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(Alliance News) - A volatile week for stocks in London is expected to continue into Thursday as the US monthly jobs report on Friday edges nearer.
Lifting investor sentiment was news that Senate Minority Leader Mitch McConnell has proposed a truce over raising the US debt ceiling.
"Despite the market chasing its tail and tying itself up in knots each day this week, thanks in part to a slow data calendar, all roads lead to tomorrow's US non-farm payrolls," said Jeffery Halley, senior market analyst at Oanda.
In early UK company news, oil major Royal Dutch Shell said it expects a hit of around USD400 million from Hurricane Ida in the US. Mondi reported quarterly earnings growth despite higher costs. The UK Competition & Markets Authority closed an investigation into Ryanair and International Consolidated Airlines Group's British Airways.
IG says futures indicate the FTSE 100 index of large-caps to open up 87.13 points, or 1.2% at 7,083.00 on Thursday. The FTSE 100 closed down 81.23 points, or 1.2%, at 6,995.87 on Wednesday.
London's rebound follows a higher finish in New York, amid the hints of a US debt ceiling deal.
The Dow Jones Industrial Average closed up 0.3%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.5%.
McConnell said Republicans would allow Democrats to vote for temporarily lifting the debt ceiling, which is about to expire, triggering a government default, "into December". This would give Democrats time to find a longer-term solution and will "protect the American people from a near-term Democrat-created crisis," McConnell said.
McConnell's decision to create a little breathing room came right after President Joe Biden, Treasury Secretary Janet Yellen and a string of heavyweight chief executives lined up at a White House roundtable to warn of "catastrophic" fallout.
Ratings agencies such as Fitch have warned that prolonged squabbling over the debt ceiling could put the US's credit rating under pressure.
Momentum flowed through to Asia on Thursday. The Nikkei 225 index in Tokyo closed up 0.5%. In China, financial markets in Shanghai remain closed for National Day Golden Week, while the Hang Seng index in Hong Kong surged 2.7%. The S&P/ASX 200 in Sydney closed up 0.7%.
Brent oil prices eased back after pushing to fresh three-year highs on Wednesday. The North Sea benchmark was trading at USD81.03 a barrel early Thursday, soft versus USD81.12 late Wednesday.
Gold was quoted at USD1,760.48 an ounce early Thursday, flat against USD1,760.00 on Wednesday.
Sterling was quoted at USD1.3588 early Thursday, firm on USD1.3570 at the London equities close on Wednesday. The euro traded at USD1.1557, higher than USD1.1538 late Wednesday. Against the yen, the dollar was quoted at JPY111.45, up from JPY111.34.
The economic events calendar on Thursday has the latest US jobless claims at 1330 BST.
The weekly initial jobless claims figures come ahead of Friday's closely watched nonfarm payrolls report. It is expected to show an increase of 488,000 jobs in September, according to FXStreet, after a rise of 235,000 in August.
In early UK company news, Royal Dutch Shell guided to a USD400 million hit from Hurricane Ida.
The oil major said the storm hit its operations in the US Gulf of Mexico and is expected to dent earnings in the third quarter. The Upstream segment is expected to take the biggest hit, with adjusted earnings knocked by around USD200 million to USD300 million, while Oil Products will take a hit of around USD50 million to USD100 million and Chemicals a USD100 million hit.
For its Integrated Gas unit, Shell added: "[Cash flow from operations] excluding working capital is expected to be significantly impacted by large variation margin inflows on the back of the prevailing gas and electricity price environment; these inflows are expected to be higher than the second quarter 2021."
Packaging firm Mondi reported quarterly earnings growth despite higher costs, which it expects to persist.
Underlying earnings before interest, tax, depreciation and amortisation for the third quarter of 2021 was EUR388 million, up 27% year-on-year and 9% higher on the prior quarter.
This was despite higher input costs, with prices rising for energy, resins, transport and chemicals. It noted a sharp rise in energy costs in Europe at the end of the quarter.
"Demand remains strong, and we are implementing price increases across the business that will support the recovery of ongoing inflationary pressures. While in the short term the fourth quarter will be impacted by recent input cost increases alongside planned maintenance and project-related shuts, the group remains well-placed to deliver sustainably into the future," said Mondi.
The UK Competition & Markets Authority said it has closed an investigation into refunds from British Airways and Ryanair due to a "lack of clarity" in the law.
A probe was launched in June over concerns the airlines may have broken the law by failing to offer refunds for flights customers could not legally take during lockdown. Instead, IAG's British Airways offered customers vouchers or rebooking, and Ryanair provided the option to rebook.
"After a thorough examination of relevant law, and the evidence it had gathered during its investigation, the CMA has concluded that the law does not provide passengers with a sufficiently clear right to a refund in these unusual circumstances to justify continuing with the case," the CMA said.
The case is different in the package holiday sector, the UK regulator explained, where customers are protected by a separate set of laws which give them refund rights.
CMC Markets backed guidance after improved client trading volumes at the end of its first half.
The online trading platform expects net operating income for the six months that ended September 30 to be around GBP126 million - which would be nearly half the GBP230.9 million achieved a year ago. Active clients were moderately lower in the period year-on-year, but increased market activity exiting September led to improved client trading volumes.
"We closed the first six months with a pickup in market volatility and client trading volumes following what was a more subdued environment from the start of the year," said Chief Executive Officer Lord Cruddas.
CMC expects full-year net operating income in a range between GBP250 million and GBP280 million. Again, this would be down from the year before, when it achieved net operating income of GBP409.8 million.
Like automotive retailing peers, Pendragon on Thursday upgraded full-year guidance as car supply issues has helped to bolster margins.
It now expects underlying pretax profit for 2021 to be around GBP70.0 million, up from a prior guidance range of GBP55.0 million to GBP60.0 million previously.
While supply issues has resulted in a reduction in the number of new vehicle deliveries achieved, margins have remained strong and helped to mitigate the volume shortfall. It also noted "unprecedented tailwinds" in used car margins.
"Whilst we also continue to expect a realignment of used vehicle margins over time, we expect these to remain strong for the remainder of this financial year, providing us with some mitigation to lower new vehicle volumes in particular," said Pendragon.
Rivals Lookers and Marshall Motor had lifted their outlooks on Wednesday amid strong car margins.
By Lucy Heming; lucyheming@alliancenews.com
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