(Alliance News) - After focusing all week on inflation readings and the likely eventual central bank response to growing price pressure, market attention will turn Friday to indicators of economic activity in the current month.
Flash purchasing managers' index readings for EU countries, the UK and the US are due throughout the day. Out already, PMI readings showed business activity in Japan slumping back into decline in May, while growth in Australia eased a bit but remained robust.
Edging down to 58.1 in May from 58.9 in April, the flash Australia composite output index nevertheless printed its ninth consecutive month in expansion. Sharp increases in activity were noted by survey participants across both the manufacturing and service sectors.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,008.76
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Hang Seng: up 0.5% at 28,450.78
Nikkei 225: closed up 0.8% at 28,317.83
DJIA: closed up 188.11 points, or 0.6%, at 34,084.15
S&P 500: closed up 43.44 points, or 1.1%, at 4,159.12
Nasdaq Composite: closed up 236.00 points, or 1.8%, at 13,535.74
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EUR: up at USD1.2227 (USD1.2210)
GBP: up at USD1.4188 (USD1.4163)
USD: down at JPY108.77 (JPY108.84)
Gold: down at USD1,874.22 per ounce (USD1,878.30)
Oil (Brent): down at USD65.15 a barrel (USD66.20)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
0930 BST UK CIPS-Markit flash manufacturing and services PMI
1100 BST Ireland wholesale price index
0930 CEST Germany flash PMI
1000 CEST EU flash PMI
0945 EDT US flash manufacturing PMI
0945 EDT US flash services PMI
1000 EDT US existing home sales
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UK retail sales saw a sharp increase in April as shoppers returned to high streets following re-opening of all non-essential stores, according to the latest figures from the Office for National Statistics. On an annual basis, UK retail sales surged 42% in April, having increased 7.2% in March. The latest figure was well above the market forecast, cited by FXStreet, for a 37% rise. On a monthly basis, retail sales grew 9.2% in April following a 5.4% rise in March. The month-on-month print also beat market consensus of a 4.5% increase.
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The Japanese private sector saw a renewed decline in May, survey results from IHS Markit and au Jibun Bank showed. The au Jibun Bank flash Japan composite purchasing managers' index stood at 48.1 points in May versus 51.0 in April. A figure above 50 implies expansion in business, while the figure below that mark means contraction. At 52.5 points, the headline au Jibun Bank Japan manufacturing PMI dipped from 53.6 in April to signal a less vigorous improvement in factory operating conditions. The au Jibun Bank flash Japan services business activity index fell to 45.7 points in May from 49.5 in April, indicating a sharper deterioration in the service sector, and one that was the most marked since August 2020.
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Palestine's top diplomat said a ceasefire in Gaza is "not enough at all" and the world must now tackle the difficult issues of Jerusalem's future and achieving an independent Palestinian state. Riad Al-Malki told reporters at an emergency meeting of the UN General Assembly on the conflict that while a ceasefire is good it does not address "the core issue" that started the violence. He said that is Jerusalem, citing the "desecration" by Israeli soldiers and settlers of the Al-Aqsa mosque, Islam's third holiest site, and the Israeli policy of evicting Palestinians from their homes in the city's different neighbourhoods including Sheikh Jarra. The last direct talks between Israel and the Palestinians took place in 2014. The Palestinians broke off relations with former US president Donald Trump's administration in December 2017 after he after he recognised Jerusalem as Israel's capital.
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BROKER RATING CHANGES
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BERENBERG RAISES HOLLYWOOD BOWL PRICE TARGET TO 280 (210) PENCE - 'BUY'
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JPMORGAN RAISES YOUNG & COS BREWERY TARGET TO 1550 (1150) PENCE - 'NEUTRAL'
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BERENBERG RAISES HOTEL CHOCOLAT PRICE TARGET TO 390 (300) PENCE - 'HOLD'
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COMPANIES - FTSE 100
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Japan formally approved the Moderna and AstraZeneca Covid-19 vaccines, but the latter will not be used immediately because of lingering concern over very rare blood clots. The decision comes just over two months before the pandemic-postponed Olympics, with growing disquiet in Japan about the country's comparatively slow vaccine rollout. Nine regions including Tokyo are already under a virus state of emergency, with the measure now being expanded to Okinawa in the south. Until now, only the Pfizer-BioNTech was available in Japan, after being approved in February, and so far just two percent of the country's 125 million residents are fully vaccinated. AstraZeneca separately said its vaccine, called Vaxzevria, was approved for emergency use by the Japanese Ministry of Health, Labour & Welfare. Production of the vaccine in Japan is already underway, it said, and the first doses are expected to be available in the coming weeks.
