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(Alliance News) - Shares in London were called to open slightly higher on Friday, with the mood lifted by a surprise rise in UK gross domestic product, as US earnings season gets underway.
Due out on Friday are fourth-quarter and full-year results from banking bellwethers JPMorgan Chase & Co, Wells Fargo, and Bank of America.
"Earnings expectations are low, but low expectations are easier to beat," Swissquote analyst Ipek Ozkardeskaya commented.
Ozkardeskaya noted that, while rising interest rates are typically good news for banks, they can create headaches as well.
"A too-rapid rise in the rates threatens credit quality, loan growth, and net interest margins," the analyst added.
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 up 0.1% at 7,803.77
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Hang Seng: up 1.0% 21,721.52
Nikkei 225: down 1.3% at 26,119.52
S&P/ASX 200: up 0.7% at 7,328.10
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DJIA: closed up 216.24 points, or 0.6%, at 34,189.25
S&P 500: closed up 15.06 points, or 0.4%, at 3,984.67
Nasdaq Composite: closed up 71.64 points, or 0.7%, at 11,003.31
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EUR: firm at USD1.0838 (USD1.0814)
GBP: firm at USD1.2200 (USD1.2171)
USD: down at JPY128.64 (JPY129.68)
GOLD: higher at USD1,895.74 per ounce (USD1,891.07)
(Brent): lower at USD83.95 a barrel (USD84.03)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
0900 GMT Germany GDP
1500 GMT US University of Michigan survey of consumers
1000 GMT EU foreign trade
1000 GMT EU industrial production
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The UK economy defied expectations and posted marginal growth in November. Gross domestic product was helped by the start of the football World Cup, which boosted consumer-facing sectors, the Office for National Statistics explained. UK GDP grew by 0.1% month-on-month in November, slowing from October's unrevised growth of 0.5%. The economy had been expected to shrink by 0.2% in November, according to consensus cited by FXStreet. GDP fell by 0.3% in the three months to November 2022 compared with the three months to August 2022. GDP is 0.3% below its pre-Covid level, the ONS said.
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The ONS said UK industrial output fell 0.2% on-month in November, having registered a 0.1% fall in October from September. Annually, output slumped 5.1% in November, after a 4.7% decline in October.
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The UK's trade deficit narrowed in the three months to November, according to the ONS. The deficit was trimmed by GBP6.5 billion to GBP20.2 billion in the three months to November, compared to the three months to August. Exports over that period edged up 0.3% to GBP203.0 billion, while imports fell 2.6% to GBP223.2 billion.
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UK Prime Minister Rishi Sunak and First Minister Nicola Sturgeon are set to jointly announce millions in UK government funding for Scotland. It comes after Sunak met with the Scottish first minister behind closed doors on Thursday evening, marking the second time he has met the Scottish National Party leader since entering Downing Street in October. The new funding is set to "create thousands of high-skilled green jobs, drive growth, potentially bring in billions of private sector investment and provide opportunities for people across Scotland", according to Downing Street. It will reportedly involve the announcement of two new green freeports expected to be near Edinburgh and Inverness.
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BROKER RATING CHANGES
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Bank of America raises Vodafone to 'buy' ('neutral') - price target 131 (130) pence
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Davy raises Wizz Air to 'outperform'
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Citigroup reinitiates Bank of Ireland with 'buy' - price target EUR10.60
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COMPANIES - FTSE 100
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Housebuilder Taylor Wimpey said annual profit was in line with expectations and its margin improved, despite a slowdown in the UK housing sector. Taylor Wimpey expects 2022 operating profit, including joint ventures and excluding exceptional items, in line with consensus of GBP921 million. Operating profit a year earlier amounted to GBP828.6 million. Total group completions slipped to 14,154 in 2022, from 14,302 in 2021. Its net private reservation rate for 2022 slowed to 0.68 homes per outlet per week from 0.91 in 2021. "As market conditions changed at pace in the third quarter we acted quickly and decisively implementing even tighter cost scrutiny, significantly reducing land commitments, and closely controlling the release of investment in work in progress," Taylor Wimpey said. "As we focus on maximising the efficiency of all our operations, we have begun a consultation on a series of proposed changes." If these proposals go ahead, it will achieve annual savings of GBP20 million. "This incorporates proposed changes identified as part of our ongoing drive to increase operational efficiency and others that, if implemented, would reduce overheads to reflect market conditions. The proposed changes would neither affect our existing market coverage or ability to deliver volumes from our landbank, nor our ability to deliver high quality product and service to our customers," Taylor Wimpey said.
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COMPANIES - FTSE 250
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ITV hailed a strong launch for its streaming platform, helped by the World Cup increasing viewership. ITV reported a 55% increase in its streaming hours between December 8 to January 7, compared to the same period a year earlier. The ITVX streaming platform launched on December 8. "During the launch month ITV's online users increased by 65% compared to the same period last year. The latter stages of the World Cup were big draws while ITVX's new exclusive content also performed strongly, attracting new and light viewers to ITV," the company added.
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Gambling operator 888 said fourth quarter revenue declined amid regulatory measures hitting its UK online segment. Revenue in the fourth quarter fell by 2.6% to GBP458 million from GBP470 million. For the whole year, revenue was 3.0% lower at GBP1.85 billion from GBP1.91 billion. "Trading during the fourth quarter of 2022 was in-line with board expectations," 888 said. "Online revenues [were] stable compared to Q3 2022, and 5% lower than the prior year, with a continuation of the trends seen in the first nine months of the year, with strong performances across a number of regulated countries being offset by the impact of proactive enhanced player safety measures within the UK Online segment." 888 said the World Cup contributed to a "successful fourth quarter". Online player days at William Hill rose 22% versus the UEFA European Championships in summer 2021. 888 sealed the acquisition of William Hill's non-US business in July 2022.
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OTHER COMPANIES
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Alphawave IP said it grew its customer base at the end of 2022, and the connectivity technology provider also set out targets for 2023. Its number of end-customers at the conclusion of 2022 was 69, up sharply from 20. New bookings surged to USD94.8 million in the fourth quarter, from GBP25.5 million. "We ended FY 2022 with strong design win momentum and a rapidly expanded customer base. Building on a broader product portfolio, our design win pipeline remains strong as we can now address more of our customers' connectivity needs, via both silicon IP and custom silicon," Chief Executive Tony Pialis said. For 2023, the company expects revenue in the range of USD340 million to USD360 million. Revenue in 2021 totalled USD89.9 million.
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Revolution Beauty said an independent investigation being carried out by Forensic Risk Alliance and Macfarlanes has concluded. The probe found that a number of sales should not have been recognised in its financial year ended February 28, 2022. "These sales were only undertaken for the purposes of meeting sales targets for FY22, and not all of the products ordered were required by the distributors at the time," the company said. Revenue resulting from these orders were roughly GBP9 million. A probe also found that two board members in July 2021, former CEO Adam Minto and Tom Allworth, "made personal loans or other investments of approximately GBP1 million (in aggregate) to one of the distributors". In September, the company's auditor BDO said it had a "number of serious concerns" regarding the audit for the 2022 financial year, concluding that it was not able to sign an audit report.
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By Eric Cunha, Alliance News news editor
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