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(Alliance News) - London stocks were in the green early on Friday, with airlines getting a boost from peer Ryanair, which upped profit guidance after better-than-expected forward bookings over the recent holiday period.
The FTSE 100 index was up 30.56 points, or 0.4%, at 7,628.68.
The mid-cap FTSE 250 index was up 57.15 points, or 0.3%, at 21,700.22. The AIM All-Share index was 0.2% higher at 964.42.
The Cboe UK 100 index was 0.2% higher at 12,891.02. The Cboe 250 was 0.1% higher at 19,548.53, and the Cboe Small Companies was flat at 12,421.71.
In mainland Europe, the CAC 40 in Paris was up 0.2% while the DAX 30 in Frankfurt was 0.3% higher.
"With this week's geopolitical risk subsiding as we head towards the weekend, investors now have the opportunity to focus on the signing of the signing of the new US, China phase one trade deal next week, as well as the health of the US economy today, and in particular the labour market which has continued to look resilient," said Michael Hewson at CMC Markets UK.
Negotiations for the second phase of a pending US-China trade deal will begin promptly but the outcome may wait until after this year's elections, US President Donald Trump said Thursday.
Trump's remarks come days before Beijing's trade envoy is due in Washington to sign a "phase one" agreement, marking a pause in the two sides' nearly two-year trade war.
Focus Friday will turn to the US jobs report for December at 1330 GMT. This follows a report that employment increased by more than expected in December, payroll processor ADP reported on Wednesday.
In November, US non-farm payrolls showed a big 266,000 rise in jobs.
"Today's main event is US data. We expect a 150,000 gain in jobs, a steady 3.5% unemployment rate and a slight slowing in average hourly earnings growth to 3% due to base effects. The consensus looks for 160,000, and 3.1% on wages," said Kit Juckes at Societe Generale.
Meanwhile, developments in the Middle East took a new, tragic twist. It is "highly likely" that Iran shot down the civilian Ukrainian jetliner that crashed near Tehran, killing all 176 people on board, US, Canadian and British officials have said.
They said the fiery missile strike could well have been a mistake amid rocket launches and high tension throughout the region.
The crash on Wednesday morning came just a few hours after Iran launched a ballistic attack against Iraqi military bases housing US troops in its violent confrontation with Washington over the drone strike that killed an Iranian Revolutionary Guard general.
The airliner could have been mistaken for a threat, said four US officials, speaking on condition of anonymity to discuss sensitive intelligence.
Canadian Prime Minister Justin Trudeau, whose country lost at least 63 citizens in the downing, said in Ottawa: "We have intelligence from multiple sources including our allies and our own intelligence. The evidence indicates that the plane was shot down by an Iranian surface-to-air missile."
Brent oil was quoted at USD65.19 a barrel Friday, down from USD66.80 at the close Thursday. The price of oil touched USD70 shortly after the US killed Iranian general Qassem Soleimani, but it has since edged back as fears of war have receded.
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average closing up 0.7%, the S&P 500 also up 0.7%, and the Nasdaq Composite 0.8% higher.
The Japanese Nikkei 225 index ended 0.5% higher on Friday. In China, the Shanghai Composite closed 0.1% lower, while the Hang Seng index in Hong Kong ended up 0.2%.
On the London Stock Exchange, budget airline Ryanair surged 10% as it said trading was stronger than expected over the festive period, and as a result it has upped profit guidance.
For its year ending March, the Irish carrier sees post-tax profit between EUR950 million to EUR1.05 billion, having previously guided for EUR800 million to EUR900 million.
Ryanair said trading was boosted by better-than-expected close-in bookings over Christmas and New Year, while forward bookings to April are 1% higher year-on-year which will lead to higher-than-expected fares.
One downside for Ryanair is Laudamotion. The recently purchased Austrian airline is underperforming due to lower-than-expected fares over the festive period. Fares are being hurt by intense competition in both Germany and Austria, Ryanair said.
