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(Alliance News) - Stock prices in London were set to open higher on Friday, despite a warning about higher-for-longer US interest rates and an unexpected fall in UK retail sales in December.
Retail sales volumes are estimated to have fallen by 1.0% in December from November. Markets had expected retail sales volumes to rise by 0.5% monthly in December, according to FXStreet.
The data comes as UK consumer confidence fell again to a near-historic low amid inflation woes and growing concern about another jump in energy bills.
Federal Reserve Vice Chair Lael Brainard said on Thursday that US interest rates will need to remain high for some time even as inflation eases, vowing that the central bank plans to "stay the course" in fighting price increases.
The Fed has raised the benchmark US lending rate rapidly from around zero to a range of 4.25% to 4.50% in the past year.
Brainard's latest remarks suggest rates will have to stay high for a while longer.
In Japan, consumer prices rose by 4.0% in December from a year earlier, a level not seen since December 1981 and accelerated from 3.7% in November.
The figures were released days after Japan's central bank again opted to leave its ultra-easy monetary policy intact.
In the UK company announcements, SSE upped its full-year adjusted earings per share outlook. The UK Competition & Markets Authority will look into whether the acquisition of Leeds-based healthcare software house Emis Group by US healthcare firm UnitedHealth will result in a lessening of competition in the UK.
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 49.31 points, or 0.6%, at 7,796.60
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Hang Seng: up 1.8% at 22,039.76
Nikkei 225: closed up 0.6% at 26,553.53
S&P/ASX 200: closed up 0.2% at 7,452.20
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DJIA: closed down 252.40 points, 0.8%, at 33,044.56
S&P 500: closed down 0.8% at 3,898.85
Nasdaq Composite: closed down 1.0% at 10,852.27
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EUR: higher at USD1.0841 (USD1.0795)
GBP: unchanged at USD1.2363
USD: higher at JPY128.83 (JPY128.45)
Gold: higher at USD1,930.40 per ounce (USD1,919.03)
(Brent): higher at USD86.52 a barrel (USD85.36)
(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 GMT Ireland wholesale price index
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UK retail sales are estimated to have fallen in December, according to the latest data released by the Office for National Statistics. Retail sales volumes are estimated to have fallen by 1.0% in December from November. Retail sales fell by 0.5% in November from October, revised from a monthly decline of 0.4%. Markets had expected retail sales volumes to rise by 0.5% monthly in December, according to FXStreet. Against the year prior, retail sales fell by 5.8% in December. In November, retail sales had fallen by 5.9% against the previous year. The ONS said December's sales volumes were 1.7% below their pre-pandemic level in February 2020.
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UK consumer confidence fell again, to a near-historic low amid inflation woes and growing concern about another jump in energy bills. GfK's long-running consumer confidence index dropped three points in January to minus 45 after a short-lived and weak rally in the last quarter. Confidence in the general economy for the coming 12 months fell one point to minus 54 and remains 22 points lower than last January, while the forecast for personal finances increased to minus 27 but is still 25 points lower than this time last year. The major purchase index, an indicator of confidence in buying big ticket items, fell six points to minus 40 – some 30 points lower than last January.
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BROKER RATING CHANGES
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Deutsche Bank cuts Virgin Money to 'hold' ('buy') - price target 220 (230) pence
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Peel Hunt cuts Harbour Energy to 'hold' - price target 325 pence
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Jefferies raises 3i Infrastructure to 'buy'
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COMPANIES - FTSE 100
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SSE upgraded its full-year expectations for adjusted earnings per share to "reflect the strength and stability of its balanced mix of regulated and market-facing businesses". The utility firm increased its adjusted EPS expectations to 150 pence from previous guidance of 120p. SSE added that it remains to course to deliver "record" investment in 2022-23, with capital expenditure expected to be in excess of GBP2.5 billion. With regard to its operational performance, SSE said its output of electricity from renewable resources in the UK and Ireland was around 10% below plan in the nine months ended December 31, but higher than the equivalent period a year before.
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COMPANIES - FTSE 250
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Close Brothers said it delivered a "resilient" performance in the first half of its financial year, which ends on January 31, despite an uncertain market backdrop. The merchant bank said it saw good demand and strong margins in the period, though it noted that trading activity was subdued at stock broker Winterflood. Its Banking division saw the loan book increase by 1.5% to GBP9.23 billion as of December 31 from GBP9.10 billion as of July 31. As of December 31, its common equity tier 1 ratio was 14.5%, above its target range of between 12% and 13%. Close Brother added that it expects to recognise an additional provision in its interim financial statements against the Novitas loan book of up to GBP90 million. In 2021, Close Brothers decided to permanently cease the approval of lending to new customers across all the products offered by Novitas and withdraw from the legal services financing market.
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OTHER COMPANIES
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Big Technologies said it continued the strong momentum seen in the first half of 2022 into the second half and, as a result, now expects full-year results marginally ahead of current market expectations. Revenue for 2022 is expected at GBP50 million, up from GBP37.6 million the previous year. Adjusted earnings before interest, tax, depreciation and amortisation is expected at around GBP30 million, up from GBP20.6 million the year prior. Chief Executive Sara Murray said: "We are delighted that the business has delivered another year of significant growth, ahead of market expectations. Against a challenging backdrop, characterised by supply chain and economic disruption, this performance is even more pleasing." Big Technologies is a technology firm that focuses on people-monitoring products.
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The CMA is looking into whether an anticipated acquisition of Leeds-based healthcare software firm Emis Group by the US's UnitedHealth will result in a lessening of competition in the UK. The inquiry has a deadline of March 17. In June 2022, Emis said it had agreed to a GBP1.24 billion all-cash takeover offer by Optum Health Solutions UK, a subsidiary of Minnesota-based healthcare and insurance firm UnitedHealth.
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By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
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