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(Alliance News) - European markets are set to end a difficult week in decent fashion on Friday, as investors take onboard a series of hawkish central bank moves.
Stocks are still set to post another losing week, however. The FTSE 100 has lost 1.1% since last Friday. The index lost 1.6% last week.
Interest rate hikes have been delivered this week by the US Federal Reserve, Bank of England, Swiss National Bank and the Riksbank in Sweden - which kicked off proceedings earlier this week with a 100 basis point rate rise.
Central banks have dominated market focus this week, but move somewhat onto the back burner on Friday. Focus is on a series of flash purchasing managers' index figures from across the globe, as well as a UK government 'mini-budget'.
"Attention turns to the economic outlook with PMIs being released in both Europe and the US. In Europe, nothing in the August PMIs suggested that a rebound is in store in September, and we expect them to overall give another gloomy reading (though we would not expect them to fall off the cliff either)," analysts at Danske Bank commented.
"If anything, the worsening energy crisis leaves further downside ahead with waning new orders and slowing hiring pace. Germany remains the epicentre of the slowdown, but it will be interesting to see whether recession risks are also growing in southern Europe with the fading services sector boost."
In the UK, the flash composite PMI is expected to fade to 49.0 points in September, from 49.6 in August, according to consensus cited by FXStreet.
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 0.3% at 7,179.52
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Hang Seng: down 0.6% at 18,036.28
S&P/ASX 200: closed down 1.9% at 6,574.70
Tokyo closed for Autumn Equinox Day holiday.
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DJIA: closed down 107.10 points, or 0.4%, at 30,076.68
S&P 500: closed down 31.94 points, or 0.8%, at 3,757.99
Nasdaq Composite: closed down 153.39 points, or 1.4%, at 11,066.81
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EUR: soft at USD0.9821 (USD0.9827)
GBP: lower at USD1.1233 (USD1.1257)
USD: unchanged at JPY142.17
GOLD: higher at USD1,673.50 per ounce (USD1,669.31)
OIL (Brent): lower at USD89.99 a barrel (USD90.24)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
09:00 BST EU flash PMI
11:00 BST Ireland wholesale price index
09:30 BST UK Chancellor Kwasi Kwarteng presents mini-budget
09:30 BST UK flash PMI
14:45 BST US flash PMI
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UK Chancellor Kwasi Kwarteng will pledge to "turn the vicious cycle of stagnation into a virtuous cycle of growth" as he sets out the new government's approach to the UK economy. Kwarteng will announce tens of billions of pounds both of increased spending and of tax cuts in his mini-budget, officially known as a "fiscal event", at around 9.30am on Friday. The statement is expected to include details of how the government will fund the energy price cap for households and businesses, and put into practice many of Prime Minister Liz Truss's tax-slashing promises. The government is dubbing it a "growth plan" of some 30 measures, which comes at a time when the UK faces a cost-of-living crisis, recession, soaring inflation and climbing interest rates.
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UK consumer confidence has fallen to another new low amid deep concerns about personal finances over the coming year, figures show. GfK's long-running consumer confidence index fell five points in September to minus 49, the worst score since records began in 1974. The latest record low is the fourth out of the last five months, with confidence in personal finances over the coming year down nine points to minus 40 and confidence in the economy over the next 12 months down eight points to minus 68.
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Referendums on Russia's annexation began on Friday in Ukrainian territory controlled by Moscow, Russian news agencies reported, in what Kyiv and the West have denounced as a "sham" vote. Voting began at 0500 GMT on Friday and was due to end Tuesday in four regions controlled entirely or in part by Russian troops – Donetsk and Lugansk in the east and Kherson and Zaporizhzhia in the south.
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BROKER RATING CHANGES
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Oddo BHF raises Intertek to 'outperform'
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RBC cuts Asos to 'sector perform' from 'outperform'
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Berenberg starts Redde Northgate with 'hold' - 335 pence price target
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Barclays cuts Tritax Big Box to 'underweight' from 'equal-weight'
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COMPANIES - FTSE 100
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Smiths Group hailed its fastest top-line growth "in nearly a decade" and said it is managing cost inflation. The engineering firm said revenue in the financial year that ended July 31 rose 6.8% to GBP2.57 billion from GBP2.41 billion. Organic revenue rose 3.8%, Smiths said, rising at the fastest pace in nearly 10 years. Pretax profit fell 57% to GBP103 million from GBP240 million. During the year, the company sold its Smiths Medical unit to medical technology company ICU Medical. The deal valued the unit's equity at USD2.7 billion. Including the contribution from the unit, down as a discontinued operation, annual profit soared to GBP1.04 billion from GBP285 million. Smiths lifted its annual payout by 5.0% to 39.6 pence per share from 37.7p. "We delivered growth ahead of expectations, our fastest organic growth in nearly a decade. Along with accelerating growth, we further strengthened our company through increased investments in innovation, commercialisation and supply chain," Chief Executive Paul Keel said. "All of this gives us confidence for continued progress in FY2023. Despite an uncertain macro environment, we expect to deliver 4.0-4.5% organic revenue growth with moderate margin improvement." In the year just gone, the operating profit improved to 16.3% from 15.5%.
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AstraZeneca said its Ultomiris drug has been approved in the EU to treat myasthenia gravis, a condition which causes muscle weakness. The backing follows a "positive opinion" it received from the European Medicines Agency's Committee for Medicinal Products for Human Use. In a trial, the drug was found to be "superior" to a placebo. "We're proud to offer a new treatment option that provides more convenience in dosing and has shown clinical benefit in a broader range of patients, including those who remain symptomatic despite their initial standard of care treatment," said Marc Dunoyer, chief executive of Astra unit Alexion.
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COMPANIES - FTSE 250
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Investec said it expects a first-half profit rise, helped by rising interest rates. The financial services firm expects to report pretax adjusted operating profit between GBP372.6 million and GBP406.2 million in the six months to September 30. At best, this would be a rise of roughly a quarter year-on-year from GBP325.7 million. Though it noted macro-economic uncertainty, Investec added that profit was boosted by "positive effects from rising global interest rates". In its Wealth & Investment business, funds under management fell by 2.7% annually to GBP61.7 billion in the five months to August 31. Investec put this down to "market volatility".
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OTHER COMPANIES
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De La Rue said it has extended a contract in Australia to provide passport pages. The deal, which began in February had an initial five-year term, the security printed products maker said. However, it has now been extended to 2032. The deal, with Note Printing Australia - part of the Reserve Bank of Australia - sees De La Rue produce polycarbonate data pages for Australian passports. "The agreement will result in De La Rue investing further to expand production at its Malta facility to meet increased volume demand, with the additional investment being covered by incremental cash flows," De La Rue said.
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Made.com Group said it will conduct a formal review of its strategic options, as the sofa seller grapples with tumbling demand amid cost-of-living pressures. Since it floated last year, macroeconomic conditions worsened. Discretionary consumer spend has taken a hit, and supply chain worries have intensified. Made.com explained that "costs must be reduced further", and it will conduct a headcount review. The wider strategic review will mull its balance sheet options, which include debt finance, strategic investment or even a sale of the company. PricewaterhouseCoopers will lead the strategic review and formal sale process. Made.com noted that it has not received any takeover approaches yet, but has had "strategic" talks with some parties. Made.com also withdrew annual guidance, amid "deterioration of trade". On Thursday, the Financial Times reported that Made.com plans to more than a third of its workforce.
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By Eric Cunha; ericcunha@alliancenews.com
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