(Alliance News) - London's FTSE 100 is called to open higher on Friday, on the expectation of a softer US jobs report, which could take some sting out of hawkish Federal Reserve interest rate expectations.
Friday's US jobs report is expected to show nonfarm payrolls rose 243,000 last month, according to FXStreet cited consensus, easing from 303,000 in March.
SPI Asset Management analyst Stephen Innes commented: "There is some market speculation that Fed Chair Powell let the NFP cat out of the bag during his relatively dovish presser.
"Remember, folks, this is less about inflation and more about jobs after Chair Powell, in no uncertain terms, noted that a material weakening in the labour market could precipitate rate cuts even if inflation were to remain relatively sticky and moderately elevated. Indeed, this jobs report is a major litmus test for near-term rate cut expectations."
In early UK corporate news, InterContinental Hotels reported first-quarter growth, despite a slight slowdown in the Americas. Diageo named a new finance chief, poaching Cola Europacific's Nik Jhangiani.
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 0.3% at 8,192.85
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Hang Seng: up 1.7% at 18,515.73
Nikkei 225: financial markets in Tokyo closed for holiday
S&P/ASX 200: up 0.6% at 7,629.00
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DJIA: closed up 322.37 points, 0.9%, at 38,225.66
S&P 500: closed up 0.9% at 5,064.20
Nasdaq Composite: closed up 1.5% at 15,840.96
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EUR: up at USD1.0734 (USD1.0690)
GBP: up at USD1.2547 (USD1.2487)
USD: down at JPY153.14 (JPY154.05)
GOLD: lower at USD2,301.18 per ounce (USD2,303.10)
(Brent): up at USD83.82 a barrel (USD83.40)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
09:30 BST UK composite PMI
10:00 BST eurozone unemployment
13:30 BST US nonfarm payrolls
14:45 BST US S&P Global composite PMI
15:00 BST US ISM services PMI
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Labour has won the Blackpool South parliamentary by-election and made gains in council contests to heap pressure on UK Prime Minister Rishi Sunak. In the contest triggered by the resignation of former Tory MP Scott Benton following a lobbying scandal, Labour's Chris Webb secured 10,825 votes, a majority of 7,607. Labour leader Keir Starmer said: "This seismic win in Blackpool South is the most important result today. This is the one contest where voters had the chance to send a message to Rishi Sunak's Conservatives directly, and that message is an overwhelming vote for change. Tory Deputy Chair Angela Richardson told the BBC: "The result was not unexpected. I think, given the circumstances that caused the by-election in the first place, it was always going to be difficult for the Conservatives." The Tories were also facing losses in council elections across England, after votes took place in 107 authorities. Most of the council seats up for re-election in England were last contested in 2021, at the peak of Boris Johnson's popularity as the Covid-19 vaccine was rolled out.
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UK retail footfall declined last month, hurt by poor weather and an earlier Easter, according to the latest British Retail Consortium-Sensormatic IQ tracker. Retail footfall fell 7.2% on-year in April, worsening from a 1.3% drop in March. In high streets alone, footfall fell 6.9%, following a 1.5% decline in March. In retail parks, footfall was 6.3% lower, worsening from March's 3.5% fall. Footfall in shopping centres slid 7.2% in April, after a marginal 0.3% fall in March. BRC Chief Executive Helen Dickinson said: "While UK footfall was impacted by poor weather last month, this was artificially exacerbated by the comparison with 2023, when Easter was in April. All locations saw declines on the previous month, and nearly all major cities performed similarly poorly. However, there was good news in Edinburgh, where footfall was positive once again owing to the investment in local shopping locations in the Scottish capital over the past few years."
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BROKER RATING CHANGES
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Barclays cuts British Land to 'equal weight' (overweight) - price target 405 (432) pence
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Jefferies cuts Tyman to 'hold' (buy) - price target 400 (360) pence
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COMPANIES - FTSE 100
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InterContinental Hotels reported growth in a key revenue metric, despite suffering a marginal slowdown in the Americas. The hotel company said revenue per available room rose 2.6% on-year in the first-quarter of 2024. It noted an 8.9% rise in the Europe, the Middle East, Asia & Africa region, and a 2.5% rise in Greater China. In the Americas, revPAR fell 0.3%. "The Americas, having already recovered very strongly, was broadly flat due to some adverse calendar timing," Chief Executive Officer Elie Maalouf said. The company also announced changes to its system fund, that hotel owners pay into. "IHG manages the fund for the benefit of hotels within the IHG system. Owners pay contributions into the fund, which include a marketing and reservation assessment and a loyalty assessment," it explained. The fund goes towards marketing hotel brands as well as technology investments. It added: "The fund has received a growing stream of ancillary revenues such as those from the sale of IHG One Rewards loyalty points. Historically, IHG has allowed the full revenue generated on the sale of loyalty points to be included in the System Fund. A portion of the revenue from the sale of certain loyalty points, together with certain other ancillary revenues, will now be recognised by IHG within its results from reportable segments." It said 50% of this will be recognised in 2024, and is expected to deliver about USD25 million incrementally to revenue and operating profit from reportable segments. "This will annualise in 2025 when 100% will be recognised by IHG," it added.
