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(Alliance News) - Stock prices in London were called lower on Friday, in the face of further political instability at Westminster.
In early UK corporate news, InterContinental Hotels said quarterly revenue growth was strong, but its chief financial officer is set to depart for sports betting firm Flutter. Food delivery firm Deliveroo narrowed its guidance range for gross transaction value growth towards the lower end of previous guidance.
UK Prime Minister Liz Truss bid farewell on Thursday, tendering her resignation. Her premiership was the shortest in British history.
"The fact that UK financial markets barely budged suggests that the measures adopted by the new chancellor, Jeremy Hunt, to rein in the fiscal largess have been enough to restore credibility," Jefferies analysts observed.
The Conservative Party now begins the process to select a new leader, with nominations open until 1400 BST on Monday. A nominee must secure at least 100 of the party's 357 MPs
The first ballot of MPs will then be held between 1530 and 1730 BST on Monday. If there are three candidates with the required number of nominations, the loser will be eliminated.
Once there are two candidates remaining, an indicative vote will be held so that the Tory party membership know which is the preferred option among MPs.
Party members will be able to take part in an online vote to choose their next leader, and therefore the country's prime minister.
Amongst those believed to be in the running are former chancellor Rishi Sunak, leader of the house Penny Mourdaunt, and even former PM Boris Johnson.
"Rishi Sunak seems like the best option. The previous chancellor of Exchequer has a solid track record; he knows he can't spend, or make tax decisions without justification. He knows that, despite the unideal economic environment, he can't increase debt without increasing the cost of borrowing. And more importantly, he is supported by the markets," Swissquote Bank's Ipek Ozkardeskaya commented.
"Whoever it is, the main challenge for the next PM will be to reassure the markets! We expect to see some more bumpy trading for the British assets until the dust settles."
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 down 35.0 points, 0.5%, at 6,908.91
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Hang Seng: down 0.5% at 16,194.10
Nikkei 225: closed down 0.4% at 26,890.58
S&P/ASX 200: closed down 0.8% at 6,676.80
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DJIA: closed down 90.22 points, or 0.3%, at 30,333.59
S&P 500: closed down 29.38 points, or 0.8%, at 3,665.78
Nasdaq Composite: closed down 65.66 points, or 0.6%, at 10,614.84
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EUR: down at USD0.9770 (USD0.9822)
GBP: down at USD1.1185 (USD1.1294)
USD: higher at JPY150.41 (JPY149.77)
GOLD: down at USD1,621.43 per ounce (USD1,641.90)
OIL (Brent): down at USD92.36 a barrel (USD93.29)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
1600 CEST EU flash consumer confidence indicator
1100 BST Ireland wholesale price index
0910 EDT US Fed New York President John Williams speaks
US Fed Chicago President Charles Evans speaks
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UK retail sales suffered a bigger-than-expected decline in September, according to figures from the Office of National Statistics. Retail sales fell 6.9% annually in September, with the decline accelerating from a 5.6% fall in August. It also was worse than FXStreet-cited market consensus, which had expected a fall of just 5%. On a monthly basis, retail sales fell 1.4% in September, with the decline easing slightly from 1.7% in August. However, sales saw a steeper fall than expected, with consensus expecting a 0.5% drop. Excluding fuel, September sales fell 1.5% on a monthly basis, compared to 1.7% in August. Annually, sales excluding fuel fell 6.2%, compared to 5.3% in August.
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Consumer confidence rose slightly in October but remains at near historic lows as the UK grapples with the "new abnormal" of soaring energy, food and mortgage costs. GfK's long-running consumer confidence index clawed back two points but continues to languish at an overall score of minus 47. A three-point fall in the major purchase measure, an indicator of confidence in buying big ticket items, continues a steep downward trend that began in July 2021 and will be especially worrying for retailers in the crucial final quarter. Confidence in personal finances for the next 12 months increased six points to minus 34 but remains 35 points lower than this time last year.
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Australian Prime Minister Anthony Albanese has expressed concern about potential delays to the Australia-UK free trade deal caused by Britain's political instability. Speaking to reporters in Perth, Western Australia on Friday, Albanese said: "I'm concerned about any delay that would occur to the Australia–UK free trade agreement. "I had discussed with Prime Minister Truss the fast-tracking of that. We discussed trying to get it concluded before the end of this year, to make sure that the appropriate parliamentary processes went through our respective parliaments." Albanese joked when comparing his term so far with the leadership turnover in the UK, saying: "My government is stable, is orderly. The adults are in charge.
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BROKER RATING CHANGES
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CitiGroup raises Jupiter Fund Management to 'neutral' (sell) - price target 95 (85) pence
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Barclays reinitiates GB Group with 'overweight' - price target 700 pence
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Berenberg raises Synthomer to 'buy' (hold) - price target 160 pence
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COMPANIES - FTSE 100
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InterContinental Hotels Group reported strong revenue growth in the third quarter, with revenue per available room rising 28% year-on-year. RevPAR now exceeds pre-pandemic levels, it noted. The hotel owner said demand remained "robust", and it managed to open 51 hotels during the quarter, despite an industry-wide slowdown in hotel opening activity. "We have also proven the resiliency of our business model and the ability for IHG to respond and adapt to opportunities and to macroeconomic uncertainties. These reinforce the confidence we have in our ability to drive attractive levels of long-term, sustainable growth," IHG said.
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London Stock Exchange Group reported a strong quarter, with growth across all of its businesses. Total income in the third quarter, including recoveries, rose 15% to GBP1.99 billion from GBP1.73 billion year-on-year. Gross profit rose 13% to GBP1.70 billion from GBP1.50 billion. "With sustained execution, a broad base of businesses and leading market positions, we remain well positioned," said CEO David Schwimmer.
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Sports betting firm Flutter Entertainment said it will establish a new chief operating officer role to support its global growth strategy. Chief Financial Officer Jonathon Hill will take on the role. Hill will be replaced by IHG CFO Paul Edgecliffe Johnson. "I am delighted that Paul will join us next year as group CFO. I am confident that his highly relevant skills and experience will help us to take advantage of the significant opportunities before us and will be invaluable as we continue to execute our strategy," said Flutter CEO Peter Jackson.
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COMPANIES - FTSE 250
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Component provider Essentra said revenue from continuing operations grew 11% in the third quarter compared to the previous year, on a like-for-like basis. It expects full year adjusted operating profit to come in line with the board's expectations, despite expecting slower economic growth in the final quarter. "The group remains mindful of the more challenging economic environment and continues to monitor headwinds, taking proactive cost management actions where appropriate," it said.
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OTHER COMPANIES
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Food delivery firm Deliveroo said gross transaction values rose 8% annually in the third quarter to GBP1.70 billion, though orders fell 1% to 72.8 million. However, Deliveroo lowered its guidance range for GTV growth for the full year to 4% to 8% in constant currency, compared to a previous range of 4% to 12%. It expects a slight improvement in the margin for earnings, aiming to reach breakeven earnings before interest, tax, depreciation and amortisation at some point between the second half of 2023 and the first half of 2024.
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By Elizabeth Winter; elizabethwinter@alliancenews.com
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