK retail sales volumes rose by 2.4% on-year in October, easing from a 3.2% climb in September and falling short of the FXStreet cited consensus of 3.4%. September's growth was downwardly revised from an initially reported 3.9% rise. Retail sales fell 0.7% in October from September. They had edged up 0.1% in September from August, downwardly revised from an 0.3% climb. The latest data undershot consensus. A lesser decline of 0.3% was expected, according to FXStreet. "Non-food stores sales volumes fell on the month as retailers reported that budget uncertainty affected sales," the ONS said. "When compared with their pre-coronavirus pandemic level in February 2020, volumes were down by 1.5%."
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UK consumer confidence improved in November amid signs shoppers are ready to put political upheaval behind them to spend again on Black Friday and Christmas. Growth from Knowledge's, GfK, long-running consumer confidence index rose by three points this month, although it remains firmly in negative territory at minus 18. The improvement was driven by a jump in intentions to make major purchases – an indicator of confidence in buying big-ticket items – by five points to minus 16 in the run-up to Black Friday next week and eight points higher than this time last year. Confidence in personal finances for the year ahead rose one point to minus one – two points higher than this time last year, while expectations for the general economic situation are up two points but remain at minus 26. Neil Bellamy, GfK consumer insights director, said: "There was evidence of nervousness in recent months as consumers contemplated the potentially worrying impact of the UK budget at home and even the implications of the US presidential election. But we have moved past those events now. "But while 2025 is just around the corner and the New Year often brings optimism, it's too early to expect significant further improvements in the consumer mood. "As recent data shows, inflation has yet to be tamed, people are still feeling acute cost-of-living pressures, and it will take time for the UK's new government to deliver on its promise of 'change'."
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The UK's energy watchdog announced its price cap will rise at the start of next year. Ofgem said a 1.2% increase would see the typical bill for a household in England, Scotland and Wales increasing to GBP1,738-a-year from GBP1,717, or by around GBP1.75-a-month. It follows the price rising by 10% in October. Tim Jarvis, director general of markets at Ofgem, said: "While today's change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households. However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.
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Russian President Vladimir Putin threatened to strike the UK with a new ballistic missile after using the weapon to hit a target in Ukraine. Downing Street condemned Putin for further escalating the conflict by using a ballistic missile with a range of "several thousand kilometres" against the city of Dnipro. Putin suggested the missile could be used to hit Kyiv's allies who have given Ukraine permission to use Western-supplied weapons to hit targets within Russia. The UK is believed to have allowed its Storm Shadow missiles to be used by Ukrainian forces within the Kursk region of Russia, while the US has given permission for its ATACMS weapons to be fired at targets in Putin's country. Putin confirmed Russia has tested a new intermediate-range weapon, saying it came in response to Ukrainian strikes on the Russian territory with US and British missiles earlier this week. The Russian leader declared that Russia would issue advance warnings before strikes on other countries to allow civilians to evacuate to safety. "In response to the use of American and British long-range weapons on November 21 of this year, the Russian armed forces launched a combined strike on one of the facilities of the Ukrainian defence industry," Putin said in a televised address.
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German economic growth was more tepid than expected in the third-quarter, Destatis reported. The German economy edged up just 0.1% quarter-on-quarter in the three months to September 30, averting a summer recession. Growth was downwardly revised from an initially reported 0.2% rise. The German economy had shrunk 0.3% in the second-quarter, after rising 0.2% in the first. Year-on-year, German gross domestic product was up 0.1% in the third-quarter, in line with the growth seen in the second-quarter. However, on a calendar-adjusted basis, GDP shrunk 0.3% on-year in the third-quarter. "There was one working day more than in the same period a year earlier," Destatis explained.
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Japan's service sector re-entered growth territory in November, though only just, while the pace of decline in manufacturing accelerated, preliminary data published by S&P Global showed. The flash composite output index edged up to 49.8 points in November from 49.6 in October. Getting closer to the neutral 50-points mark separating growth from contraction, it indicates the pace of contraction slowed. The flash services business activity index rose into growth territory of 50.2 points in November from 49.7 in October, indicating a renewed albeit fractional rise in business activity in Japan's service sector, S&P Global said. "Service providers saw a broadly similar rise in new business, however new work at manufacturing firms fell moderately, extending the current sequence of falling factory sales to one-and-a-half years," said Usamah Bhatti, economist at S&P Global Market Intelligence. The flash manufacturing output index worsened to 49.0 in November from 49.4 in October, indicating the pace of contraction sped up. It was worse than the FXStreet-cited consensus, which had pencilled in an uptick to 49.5 for November.
