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(Alliance News) - Stock prices in London are set to open higher on Monday following positive job news coming from the US on Friday and renewed optimism the US will not implement new trade tariffs on Europe, Japan and South Korea.
In early UK corporate news, British Airways-parent International Consolidated Airlines has acquired Air Europa for EUR1 billion, while Irish budget peer Ryanair saw a half-year rise in revenue and traffic. Insurer Hiscox reported a rise in written premiums in the third quarter.
IG says futures indicate the FTSE 100 index of large-caps to open 17.68 points, 0.2%, higher at 7,320.10 on Monday. The FTSE 100 index closed 0.8% higher at 7,302.42 Friday.
The pound was quoted at USD1.2933 early Friday, soft against USD1.2941 at the London close on Friday.
In the US on Friday, Wall Street ended higher. The Dow Jones Industrial Average and the Nasdaq Composite both ending up 1.1%, and the S&P 500 added 1.0%.
"US equities reached fresh all-time highs following an inspiring jobs report on Friday. The US economy added 128,000 new nonfarm jobs in October, comfortably beating the 85,000 expected by analysts despite the [General Motors] strike. The average hourly earnings grew 0.2%, slightly lower than 0.3% pencilled in by analysts, but better than 0.0% printed a month earlier," commented London Capital Group analyst Ipek Ozkardeskaya.
Ozkardeskaya continued: "The deluge of better-than-expected company earnings and encouraging economic data, combined with the Federal Reserve's 25-basis-point cut last week gave a serious boost to the stock markets."
The US is hopeful negotiations with Europe, Japan and South Korea on car manufacturing could avert a sharp increase in tariffs later this month, Commerce Secretary Wilbur Ross said on Sunday.
"Our hope is that the negotiations we've been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put the 232 fully into effect, may not even be necessary to put it partly in effect," Ross told Bloomberg Television, referring to the investigation under Section 232 of a 1962 trade law.
Ross, speaking in Bangkok, where he's attending a regional summit, told Bloomberg that discussions thus far have been "very good" with the major car-producing countries in Europe, Japan and South Korea.
There is currently a 2.5% tariff on cars imported into the US from the EU. US President Donald Trump has said he could raise this to 25%.
The White House agreed in May to delay new tariffs on imported vehicles and parts for six months.
In a further boost to sentiment, senior Chinese and US officials on Friday again sent positive signals about their efforts to formalise the partial trade bargain announced last month, with Trump saying he may meet with Chinese counterpart Xi Jinping in the state of Iowa.
Chinese Vice Premier Liu He on Friday spoke by telephone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, a call both sides described as "constructive".
In Asia on Friday, the Shanghai Composite closed up 0.6%, while the Hang Seng index in Hong Kong is up 1.5%.
Japanese markets were closed as the country celebrates Culture Day.
In the economic calendar on Monday, manufacturing PMI data are due from Germany at 0855 GMT and the eurozone at 0900 GMT with construction PMI figures from the UK at 0930 GMT. In the US, factory orders are at 1500 GMT.
IAG said it has acquired the entire issued share capital of Spanish airline Air Europa for EUR1 billion in cash. IAG already owns Spanish carriers Iberia and Vueling, as well as Ireland's Aer Lingus.
IAG said the Air Europa deal will transform the company's Madrid hub into a "true rival" for Europe's four largest hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle.
The company believes the acquisition will be earnings per share accretive in the first full year. The deal is also expected to generate "significant" revenue synergies by 2025.
IAG Chief Executive Officer Willie Walsh added: "Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership, therefore generating additional financial value for our shareholders.
The deal is expected to be completed in the second half of 2020.
Rival Ryanair Holdings reported a rise in revenue, but a steep rise in costs has hindered profit growth.
For the six months to September 30, Ryanair's revenue was up 11% year-on-year to EUR5.39 billion. Traffic was up 11% to 86 million passengers with an unchanged load factor of 96%.
Air fares were 5% lower, Ryanair noted, due to lower demand in the UK as well as overcapacity in Germany and Austria. Ancillary revenue however was up 28% to EUR1.65 billion.
Group pretax profit was flat at EUR1.26 billion. Fuel & oil costs rose 22% to EUR1.59 billion, and overall costs climbed by 16% to EUR1.29 billion.
"Our outlook for the remainder of the year remains cautious. We try to avoid the unreliable optimism of some competitors," added Ryanair.
Insurer Hiscox said it was "pleased" with its growth in the third quarter, reporting a rise in written premiums from every division.
Total gross written premiums rose 7.3% to USD3.21 billion in the period to September 30. Hiscox Retail reported a 7.0% rise in written premiums, Hiscox London Market 9.7% and Hiscox Re 6.1%.
"The third quarter has been an active period for claims, with the market experiencing significant catastrophe losses from storms in the US, the Caribbean and Japan. Paying claims is what we are here for, and we have reserved USD165 million for claims from Hurricane Dorian and Typhoons Faxai and Hagibis. We expect an additional impact from lower fees and profit commissions," said Chief Executive Bronek Masojada.
Kosmos Energy said it was able to continue to "build momentum" in the third quarter.
In the three months to September 30, revenue rose to USD357.0 million from USD250.2 million the year before. As a result, the Dallas-headquartered firm swung to a net income of USD16.1 million compared to a loss of USD126.1 million the year before.
Kosos Chair & CEO Andrew Inglis said: "At current oil prices we expect to deliver the 2019 free cash flow we set out at our capital markets day in February. Our 2019 drilling program in Mauritania and Senegal has increased the gas initially in place to the top end of our 50-100 Tcf range. Furthermore, our first infrastructure-led exploration well in Equatorial Guinea was successful and we expect this to further enhance the value of our Equatorial Guinea acquisition."
Direct marketer 4imprint said demand has "remained robust" in the second half.
The company said it has experienced growth in both new and existing customer orders consistent with that seen in the first half.
4imprint added: "The relatively new brand recognition element of the group's marketing activities continues to perform well. As a result, the board expects a strong full-year trading performance, with revenue growth of around 16% over 2018."
4imprint recorded pretax profit of USD44.2 million for the 52 weeks to December 29, 2018, on revenue of USD738.4 million.
Marston's has sold 137 pubs for GBP44.9 million to Admiral Taverns.
The company said the disposal is in line with its plans to reduce its debt in part through the disposal of certain non-core assets. The assets being disposed of are smaller wet-led leased, tenanted and franchised pubs. The deal is expected to complete before the end of November.
Saudi Aramco announced Sunday its long-awaited stock market debut in what could be the world's biggest IPO, underpinning Crown Prince Mohammed bin Salman's ambitions to overhaul the kingdom's oil-reliant economy.
After years of delay, Aramco said it plans to sell an unspecified number of shares on the Riyadh stock exchange, calling it a "historic" milestone for the energy giant which pumps 10% of the world's oil. However, the state firm said there were no current plans for an international listing, indicating that the long-discussed goal for a two-stage IPO including an offering on a foreign bourse had been put aside.
With analysts saying that Aramco could be valued at up to USD1.7 trillion, the initial public offering is potentially the world's biggest, depending on how much of the company it decides to sell.
By Paul McGowan; paulmcgowan@alliancenews.com
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