(Alliance News) - Stock prices in London are called to open flat on Friday after peace talks in Ukraine went nowhere, while soaring inflation in the US all but guarantees a rate hike from the Federal Reserve.
In early UK corporate news, Berkeley is pleased with its robust trading, Avast is pulling out of Russia, while Aquis Exchange is planning to dual list on its own stock market.
IG futures indicate the FTSE 100 will open up just 6.11 points at 7,105.20 on Friday. The blue-chip index closed down 91.63 points, or 1.3%, at 7,099.09 on Thursday.
Russia and Ukraine failed to make a breakthrough Thursday in their first top-level talks since Moscow's invasion two weeks ago, as Russian advances raised fear the Ukrainian capital Kyiv could soon be encircled.
After talks with Russian counterpart Sergei Lavrov in Turkey, Ukraine's Foreign Minister Dmytro Kuleba said there had been "no progress", even on a 24-hour ceasefire, although Lavrov said Moscow would keep talking.
In Asia on Friday, the Japanese Nikkei 225 index closed down 2.1%. In China, the Shanghai Composite ended 0.4% higher, while the Hang Seng index in Hong Kong was down 1.4% in late trade. The S&P/ASX 200 in Sydney closed down 0.9%.
Five Chinese companies have been ordered to comply with audit requirements by the US Securities & Exchange Commission or face delisting from Wall Street.
The initial group of companies named on a list published by the SEC on Thursday could soon be followed by all Chinese companies listed in New York, none of which are currently complying with US regulations in this area.
The five companies named Thursday were the biotech companies BeiGene, Zai Lab and Hutchmed, as well as the semiconductor industry subcontractor ACM Research and the restaurant group Yum China.
Brent oil was quoted at USD111.65 a barrel on Friday morning in London, down from USD112.45 late Thursday.
Gold stood at USD1,988.30 an ounce early Friday, sliding from USD1,995.65 late Thursday.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: "Gains in equities reversed on Thursday, but industrial metals traded south, and crude oil cheapened despite a tense geopolitical environment, as the worries that such a spike in energy and commodity prices would certainly curb the economic growth and slow the global demand took over the worries of a tighter supply."
In the US on Thursday, stocks ended lower. The Dow Jones Industrial Average closed down 0.3%, the S&P 500 0.4%, and the Nasdaq Composite slid 1.0%.
In UK economic news, GDP expanded 0.8% in January, rebounding from December's 0.2% drop, and was ahead of market consensus - provided by FXStreet - of 0.2% growth.
The Office of National Statistics noted the UK economy is now 0.8% bigger than its pre-coronavirus size in February 2020.
Industrial production growth was 0.7% month-on-month in January, primarily driven by 0.8% growth in manufacturing. This follows growth of 0.3% in December 2021.
The market had predicted a measly 0.1% monthly rise in industrial production, while manufacturing was guided to rise by 0.2%.
Services output grew by 0.8% in January from the month before and is 1.3% above its pre-coronavirus pandemic level, the ONS noted. This followed a 0.5% fall in December.
In London, housebuilder Berkeley said its trading has been "robust" in the period from November 1 to February 28.
The company said the value of underlying sales reservations has remained slightly ahead of pre-pandemic levels and cancellations are at normal rates, while sales pricing is "sufficiently" ahead of its business plan - allowing the housebuilder to absorb construction cost increases.
As a result, Berkeley said it is on track to meet its annual earnings guidance for the year ending April 30.
Forward sales, representing cash due under exchanged private sales, is expected to be above GBP1.70 billion at year-end. They stood at GBP1.70 billion on October 31. Net cash is forecast to be around GBP900 million, up from GBP846 million at the end of October.
Cybersecurity firm Avast joining the rapidly expanding list of companies that have withdrawn their services from Russia.
Avast noted it has employees in both Russia and Ukraine. Ukraine, Russia and Belarus collectively contributed around 1.5% of Avast's annual revenue in 2021.
DP Eurasia, the master franchisee of Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia, said Friday there has been no material disruption to its operations so far.
"Trading from its 188 stores in Russia continues, and the group remains dedicated to the communities it serves," it asserted.
DP Eurasia did, however, say it felt it is "prudent" to limit any further investment into its operations. It also has suspended royalty payments from its Russian operations.
Secure Trust Bank has agreed to exit the debt purchase market, and, as a result, its subsidiary, Debt Managers, has sold its 650,000 strong customer loan portfolio to Intrum UK Finance.
"The cash purchase consideration for the portfolio will be determined by the financial position of the portfolio as at completion, taking account of debt collections and of further debt purchases from STB by DMS to date," the lender noted.
At the end of September, the portfolio held a gross value of GBP84.7 million. STB is expecting to secure GBP79.7 million for the portfolio.
Aquis Exchange - which operates the Aquis Stock Exchange - is planning to list on that market on March 29.
Aquis is looking to list on the Apex Segment of the Aquis Stock Exchange Growth Market, but noted it will continue to trade on AIM.
"Aquis continues to build momentum across all areas of its activities and the dual listing on the AQSE Growth Market is a logical step in the group's progression and a tangible demonstration of confidence in that market," the company explained.
The euro was priced at USD1.0997, soft from USD1.1007 at the London equities close Thursday, after the European Central Bank kept interest rates on hold.
Notably, however, the ECB signalled that it may give itself a little more time before rising interest rates, as the war in Ukraine and surging inflation cloud the economic outlook.
The central bank kept the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively.
In its latest policy announcement, the ECB dropped its usual mention of raising rates "shortly after" the end of stimulus bond-buying schemes, saying instead that rate adjustments would now come "some time after" the end of asset purchases.
The pound was quoted at USD1.3092 early Friday, down on USD1.3125. Against the yen, the dollar was trading at JPY116.77, up from JPY116.05.
Hot inflation readings continued on Thursday.
Consumer price inflation in the US in February rose to its highest level since January 1982. On an annual basis, the US consumer price index increased 7.9% in February, surpassing January's increase of 7.5%. Month-on-month, US CPI rose 0.8% in February after rising 0.6% in January.
The data will add pressure on the US Federal Reserve to raise interest rates at its meeting next week.
Deutsche Bank said: "Last week Chair Powell clearly signalled the Fed's intention to raise rates by 25 basis points at the March meeting, taking a 'careful' first step in an anticipated 'series' of rate increases. With the Fed highly likely to follow through on this message next week, focus will be on progress towards pinning down the details of quantitative tightening and guidance about the future path of policy in response to recent geopolitical events and extremely elevated inflation."
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.