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Diageo said it has named Nik Jhangiani as chief financial officer, joining from soft drink bottler Coca-Cola Europacific Partners, where he held the same position. Brewer and distiller Diageo, which owns the Guinness and Johnnie Walker brands, said Lavanya Chandrashekar will step down as CFO and return to the US. The personnel changes will occur in "autumn". "Nik has more than 30 years of finance experience gained in roles in the UK, Europe, India, Africa and the US, including 20 years as chief financial officer; and has spent most of his career in consumer and beverage industries including 20 years within the Coca-Cola system," Diageo said. CCEP said a search for Chandrashekar's successor is "well underway". CCEP added: "Nik will remain in role to ensure an orderly and effective transition."
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HSBC is facing pressure from shareholders over green finance ahead of its annual general meeting. ShareAction, which campaigns for responsible investment, said it plans to read out a statement at the meeting on Friday on behalf of a coalition of shareholders amid transparency concerns. The charity said it will ask the British bank to set out how exactly they intend to use the USD1 trillion they have pledged to spend on green finance by 2030. It added the lack of transparency means shareholders are unable to assess whether the bank is on the path to net zero or contributing its fair share of financing to address climate finance gaps. The investor group will also urge the board to set a funding target for renewable energy, ShareAction said. The meeting, which will take place at the InterContinental London O2 on Friday, comes after Chief Executive Noel Quinn's surprise retirement announcement earlier this week.
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COMPANIES - FTSE 250
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Rail ticketing platform Trainline reported expectation-beating revenue, and said net ticket sales came in at the top end of its guidance range. It also announced a new share buyback. Revenue in the year ended February 29 rose 21% to GBP396.7 million, from GBP327.1 million. Revenue was topped the "previous guidance range". Pretax profit jumped to GBP48.1 million from GBP22.1 million. Net ticket sales were up 22% on-year to GBP5.30 billion, at the top end of its previous guidance range. Chief Executive Officer Jody Ford commented: "New entrant carrier competition is revolutionising rail in Europe as more customers benefit from greater choice, lower prices and the opportunity to choose greener travel. We are becoming the aggregator of choice in the UK and internationally and are delivering strong growth, particularly in those markets liberalising fastest such as Spain." For the new financial year, it predicts net ticket sales growth of 8%-12%, and revenue to rise between 7%-11%. Trainline announced a GBP75.0 million share buyback programme. It recently completed a GBP50.0 million buyback which kicked off in September.
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Pennon Group's planned buy of Sutton & East Surrey Water could harm the UK water utility watchdog Ofwat's "ability to make comparisons between water companies and carry out its statutory functions". The UK Competitions & Markets Authority said that regulator Ofwat removing SES from its dataset should it become part of Pennon would reduce the "number of comparators available for it to estimate cost allowances and set service quality targets". Antitrust regulator CMA, which has "engaged with Ofwat throughout its probe", said: "The merging businesses conceded that the deal could have a detrimental impact on Ofwat's ability to make comparisons in order to carry out its statutory functions." Pennon noted the CMA will up its probe to phase 2 should no pledges to soften regulatory worries be made. Pennon said it will offer undertaking to the CMA by May 13. "As with the group's acquisition of Bristol Water, the proposed undertakings will ensure that the acquisition does not prejudice Ofwat's ability to make comparisons between water companies when carrying out its statutory functions as a regulator, and ensure that the benefits of the acquisition are shared among the group's stakeholders," Pennon said. Pennon in January announced the deal to acquire Sumisho Osaka Gas Water UK Ltd and certain ancillary businesses from Sumitomo Corp & Osaka Gas for GBP89 million. Sumisho Osaka is the holding company of Sutton & East Surrey Water.
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OTHER COMPANIES
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Angle said it has struck a deal with AstraZeneca to develop a "Parsortix-based androgen receptor" detection assay to be used in prostate cancer studies. Medical diagnostics provider Angle said the deal is worth GBP550,000. "Assay development will take place in the Angle's UK laboratories, with project completion expected in Q1 2025. A successful development phase will demonstrate the importance of the Parsortix system in assessing the efficacy of prostate cancer therapeutics and offers the potential for long-term, ongoing business for the company supporting clinical studies," it said. Parsortix is a liquid biopsy treatment. Angle added: "Prostate cancer is the second most common cancer in men with 1.5 million new cases diagnosed globally each year and 5 million men living with prostate cancer (5-year prevalence). The androgen receptor plays a pivotal role in prostate cancer tumour growth and progression with anti-androgen therapy frequently given as first-line treatment."
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By Eric Cunha, Alliance News news editor
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