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(Alliance News) - Stocks in London were called higher on Friday, as investors weighed conflicting economic data from the world's two largest economies.
Activity in China's factory sector contracted for a third straight month in June, official data from the National Bureau of Statistics showed, signalling a patchy recovery in the world's number-two economy as global demand and raw material prices slumped.
Purchasing managers' indexes showed a continuing contraction in Chinese manufacturing, while non-manufacturing sectors of services and construction saw a slowing in growth.
Conversely, stocks in New York were boosted on Thursday by stronger-than-expected US data, with first-quarter economic growth revised upward and a robust weekly labour report.
The figures followed Wednesday's trio of good news when new housing sales, durable goods orders, and consumer confidence figures were all stronger-than-expected in the US.
"The initial forecast for this year - US recession and Chinese rebound - is not happening. On the contrary, the US is growing, and China is slowing," said Swissquote Bank senior analyst Ipek Ozkardeskaya.
However, the stronger picture for the US economy will give the Federal Reserve more leeway for further interest rate hikes in the coming months, with the prospect of a "soft landing" appearing to still be on the table.
Investors will have their eyes on the release of the US core personal consumption expenditures price index at 1330 BST on Friday, given it is the Federal Reserve's preferred measure of inflation.
Meanwhile, in UK economic news, gross domestic product was confirmed to have seen 0.1% growth in the first quarter of 2023 from the final quarter of 2022.
In UK company news, Barratt Developments announced the sale of about 600 homes. Vanquis Banking named Peter Estlin, former Barclays CFO and former Lord Mayor of the City of London, as its new chair.
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 24.2 points, 0.3%, at 7,495.89
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Hang Seng: down 0.2% at 18,897.15
Nikkei 225: closed down 0.1% at 33,189.04
S&P/ASX 200: closed up 0.1% at 7,203.30
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DJIA: closed up 269.76 points, 0.8%, at 34,122.42
S&P 500: closed up 19.58 points, 0.5%, at 4,396.44
Nasdaq Composite: closed down 0.42 of a point at 13,591.33
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EUR: down at USD1.0860 (USD1.0886)
GBP: down at USD1.2607 (USD1.2611)
USD: up at JPY144.65 (JPY144.70)
Gold: down at USD1,904.52 per ounce (USD1,911.17)
Oil (Brent): up at USD74.41 a barrel (USD73.70)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
11:00 CEST EU unemployment
11:00 CEST EU consumer price index
09:55 CEST Germany labour market statistics
08:30 EDT US personal income and outlays
09:45 EDT US ISM-Chicago business survey
10:00 EDT US state quarterly personal income
10:00 EDT US University of Michigan survey of consumers
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The UK economy grew marginally at the beginning of 2023, official numbers showed. The Office for National Statistics confirmed the UK gross domestic product grew 0.1% in the first three months of 2023 from the final quarter of last year. GDP also had grown 0.1% in the fourth quarter of 2022 from the third. Year-on-year, first-quarter gross domestic product grew 0.2%, ONS confirmed. It had expanded 0.6% year-on-year in the fourth quarter of 2022.
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UK households will pay less for their gas and electricity from Saturday amid warnings that bills will still be almost double the amount they were before the energy crisis began. The average household energy bill will fall by GBP426 a year from July 1 after Ofgem dropped its price cap following tumbling wholesale prices. The regulator is cutting its price cap from GBP3,280 to GBP2,074 in a relief for consumers who have seen typical bills soar from GBP1,271 a year in October 2021 due to the global gas crisis. Households have been partly shielded from the most recent rise in prices by the UK government's Energy Price Guarantee, which limited annual energy costs to GBP2,500 for the average household – subsidising Ofgem's price cap. Ofgem's latest cut means its cap will again govern household bills, resulting in a reduction of GBP426 from GBP2,500 to GBP2,074 – a fall of about 17%.
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BROKER RATING CHANGES
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Exane BNP cuts B&M European Value Retail to 'neutral' - price target 600 pence
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HSBC raises Aviva to 'buy' - price target 480 pence
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Credit Suisse raises Drax to 'outperform' (neutral) - price target 760 (700) pence
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COMPANIES - FTSE 100
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Barratt Developments announced an agreed future sale of 604 homes to Lloyds Banking subsidiary Citra Living Properties for GBP168.4 million in cash. The housebuilder said revenue and profit will be recognised upon the legal completion of each home in the deal, with over 500 expected to be legally completed and transferred to Citra in the financial year ending June 30, 2024. "The single-family dwelling segment of the private rental sector continues to grow strongly and presents an opportunity for us to both diversify our revenues against the current challenging market backdrop and develop communities which encompass all forms of housing tenure," said Barratt Chief Executive David Thomas.
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COMPANIES - FTSE 250
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Vanquis Banking said it has decided to appoint Peter Estlin as chair, subject to regulatory approval. Estlin joined the board as an independent non-executive director in April and will succeed Patrick Snowball. Snowball will continue in his role until Estlin has received regulatory approval. Estlinwas previously chief financial officer at Barclays, and served as Lord Mayor of the City of London in 2018 to 2019. "Sir Peter was the outstanding candidate for the chair role. His experience will be valuable to the board, and the group, as we continue to develop as the specialist banking group for customers who find it difficult to access mainstream lenders," said Andrea Balnce, senior independent director.
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OTHER COMPANIES
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Ahead of its annual general meeting, automotive retailer Pendragon announced its chair, Ian Filby, will "step down to pursue other interests", after less than two years in the role. The announcement follows a Sky News report from late Thursday, which reported Filby would step down amid pressure from an activist investor. Palliser, a fund which has built up a 4% stake in firm, has pushed for a boardroom shake-up at the firm. The firm will begin a process to appoint Filby's succesor shortly, and has the support of external consultants, Pendragon said. Additionally, Pendragon said positive trading momentum has continued into the second quarter, and remains in line with the board's expectations.
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Thames Water chose a new chair on Thursday, just two days after its chief executive stepped down, amid serious questions over the debt-laden company's future. It came as the UK government tried to calm the waters by saying that the utility has "secure and committed" funding, and reassured customers that their supply would not be interrupted. Adrian Montague, who was previously the chair of Anglian Water, will take over the role on July 10. He takes over from Ian Marchant who announced in April he would step down when a successor was found. Montague currently chairs Cadent Gas, Porterbrook Holdings and Manchester Airports Group. He is set to step down from the latter in September.
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By Elizabeth Winter, Alliance News senior markets reporter
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