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(Alliance News) - Stocks in London are geared to open the shortened week on the back foot, as rising inflation in China adds to worries of a global recession ahead.
Meanwhile, the euro edged higher amid Emmanuel Macron's performance in the French elections.
In early news in the UK, the country's gross domestic product figure undershot expectations in February. On the corporate side, Ascential confirmed it is considering separating some of its assets and Sirius Real Estate has seen strong rent roll growth.
IG futures indicate the FTSE 100 index is to open down 47.16 points, 0.6%, at 7,622.40. The blue chip index closed up 117.75 points, or 1.5%, at 7,669.56 on Friday - ending the week up 1.6%.
"Global markets are in recession obsession mode. And tilting the tape from a more worrying observation is the potential global stagflationary impact of China's Covid lockdowns. Indeed, Shanghai's lockdown continues, and with cases rising, there is no scope for reopening under the country's zero-Covid policy," SPI Asset Management's Stephen Innes said.
In Asia on Monday, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite was 2.6% lower, while the Hang Seng index in Hong Kong was down 3.0%. The S&P/ASX 200 in Sydney ended up 0.1%.
China's factory-gate inflation was higher than expected in March, official data showed Monday, as Russia's war on Ukraine pushes up oil prices while a domestic Covid-19 resurgence strains food supplies and consumer costs.
The producer price index – measuring the cost of goods at the factory gate – grew 8.3% annually, National Bureau of Statistics figures showed.
This was slightly more than a Bloomberg poll of economists expected, while PPI also rose month-on-month.
"Geopolitical and other factors have pushed global commodity prices to continue increasing, driving the prices of oil, non-ferrous metals and other related industries to rise further domestically," NBS senior statistician Dong Lijuan said in a statement.
China's consumer price index, a key gauge of retail inflation, rose more than expected as well, by 1.5% year-on-year in March, the NBS said.
In the US on Friday, Wall Street ended mixed, as investors continue to manoeuvre in an attempt to digest the US Federal Reserve's hawkish shift. The Dow Jones Industrial Average closed up 0.4% - but ended the week down 0.2%. The S&P 500 closed down 0.3%, losing 1.6% over the week. The tech-heavy Nasdaq Composite closed down 1.3% - suffering a steep 4.9% loss over the 5 days.
CMC Markets Analyst Michael Hewson said: "US markets had an altogether more negative week, with the Nasdaq 100 weighing on the wider market against a backdrop of a rising US dollar and yields which have continued to move higher.
"Last week's unexpectedly aggressive pivot by several Fed officials, who are normally considered to be of a more dovish persuasion, Fed Governor Lael Brainard being a case in point, has seen US 10-year, 5-year and 2-year yields hit their highest levels in over three years."
In economic news in the UK, GDP grew by 0.1% month-on-month in February, slowing from 0.8% growth in January, and coming in behind market consensus - according to FXStreet - for 0.3% growth.
The Office for National Statistics noted that the UK economy is now 1.5% above its pre-coronavirus level in February 2020.
The stats body said services output grew by 0.2% and was the main contributor to February's growth in GDP - though this was partially offset by industrial production, which fell by 0.6% and construction output, which fell by 0.1%.
The market had hoped for industrial production to rise by 0.4% in February, while construction output was forecast to grow 0.5%.
The pound was quoted at USD1.2991 early Monday, down from USD1.3020 at the London equities close on Friday.
In London, midcap media firm Ascential - responding to media reports - confirmed it is actively discussing "the merits" of separating some of its assets.
"As discussions are exploratory at this stage, they may or may not lead to the board making a decision to undertake a managed separation of these businesses in due course. The board is committed to open and transparent engagement with all of its stakeholders and will communicate further if and as appropriate," the company added.
This followed Sky News reporting on Saturday that Ascential was looking at demerging its digital operations and listing them separately in the US.
Business park owner Sirius Real Estate said its German portfolio's annual rent roll grew by 18% in financial 2021.
In the year to March 31, the rent roll for its German properties rose to EUR113.7 million from EUR96.5 million. Like-for-like, its annualised rent was up 6.4%, building on the 5.2% growth seen the year prior.
"The increase in organic growth reflected the effect of approximately 13,000 sqm of net move ins together with an increase in the average rate per sqm of 5.3%. This highlights the way in which flexible space can attract premium pricing, together with the continuing ability of the Company's internal operating platform to capture reversionary potential," Sirius explained.
Looking ahead, the company is excited by its move into the UK market - following its GBP245 million acquisition of BizSpace in November 2021.
It added: "BizSpace has provided Sirius with an opportunity to diversify geographically at scale through the single acquisition of an established platform. The transaction provides a number of organic growth opportunities, overlayed with meaningful operational and financial synergies."
Guaranteed loans provider Amigo noted on Monday it has made a "significant improvement" to its scheme redress proposals - after the UK regulator told the company it will not appear at the upcoming sanction hearings.
The scheme is being proposed to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints.
"The FCA has made clear that it will continue to engage closely with Amigo, taking into account the outcome of the sanction hearings," Amigo said on Monday.
It noted, however, the FCA has told the company it does not consider it "necessary to appear at the sanction hearings either to oppose the schemes or to present any evidence of its own concerning the schemes unless the court requests or otherwise requires assistance from it."
Chief Executive Gary Jennison said: "We thank the FCA for its confirmation that there has been a significant improvement in the fairness of the schemes compared with Amigo's first Scheme, which was rejected by the court in May 2021.
"There remain significant obstacles to overcome, including the need for a significantly dilutive equity issue, to recapitalise the ongoing business given the requirements of the schemes for the transfer of virtually all existing assets to the redress creditors."
While the dollar was largely higher against major currency pairings at the start of the week, the euro edged up. The single currency was priced at USD1.0879, sliding from an overnight high of USD1.0894, but still up from USD1.0875 on Friday night.
French President Emmanuel Macron topped the first round of presidential elections on Sunday, beating far-right rival Marine Le Pen by a larger than expected margin and setting up what is expected to be a tight run-off between the pair later this month.
Projections showed Macron scoring 28% to 29% on Sunday with Le Pen on 23% to 24%. As the top two finishers, they advance to the second round on April 24.
Despite entering the campaign late and holding just one rally before the vote, Macron performed more strongly than predicted and won immediate support on Sunday night from most of his defeated rivals ahead of the run-off.
CMC's Hewson said: "The euro also slid back, though we did see a brief recovery in Asia trading after the first round of voting in the French election showed that Emmanuel Macron held a better-than-expected lead against Marine Le Pen heading into the second round run off in a couple of weeks' time.
"While Macron's lead is encouraging, recent history has taught us that nothing is certain until the final vote is counted, and in the case of the French President, Macron's arrogance may count against him in the second round if he thinks he has the election in the bag."
Against the yen, the dollar was trading at JPY125.31 in London, up from JPY124.33.
Brent was quoted at USD100.63 a barrel on Monday morning, down from USD101.33 a barrel Friday evening.
Gold stood at USD1,941.60 an ounce, against USD1,945.10 late Friday.
In the days ahead in the economics calendar, there is consumer inflation from Germany and the US on Tuesday, followed by inflation data from the UK on Wednesday. The headline event, however, will be a European Central Bank rate decision on Thursday afternoon. The week will be a shortened trading week for most countries, due to Good Friday.
In the US, earnings season kicks off later this week with first quarter results due from JPMorgan Chase, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs.
By Paul McGowan; paulmcgowan@alliancenews.com
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