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COMPANIES - FTSE 250
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Biffa said it has entered into an agreement to acquire the Collections business and some Recycling assets from Viridor Waste Management for GBP126 million. Completion is expected no earlier than August, the company added. "When combined with the other investments we have made over the past year across waste reduction, recycling and energy recovery, we have positioned the group as a leading enabler of the UK circular economy, ready to tackle the UK's waste challenge. We look forward to welcoming our new colleagues from Viridor to Biffa in due course," Chief Executive Officer Michael Topham said. Viridor was sold by water utility Pennon Group in July last year to funds advised by Kohlberg Kravis Roberts & Co.
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Close Brothers Group said it continued to perform strongly in its financial third quarter to April 30, in line with the trends reported in the first half of the year. The merchant bank said the third quarter saw high new business volumes in the lending business, solid net inflows in Asset Management, and a strong trading performance by stockbroker Winterflood. Close Brothers said it capital position remained strong, with a Common Equity Tier 1 capital ratio of 15.5%, which it said was significantly above the applicable minimum regulatory requirement. In the Banking unit, the loan book increased by 3.2% in the quarter and 7.7% year-to-date to GBP8.2 billion, up from GBP8.0 billion at the end of the previous quarter. Looking ahead Close Brothers said: "We continue to respond well to the challenges and opportunities arising from the current environment. Although there has been some improvement in the broader economic outlook, the impact of Covid-19 on customers remains uncertain. Our proven and resilient model and strong balance sheet, combined with our deep experience in navigating a wide range of economic conditions, leave us well placed to continue supporting our colleagues, customers and clients over the long term."
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Investec raised its dividend following a rise in annual earnings in a mixed year for the Anglo-South African asset manager. For the year ended March 31, pretax profit from continuing operations was GBP331.6 million, up 6.8% from GBP310.5 million last year. Investec reported funds under management of GBP58.4 billion, up 30% from 45.0 billion. Investec reported basic earnings per shares of 25.2 pence, up 44% from 17.5p and headline EPS of 26.6p, up 24% from 21.5p. The bank declared a final dividend 7.5p, giving a 13.0p full-year payout, up 18% from 11.0p last year. Looking ahead, Investec expects revenue momentum from the second half to continue assuming economic growth remains intact. "The 2021 financial year was a tale of two halves. First half performance was characterised by difficult and volatile market and economic conditions attributable primarily to COVID-19. The second half showed strong earnings recovery, supported by our resilient client base, a rebound in economic activity and a greater sense of optimism spurred on by global vaccination campaigns. We carry this momentum into the 2022 financial year, focused on actively servicing our clients and delivering long-term value," said Chief Executive Officer Fani Titi.
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COMPANIES - GLOBAL
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The Pfizer and BioNTech coronavirus vaccine can be stored in a fridge for up to a month, the UK Medicines & Healthcare products Regulatory Agency has ruled. Previous advice was that the vaccine needed to be used within five days of being removed from ultra-low temperature freezers. It is hoped the change will make storage easier and possible for a wider range of health facilities. Raine said the change was approved after the MHRA "rigorously assessed" additional stability data which had been submitted by Pfizer. The change follows a similar moves by the US Food & Drug Administration and the European Medicines Agency earlier this week.
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Friday's Shareholder Meetings
Arrow Global Group PLC - GM re acqusition by Sherwood Acquisitions Ltd
Central Asia Metals PLC - AGM
Circassia Group PLC - AGM
Croda International PLC - AGM
Fair Oaks Income Ltd - AGM
Headlam Group PLC - AGM
Old Mutual Ltd - AGM
Premier African Minerals Ltd - AGM
Secure Income REIT PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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