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BROKER RATING CHANGES
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JPMorgan cuts JD Sports to 'neutral' (overweight) - price target 105 (171) pence
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Berenberg starts Clarkson with 'buy' - price target 5,075 pence
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COMPANIES - FTSE 100
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GSK said it has landed another respiratory syncytial virus vaccine approval in Japan. The Arexvy jab has been backed by the Ministry of Health, Labour & Welfare for use in adults aged 50-59 at increased risk of severe RSV. For just over a year, the vaccine has been approved in adults aged over 60. "To date, GSK's RSV vaccine has been approved for adults aged 50-59 at increased risk in 35 countries, including the US, with regulatory decisions for other geographies undergoing review," GSK added. GSK Chief Scientific Officer Tony Wood said: "This approval reflects our ambition to protect people at increased risk from the severe consequences of RSV infection. Adults aged 50-59 with certain underlying medical conditions can face debilitating consequences from RSV, so we are pleased to offer those in Japan a vaccine for the first time."
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COMPANIES - FTSE 250
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Workspace Group lifted its half-year dividend and reported a swing to profit, hailing "good customer demand and continued pricing growth". Workspace reported pretax profit of GBP10.2 million for the six months to September 30, swinging from a loss of GBP147.9 million a year prior. Helping its bottom line, it reported only a GBP20.3 million hit from the change in fair value of investment properties, narrowing markedly from GBP177.4 million. Net rental income declined 0.8% on-year to GBP60.5 million from GBP61.0 million, though underlying net rental income rose 4.3% to GBP60.2 million from GBP57.7 million. The underlying sum strips out disposals. EPRA net tangible assets per share weakened to GBP7.85 at the half-year end from GBP8.00 in March. Chief Executive Officer Lawrence Hutchings said: "Workspace is a leader in the London flex market, with a deep understanding of what our customers want from their work space and a focus on championing the needs of the Capital's fastest growing businesses. Today's results, reflecting good customer demand and continued pricing growth, demonstrate the enduring appeal of the Workspace offer for these businesses." Workspace upped its interim dividend by 4.4% to 9.4 pence per share from 9.0p.
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Miniature wargames maker Games Workshop said trading over the past two months has been "ahead of expectations". It expects revenue in the six months to December 1 to rise 10% to GBP260 million from GBP235.6 million a year prior. Pretax profit of GBP120 million is expected, a rise of 25% from GBP96.1 million. Games Workshop releases half-year results on January 14.
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OTHER COMPANIES
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DFS Furniture said an improvement in trading conditions as continued into its new financial year. The furniture seller, which concluded its last financial year on June 30, back in September reported a improvement in its trading performance during the final quarter. "This trend has continued into the current financial year, with order intake remaining in growth over the first 20 weeks of the period, inline with our expectations. In addition, the progress made on reducing our cost base through FY24 has also continued through the current financial year to date," the firm said ahead of its annual general meeting on Friday. In addition, it named Marie Wall as interim chief financial officer, from December 2. Wall has previously held senior finance roles at tobacco firm Imperial Brandsand consumer electronics-focused Dixons Carphone. DFS had said in October that CFO John Fallon would seek re-election at the AGM. DFS has now confirmed that Fallon will now step down from the board on Friday, before leaving the business altogether on January 17.
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Brick manufacturer Michelmersh said trading has been "resilient" so far in the final quarter of 2024. The firm expects to report results for 2024 in line with market expectations. Michelmersh said: "Our order intake continues to run ahead of manufacturing capacity as we have focused on growing a well-balanced forward order book with appropriate pricing to support demand. While the inflection point in activity levels within the construction sector remains uncertain, we are working closely with our customers on the expected timing of despatches. Group trading is also benefiting from the quality of the order book built up during the year across our broad and diverse customer base." It plans to release annual results on March 25.
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By Eric Cunha, Alliance News news editor
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