Ryanair's unscheduled update boosted FTSE 100 peer International Consolidates Airlines, which was 4.6% higher, making it one of the best large-cap performers alongside easyJet, up 5.7%. Midcap peer Wizz Air was 5.9% higher.
Back in the FTSE 100, sportswear firm JD Sports Fashion was 0.6% higher as it reiterated full-year guidance and reported "positive like-for-like trends" over the pivotal Christmas trading period, despite the UK retail market facing tricky conditions.
The company said full-year headline pretax profit, after removing the impact of IFRS 16, will fall in the "upper quartile" of market consensus range of GBP403 million and GBP433 million. This could represent a annual jump of as much as 27% from last year's pretax profit of GBP339.9 million. IFRS 16 governs the financial treatment of leases, a big cost for retailers.
JD Sports said: "Against a backdrop of widely reported retail challenges in the group's core UK market, it is encouraging to report positive like-for-like trends in the group's global sports fashion fascias, particularly overseas."
Gold miner Polymetal International was 1.4% higher, as Berenberg raised its rating on the stock to Buy from Hold.
Paper and packaging firm Mondi fell 1.5% as it said Chief Executive Peter Oswald is to leave the company at the end of March. He originally joined Mondi in 1992, and has been CEO since early 2017.
Mondi has appointed Chief Financial Officer Andrew King as interim CEO whilst a replacement for Oswald is found, the company added.
FTSE 250 discount retailer B&M European Value Retail slumped 6.1% as it reported 9.3% revenue growth excluding currency movements for the 13 weeks to December 28.
In the UK, revenue growth was 8.8%, and the like-for-like growth figure was 0.3%. This came against a backdrop of poor retail conditions and a decision not to carry out any early discounting, B&M said.
Heron Foods is doing well, the company said, with like-for-like sales growth solid. B&M is making progress at French subsidiary Babou, it added. However Jawoll, B&M's German business, reported a 1.5% fall in revenue for the quarter at constant currency. A review of the unit's future, announced November, is ongoing.
Diploma fell 3.5% as Jefferies cut the technical products supplier to Hold from Buy, while Royal Bank of Canada lowered it to Underperform from Sector Perform.
Precision instruments firm Spectris was down 1.3% with Morgan Stanley downgraded it to Underweight from Equal Weight, and fund administrator Sanne fell 1.9% as RBC cut it to Sector Perform from Outperform.
Recruiter PageGroup fell 1.2% after a cut by RBC to Sector Perform from Outperform, and peer Hays was 1.5% lower after the same move by RBC.
Building products firm SIG slipped 2.9% as Liberum reduced it to Hold from Buy. Restaurant Group declined 0.7% after RBC cut the rating to Sector Perform from Outperform.
Elsewhere, fashion retailer Superdry fell 20% as it warned trading has not been as strong as expected in the period between October 27 and January 4, despite a strong Black Friday.
Superdry said there has been "unprecedented" promotional activity as well as subdued consumer demand post-Christmas.
"These factors, combined with shortages of some better-selling product, driven by the need to reduce our inherited inventory position, adversely impacted our sales during peak trading," Superdry added.
Retail sales have missed expectations by GBP23 million, the company continued, while wholesale operations have suffered a GBP5 million shortfall due to timing issues.
As a result, Superdry now sees underlying pretax profit for its year ending April between zero and GBP10 million.
The UK's exit from the EU moved a step closer after Prime Minister Boris Johnson's Brexit Bill cleared the House of Commons, the lower house of the UK parliament. The EU (Withdrawal Agreement) Bill was given a third reading by 330 votes to 231, a majority of 99.
The comfortable victory for the UK prime minister followed the influx of new Tory MPs and is in marked contrast to the tortuous attempts to steer a Brexit bill through the Commons before the December general election.
The Bill, which paves the way for Brexit on January 31, will now go to the House of Lords – where it could face a more difficult passage as Johnson does not have a majority in the upper chamber.
The pound was quoted at USD1.3064 on Friday, up from USD1.3045 at the close Thursday.
By George Collard; georgecollard@alliancenews.com
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