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(Alliance News) - Stocks were called higher on Friday morning, as the UK mourned the death of the Queen and after a major interest rate hike from the European Central Bank.
Buckingham Palace announced on Thursday that Queen Elizabeth II had died. She was the UK's longest-reigning monarch, serving as head of state for more than 70 years.
The Prince of Wales is now King Charles III, having acceded to the throne immediately on the death of his mother. He is on Friday due to address his new subjects.
As a result of the Queen's death, planned strikes by UK rail and postal workers have been called off. Members of the Rail, Maritime & Transport union were due to walk out on September 15 and 17 in a long-running dispute over pay, jobs and conditions.
The Bank of England noted that current banknotes, featuring a portrait of the Queen, will continue to be legal tender. A further announcement regarding banknotes will be made once the period of mourning has been observed following the Queen's death, it said.
The London Stock Exchange said it will be open as normal on Friday. It added that it will recognise any public and bank holidays of England and Wales. The Queen's state funeral is expected take place on Monday, September 19 at Westminster Abbey in central London.
Energy bills for the average UK household will be frozen at no more than GBP2,500 per year, and businesses will be spared crippling increases, as Prime Minister Liz Truss took action to shield Britons from the global gas crisis.
The prime minister's two-year plan, paid for by tens of billions of pounds of borrowing, will save the typical household around GBP1,000 from October and protect bill payers from further expected rises over the coming months.
The ECB unveiled its largest-ever interest rate rise on Thursday, as it attempts to corral surging costs around the continent, but President Christine Lagarde was quick to say that such a rise will not become normal.
The Frankfurt-based central bank upped its key interest rates by 75 basis points, as it "frontloads" its fight against surging inflation and soaring energy bills. The hike was the largest in since the euro's launch in 1999.
In Asia, the Hang Seng index in Hong Kong was performing well against Asian stock peers on Friday, thanks to data that showed inflation was cooling in China.
China's consumer price annual inflation rate eased to 2.5% in August from 2.7% in July, data showed. Expectations, according to FXStreet, were for the inflation rate to tick up to 2.8%. Month-on-month, prices contracted 0.1% after growth of 0.5% in July.
Producer prices grew 2.3% year-on-year in August, slowing from July's rise of 4.2% and undershooting expectations of 3.1%.
On Wall Street, all three of New York's major indices closed higher.
Fed Chair Jerome Powell said Thursday that the Federal Reserve must continue to act "strongly" to cool demand and contain price pressures to avoid a repeat of the inflation surge the US economy suffered in the 1970s and 1980s.
With soaring prices in recent months pushing US annual inflation to the fastest in four decades, Powell's Fed has raised the benchmark lending rate four times this year, with a third massive, three-quarter point hike possible later this month.
"We need to act now forthrightly, strongly as we have been doing and we need to keep at it until the job is done to avoid...the kind of very high social costs" of the Volcker era, Powell said, referring to Paul Volker, the Fed chair from 1979 to 1987.
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 23.70 points, or 0.3%, at 7,283.80
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Hang Seng: up 2.5% at 19,321.08
Nikkei 225: closed up 0.6% at 28,242.95
S&P/ASX 200: closed up 0.7% at 6,895.80
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DJIA: closed up 193.24 points, 0.6%, at 31,774.52
S&P 500: closed up 26.31 points, 0.7%, at 4,006.18
Nasdaq Composite: closed up 70.23 points, 0.6%, at 11,862.13
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EUR: up at USD1.0071 (USD0.9996)
GBP: up at USD1.1599 (USD1.1498)
USD: down at JPY142.89 (JPY144.00)
GOLD: up at USD1,722.53 per ounce (USD1,707.91)
OIL (Brent): up at USD89.63 a barrel (USD88.57)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
09:30 BST UK BoE quarterly inflation attitudes survey
08:30 EDT US sales report
10:00 EDT US monthly wholesale trade
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Both consumer and factory price inflation slowed in China last month, data from the National Bureau of Statistics of China showed on Friday. China's annual inflation rate eased to 2.5% in August from 2.7% in July, data showed. Expectations, according to FXStreet, were for the rate to tick up to 2.8%. Annual food price growth was slower than the month. While pork prices accelerated, this was against a lower base a year before. Month-on-month, prices contracted 0.1% after growth of 0.5% in July. They had been expected to grow 0.2%. The core consumer price index, which strips out food and fuel, rose 0.8% year-on-year, matching July's rate.
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Chinese President Xi Jinping expressed his condolences to the royal family over the death of the Queen. He noted that she was the first UK monarch to visit China, in 1986, saying: "Her death is a great loss to the British people." The statement added that China was willing to work with the King as an opportunity to promote bilateral relations and benefit the two countries and their people. Chinese Premier Li Keqiang also sent a message of condolence to Prime Minister Liz Truss. The Queen's death comes amid tensions between Britain and China over human rights, trade and China's relentless crackdown on free speech and political opposition in the former British colony of Hong Kong.
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BROKER RATING CHANGES
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Barclays cuts AB Foods to 'equal weight' (overweight) - price target 1,500 (2,300) pence
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Jefferies raises TI Fluids to 'buy' (hold) - price target 185 pence
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Jefferies reinitiates Darktrace with 'buy' - price target 615 pence
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COMPANIES - FTSE 100
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Land Securities said Chief Operating Officer Colette O'Shea will leave the business as it moves into the next phase of its growth strategy. O'Shea will step down from the COO role at the commercial property developer on March 31 after a "transitional period".
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THe UK Competition & Markets Authority has provisionally cleared London Stock Exchange's acquisition of Quantile, following a phase two inquiry. The CMA concluded that the deal "does not raise substantial competition concerns in the UK". Quantile is a firm which helps financial institutions trading in derivative instruments to reduce their capital requirements. The CMA was concerned the acquisition by the stock exchange operator could "potentially disadvantage third party compression providers", leading to reduced competition.
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COMPANIES - FTSE 250
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IT services firm Computacenter reported a dip in interim profit but double-digit growth in revenue in the first half of 2022 amid ongoing difficulties with supply chains. In the six months that ended June 30, pretax profit fell 6.4% to GBP107.8 million from GBP115.2 million the previous year. This was despite revenue rising 17% to GBP2.83 billion from GBP2.43 billion, amid higher amortisation costs for past acquisitions. Despite the dip in profitability, Chief Executive Mike Norris said firm "remains on track" to deliver its growth expectations for the year as a whole. He also noted that supply chain challenges has eased materially in the last three months.
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Online clothing company Asos said full-year sales and adjusted pretax profit are expected to be in the range of market expectations for the financial year that ended August 31. The company-complied consensus was at a range of 0.3% to 6.3% growth for sales and between GBP9 million and GBP43 million for adjusted pretax profit. The firm added that sales in August were weaker than expected after good sales growth in June and July. It explained this reflected the impact of accelerating inflationary pressures.
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OTHER COMPANIES
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Flooring designer and manufacturer Victoria said it was trading in line with expectations, with revenue and earnings all in line with market forecasts. The firm said it continued to successfully navigate the "current challenging macroeconomic environment" with service improvement, input cost hedging and price increase "where necessary".
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By Heather Rydings; heatherrydings@alliancenews.com
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