(Alliance News) - Stocks in London were called lower on Friday ahead of key US jobs data, and after further hawkish cues from the US Federal Reserve.
In her first speech as a Fed governor, Federal Reserve board member Lisa Cook said restoring price stability in the US will likely "require ongoing rate hikes" and a period of restrictive policy.
"Inflation remains stubbornly and unacceptably high, and data over the past few months show that inflationary pressures remain broad based," said Cook, speaking at the Peterson Institute for International Economics think tank.
Now investors' attention will be on the key US nonfarm payrolls print at 1330 BST.
"The US will announce its latest jobs data in a tense and volatile environment of energy crisis, persistent inflation, Fed members insisting that what they are doing is right, and markets crying that what they are doing is maybe a bit too much," said Swissquote Bank analyst Ipek Ozkardeskaya.
The data will be crucial for assessing the health of the US job market, and the effects of monetary tightening from the Fed.
"Investors will be watching three main elements. The NFP data, the unemployment and participation rates, and the wages growth," Ozkardeskaya added.
Meanwhile in the UK, signs pointed to the cost-of-living crisis beginning to bite.
September recorded the slowest retail sales growth since shops reopened post-Covid due to a combination of inflation, economic crisis and an unexpected bank holiday, figures show.
Total in-store and online sales increased by just 2.8% in September on last year, according to BDO's High Street Sales Tracker. This follows a similarly poor set of results in August, which was the previous lowest post-Covid performance for retail sales.
Sophie Michael, head of retail and wholesale at BDO, said: "While the overall like-for-like is not quite going backwards across all discretionary spending categories, it's clear that it's trending downwards.
"In addition, with the pound's current level against the US dollar and euro, retailers that rely on imports are paying more for their products, eating into already slim margins.
In local corporate news, JD Wetherspoon reported annual revenue growth, but continues to battle rising costs, and manufacturer Marshalls said it expects profit to miss the lower end of market consensus.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called down 22.8 points, or 0.3%, at 6,974.47
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Hang Seng: down 1.4% at 17,767.06
Nikkei 225: closed down 0.7% at 27,116.11
S&P/ASX 200: closed down 0.8% at 6,762.80
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DJIA: closed down 346.93 points, or 1.2%, at 29,926.94
S&P 500: closed down 38.76 points, or 1.0% at 3,744.52
Nasdaq Composite: closed down 75.33 points, or 0.7% at 11,073.31
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EUR: down at USD0.9778 (USD0.9837)
GBP: up at USD1.1134 (USD1.1191)
USD: up at JPY145.00 (JPY144.81)
Gold: down at USD1,710.51 per ounce (USD1,712.13)
Oil (Brent): up at USD94.45 a barrel (USD94.30)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
09:45 BST France foreign trade
13:30 BST US nonfarm payrolls
13:30 BST Canada labour force survey
15:00 BST US wholesale trade sales
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UK house prices edged down marginally in September, according to Halifax house price index. Prices fell 0.1% in the month, compared to a 0.3% rise in August. Annually, prices rose 9.9%, slowing from 11.4% annual growth seen in August. "The events of the last few weeks have led to greater economic uncertainty, however in reality house prices have been largely flat since June, up by around GBP250. This compares to a rise of more than GBP10,000 during the previous quarter, suggesting the housing market may have already entered a more sustained period of slower growth," said Kim Kinnaird, Halifax mortgage director.
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Liz Truss has ruled out launching an energy-saving public information campaign, amid warnings planned blackouts could hit the UK if power plants cannot get enough gas to keep running. Business Secretary Jacob Rees-Mogg is believed to have backed a GBP15 million campaign this winter, with the Times reporting the idea was blocked by No 10. It added the campaign was seen as "light touch" and included measures designed to help people save up to GBP300 a year, including lowering the temperature of boilers, turning off radiators in empty rooand advising people to turn off the heating when they go out. The newspaper quoted a government source describing the campaign as a "no-brainer" and said No 10 had made a "stupid decision", but it added Truss is said to be "ideologically opposed" to such an approach as it could be too interventionist.
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US President Joe Biden said Thursday the world risks nuclear "armageddon" for the first time since the Cold War and that he is trying to find Russian President Vladimir Putin's "off-ramp". "We have not faced the prospect of armageddon since Kennedy and the Cuban missile crisis" in 1962, Biden said at a Democratic party fundraising event in New York. Putin is "not joking" when he threatens to use nuclear weapons, and "we are trying to figure out what is Putin's off-ramp. Where does he find a way out?"
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The UK and Ireland have insisted they will work closely to try and resolve the impasse over the Northern Ireland Protocol. Foreign Secretary James Cleverly met his Irish counterpart Simon Coveney in London on Thursday, with the pair expressing warm words and a desire for close cooperation on issues including the protocol. The first bilateral meeting between the UK and Ireland since Liz Truss became UK Prime Minister will be followed on Friday by the British-Irish Intergovernmental Conference. It will be co-chaired by Coveney and Northern Ireland Secretary Chris Heaton-Harris. While agreement on changes linked to the protocol remain to be negotiated, the UK, Ireland and the EU have made a noticeable effort in recent days to express a desire for action.
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BROKER RATING CHANGES
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HSBC raises RS Group price target to 1,430 (1,375) pence - 'buy'
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Barclays cuts Gym Group price target to 160 (290) pence - 'overweight'
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HSBC cuts Rightmove price target to 440 (520) pence - 'reduce'
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COMPANIES - FTSE 250
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JD Wetherspoon said revenue in the 52 weeks to July 31 came in at GBP1.74 billion compared to GBP772.6 million year-on-year. Compared to financial 2020, revenue was down 4.3% from GBP1.82 billion. Pretax loss before exceptional items narrowed substantially to GBP30.4 million from GBP167.2 million on the year prior. Operating costs jumped to GBP1.7 billion from GBP872.9 million. It declared neither a dividend nor share buybacks, unchanged from the previous year. The pub chain warned firm predictions about its financial performance are difficult to make, owing to rising costs of labour and repairs, but it is "cautiously optimistic". "Perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions," it said.
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Manufacturing company Marshalls said revenue for the nine months to September 30 was GBP544 million, rising 20% year-on-year from GBP453 million. However, it now predicts outturn will be slightly below the bottom end of the current range of market expectations for its full year. Consensus stands at a range of GBP95.1 million to GBP101.0 million. This is due to the "combined impact of the accelerated rate of revenue contraction in Marshalls Landscape Products in the third quarter and the reduction in efficiency resulting from lower manufacturing output in this reporting segment", it explained.
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OTHER COMPANIES
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SolGold said it has entered into a friendly merger with Cornerstone Capital Resources, whereby SolGold will acquire all of Cornerstone's shares. "The merger of Cornerstone and SolGold will significantly strengthen the ability of the combined group to create value for shareholders by consolidating ownership of the Cascabel Project along with a robust portfolio of other projects primarily across Ecuador," it said.
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Superdry said revenue grew 9.6% in the year ended April 30, to GBP609.6 million from GBP556.1 million year-on-year. The clothing retailer swung to pretax profit of GBP17.9 million from a loss of GBP36.7 million. It proposed no dividends for the year. "The last two years have caused unimaginable levels of disruption and uncertainty, with Omicron hitting at a critical sales period in financial 2022... Although we remain cautious on the macroeconomic outlook and the impact of inflation, we are confident that our strategy is positioning the brand for future success," said Chief Executive Officer Julian Dunkerton.
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By Elizabeth Winter; elizabethwinter@alliancenews.com
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