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(Alliance News) - Stock prices in London are seen opening lower on Friday following a rout on Wall Street on Thursday, fuelled by worries over rising interest rates and surging inflation.
In early company news, International Consolidated Airlines posted a narrowed first-quarter loss. InterContinental Hotels said trading in Greater China is being hurt by pandemic restrictions.
IG futures indicate the FTSE 100 index will open 19.87 points lower at 7,483.40. The index closed up 9.82 points, or 0.1%, at 7,503.27 Thursday.
Holiday Inn-owner InterContinental Hotels Group said it experienced positive trading conditions in the first quarter with travel demand continuing to increase in almost all of its key markets around the globe.
For the three months ended March 31, revenue per available room - a key metric in the hotel industry - was up 61% from the first quarter of last year.
First quarter average daily rate - which measures the average rental revenue earned for an occupied room per day - was up 27% from a year before.
IHG said Americas and EMEAA regions saw sequentially improved trading in February and March after a challenging January. However, in Greater China, trading in March was hurt by the tightening of localised travel restrictions following a spike in Covid-19 cases.
In Greater China, first-quarter RevPAR was down 7% from the first quarter of 2021 and down 42% from the same period in 2019.
IHG did not provide RevPAR figures, only percentage changes.
"The high level of demand we have seen for leisure travel continues to drive increased rates and occupancy. We also continue to see a return of business and group travel, further supporting RevPAR improvements in many of our key urban markets," said Chief Executive Officer Keith Barr.
"As occupancy levels rise and due to the strength of our brands, our hotels are seeing increased pricing power; in March, our hotels in the US achieved leisure rates up by more than 10% on 2019 levels and rate across the whole of the US business was 4% ahead. Trading in Greater China continues to be impacted by restrictions put in place to control rising Covid cases," Barr added.
International Consolidated Airlines Group said demand for travel is recovering strongly in line with its previous expectations as the British Airways parent posted a narrowed first-quarter loss.
For the three months ended March 31, IAG reported a pretax loss of EUR787 million, narrowed from EUR1.07 billion in the first quarter last year, as total revenue more than tripled to EUR3.44 billion from EUR968 million.
IAG said the continued easing of government-imposed travel restrictions, particularly in the UK, resulted in improved travel demand, with no noticeable hit from the war in Ukraine. In addition, IAG - which also owns Iberia and Aer Lingus - said premium leisure continues to be the strongest performing segment and business travel is at its highest level since the start of the pandemic.
As such, IAG said it expects to be profitable from the second quarter onwards and for the full year of 2022.
"As a result of the increasing demand, forward bookings remain encouraging. We expect to achieve 80% of 2019 capacity in the second quarter and 85% in the third quarter. North Atlantic capacity will be close to fully restored in the third quarter," said CEO Luis Gallego.
"The group's operating loss reduced significantly in the first quarter compared to last year, with our losses reflecting normal seasonality, the impact of Omicron and costs associated with ramping up operations," Gallego added.
Spirent Communications said it has seen an encouraging start to the year with 18% order growth for the three months to March 31.
Spirent said it continues to secure many large 5G contract wins as the development of the technology and network deployments remain solid long-term drivers that underpin growth.
"As expected, we have continued to see inflationary pressures and a volatile supply chain environment. However, our resilient business model, together with our active mitigation of these pressures, mean that our expectations for the full year remain unchanged," the company said.
Calls for a lower open in London come after a sell-off in New York on Thursday. The Dow Jones Industrial Average closed down 3.1%, the S&P 500 down 3.6%, and the Nasdaq Composite down 5.0%.
In Asia on Friday, the Shanghai Composite was down 1.8%, while the Hang Seng index in Hong Kong was down 3.6%. The S&P/ASX 200 in Sydney ended down 2.2%. In Tokyo, the Nikkei 225 index closed up 0.7%, bucking the trend, having reopened on Friday after being closed for public holidays for most of the week.
There was some relief after the Federal Reserve on Wednesday lifted borrowing costs 50 basis points - the most since 2000 - but said a feared 75-point lift was not on the agenda for now.
However, investors were spooked on Thursday as they contemplated a period of fierce monetary tightening by the US central bank to contain inflation running at a more than 40-year high.
Adding to the selling pressure was weakness in China's economy, caused by strict lockdowns and other containment measures as officials struggle to bring a Covid flare-up under control by sticking to a zero-Covid policy.
"Today's European open is set to be a slightly weaker one ahead of today's US jobs report for April, as financial markets become increasingly concerned about the outlook for the US economy, as well as the wider global economy," said CMC Markets analyst Michael Hewson.
The pound was quoted at USD1.2347 early Friday, up from USD1.2331 at the London equities close Thursday.
The euro was priced at USD1.0518, unmoved against USD1.0516. Against the yen, the dollar was trading at JPY130.55, up from JPY130.30.
Brent oil was quoted at USD111.72 a barrel Friday morning, up from USD110.84 late Thursday. Gold stood at USD1,876.18 an ounce, lower against USD1,881.76.
Friday's economic calendar has UK construction PMI at 0930 BST and the monthly US jobs report at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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