(Alliance News) - Stock prices in London are seen opening higher on Friday, clawing back some of Thursday's chunky losses, despite data showing rising virus cases and labour shortages hit UK economic growth in July.
IG futures indicate the FTSE 100 index is to open 28.2 points higher, 0.4%, at 7,052.41. The blue chip index closed down 71.32 points, 1.0%, at 7,024.21 on Thursday. London's large-cap index has lost 1.6% so far this week.
In early UK corporate news, Cineworld said it will part with an initial USD170 million as part of a claim made by dissenting shareholders of 2018 acquisition Regal Entertainment Group. SigmaRoc and Marshalls will team for low-carbon products, while Franco Manca and Real Greek restaurants owner Fulham Shore said revenue in recent weeks has topped pre-virus levels.
The UK economy grew at a much slower pace than expected in July and still sits more than 2% below pre-pandemic levels, data from the Office for National Statistics showed on Friday.
The ONS said the UK economy inched up 0.1% monthly in July, with growth slowing considerably from June's 1.0% climb. A GDP hike of 0.6% was expected, according to FXStreet cited consensus.
Growth in July was "measly", Capital Economics analyst Paul Dales commented.
"[It] shows that amid rising Covid-19 cases and broadening product/labour shortages, the economic recovery has stalled. More timely evidence suggests August may not have been much better," Dales added.
"We expect to learn next week that CPI inflation jumped from 2.0% in July to 3.1% in August. Stalling GDP and rising inflation will leave a whiff of stagflation in the air."
Stagflation is slowing economic growth coupled with accelerating inflation.
A shortage of HGV, or heavy goods vehicle, drivers led to a spate of economic concerns in July, from component shortages to fears of empty shelves in supermarkets. Labour shortages due to the "pingdemic" also hit the UK economy in July.
The pound was quoted at USD1.3842 early Friday in London, largely flat from USD1.3840 at the London equities close on Thursday.
The euro rose to USD1.1827 on Friday morning from USD1.1815 at the European equities close on Thursday. Against the yen, the dollar was trading at JPY109.94, up from JPY109.78.
Stock markets in Asia had a stronger session on Friday. In China, the Shanghai Composite was up 0.3%, the Hang Seng in Hong Kong was 1.4% higher, while the Nikkei 225 closed up 1.3%. In Sydney, the S&P/ASX 200 rose 0.5%.
Sentiment in markets was boosted by news that US President Joe Biden talked with his Chinese counterpart Xi Jinping for the first time in seven months Thursday, urging they ensure that "competition" between the two powers does not become "conflict," the White House said.
During the call, Biden's message was that the US wants to ensure "the dynamic remains competitive and that we don't have any situation in the future where we veer into unintended conflict," a senior US administration official told reporters.
In Beijing, state broadcaster CCTV reported that the phone call was "candid, in-depth" and covered "extensive strategic communication and exchanges on China-US relations and issues of mutual concern," and that US policy on China has caused "serious difficulties."
In London, cinema chain Cineworld said it will pay USD170 million as part of a judgement which ruled in favour of shareholders of Regal. Cineworld acquired Regal back in February 2018.
Back in May, Cineworld said it received a judgement from the claim in the region of USD255 million, a hit which was largely in line with what it expected, the company said at the time.
Cineworld added on Friday that a further USD92 million will be held in an escrow account. This will be paid to the dissenting shareholders no later than the end of March next year.
Elsewhere in London, quarried materials group SigmaRoc has entered into a deal with Marshalls to develop ultra-low carbon technology within the concrete building materials sector.
"The aim of this collaboration is to share learnings in the application of current technologies while working together to develop new low carbon methods of production," SigmaRoc said.
Marshalls, which manufactures natural stone and concrete hard landscaping products, will get low-carbon alternative to its product range as part of the deal.
"By entering into a collaboration with SigmaRoc we envisage being able to give our customers the opportunity to use an ultra-low carbon alternative to a variety of traditional hard landscaping and construction products. We aim to significantly lessen the long-term environmental impact of hard landscaping solutions in alignment with our ambitious ESG targets," Marshall Technical Director Nick Jowett commented.
Fulham Shore said revenue in the three weeks following its August 17 update have surged, sitting 27% higher than pre-pandemic times.
"This represents a marked acceleration from the 8% average increase for the eight weeks ended 15 August 2021 announced in the final results. The group's 17 restaurants that are located in the West End of London and city centre office locations, although still down on 2019 levels, have, in these three weeks, continued to see a week-by-week improvement in footfall and revenues as tourists and office workers have started to return," the company said.
It has opened two Franco Manca sites and a new Real Greek unit so far this financial year.
Brent oil was quoted at USD72.04 a barrel early Friday in London, down from USD72.91 late Thursday. Gold was quoted at USD1,802.69 an ounce, up from USD1,791.00.
By Eric Cunha; ericcunha@alliancenews.com
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