(Alliance News) - Stock prices are set to open lower in London on Friday morning, as any optimism for an orderly Brexit dissipates in the face of weakening Chinese economic growth and new US tariffs on European goods.
In early UK company news, Crowne Plaza owner InterContinental Hotels reported a fall in revenue as violent protests in Hong Kong hit trading. London Stock Exchange Group had a strong third quarter but is losing its CFO next year. Eddie Stobart Logistics and rival Wincanton are mulling a merger.
IG futures indicate the FTSE 100 index is to open 39.5 points lower at 7,142.82. The blue-chip index closed up 14.37 points, or 0.2%, at 7,182.32 on Thursday.
China's economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, data showed Friday, with an official warning of "mounting downward pressure".
Gross domestic product expanded 6.0% in July to September, down from 6.2% in the second quarter, according to the National Bureau of Statistics.
The reading, in line with an AFP survey of 13 analysts, is the worst quarterly figure since 1992 but within the government's target range of 6.0% to 6.5% for the whole year. The economy grew 6.6% in 2018.
"Amidst all the excitement around yesterday's EU, UK Brexit deal it was easy to forget the US and China are also trying to settle their own differences, at a time when China's economy is showing a lot more stresses than the US economy," said Michael Hewson at CMC Markets UK.
"This morning's latest China data has merely served to reinforce the importance of trying to advance the progress of some form of limited trade deal after China's third-quarter GDP came in at 6%, below expectations of 6.1%."
"There was a significant improvement in industrial production in September, from 4.4% in August to 5.8%, while retail sales came in at 7.8%, up from 7.5% in August, however both readings appear to show an economy that is struggling to generate demand on a domestic level, despite recent easing measures," Hewson added.
The Japanese Nikkei 225 index closed up 0.2% on Friday. In China, the Shanghai Composite is down 1.4%, while the Hang Seng index in Hong Kong is 0.6% lower.
The US has slapped tariffs on a record USD7.5 billion worth of European goods Friday, with Airbus, French wine and Scottish whiskies among the high-profile targets.
The tariffs, which took effect at 0001 EDT in Washington, were imposed despite pleas from European officials for a last-minute reprieve and French Economy Minister Bruno Le Maire warning of retaliation.
In early UK corporate news on Friday, InterContinental Hotels Group reported a 4.7% yearly rise in net system size to 865,000 rooms for the third quarter of 2019, despite what it said was a strong comparable.
However, revenue per available room, a key hotel industry metric, fell 0.8%, and was flat for the first nine months of the year. Greater China RevPar fell 6.1% in the quarter amid unrest in Hong Kong, while in the Americas it dipped 0.6%. However, in Europe, the Middle East, Asia & Africa, RevPar rose 0.2%.
"Despite the weaker RevPAR environment, and the challenges some of our markets are currently experiencing, we remain confident in our financial outcome for the rest of the year," said Chief Executive Keith Barr.
London Stock Exchange Group, which recently fended off a takeover bid from Hong Kong Exchanges & Clearing, registered a 12% rise in third-quarter income to GBP587 million. On a nine-month basis, the figure was 9% higher at GBP1.73 billion.
The business is performing well, it said, with third-quarter trading "strong". Information Services grew revenue by 9%, helped by strong performance in subscription revenue from FTSE Russell, while Capital Markets revenue climbed 14% in a weak environment.
LSEG said the proposed acquisition of Refinitiv is continuing to progress, and remains on track to complete in the second half of 2020.
Chief Financial Officer David Warren will be departing by the end of 2020. He will stay until the Refinitiv deal has been completed and will not leave until a replacement is found, LSEG said. The company also appointed a chief integration officer to support the merger, hiring David Shalders, who will leave the TP ICAP board as a result.
Steelmaker Evraz said the effect on earnings before interest, tax, depreciation and amortisation from an efficiency programme will be USD350 million in 2019, and it wants around USD300 million per year from it going forward.
The firm is also mulling three "major" investment projects in 2020 to 2023, without naming them, which will lead to capital expenditure of around USD1 billion a year in that timeframe. In 2019, capex is seen at USD850 million.
In the FTSE 250 index, cybersecurity firm Avast reported a 5.0% rise in adjusted revenue for the third quarter to USD220.3 million. Excluding discontinued operations, this rose 7.3% to USD218.3 million.
Adjusted Ebita rose 8.7% to USD121.9 million, and is 6.6% higher in the first nine months.
Avast has reiterated 2019 guidance, and Chief Executive Ondrej Vlcek said the firm had a good quarter, meeting expectations.
Elsewhere, Eddie Stobart Logistics and Wincanton said the latter is conducting due diligence on Eddie Stobart to "assess the potential merits of a combination".
In other M&A news, Elegant Hotels has agreed a GBP100.8 million takeover by Marriott International. Marriott has offered 110 pence per Elegant share, a 57% premium to Elegant's closing price on Thursday in London.
The two stressed no proposal has been made, and gave no other details.
On the Brexit front, Boris Johnson will face a race against time to sell his last-minute deal to MPs before a crunch vote as he returns from Brussels in a "very confident" mood.
The prime minister said there is a "very good case" for MPs to vote in his favour in what is expected to be a dramatic and historic House of Commons showdown on Saturday.
But with significant opposition lining up to thwart it, he faces an uphill battle to get the deal through in the extraordinary sitting of Parliament, the first on a weekend since April 1982.
The pound was quoted at USD1.2860 early Friday, firm against USD1.2831 at the close Thursday.
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average closing up 0.1%, the S&P 500 0.3% higher, and the Nasdaq Composite 0.4% higher.
The economic calendar has eurozone current account numbers at 0900 BST.
By George Collard; georgecollard@alliancenews.com
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