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(Alliance News) - The FTSE 100 is set to make another underwhelming start on Friday, with concerns about events in the Middle East casting a dark cloud over markets.
US interest rate worries also continue to look, particularly in light Federal Reserve President Jerome Powell saying inflation is "still too high" despite a recent slowdown.
Additional evidence of "persistently above-trend growth," or a reversal of the recent decline in job openings and softening of wage growth could cause the Fed to reconsider its current rate pause, he told a conference in New York.
UK data, meanwhile, painted a tepid picture about the UK retail sector. Sales declined in September and consumer confidence plunged this month with the key festive period on the horizon.
In early UK corporate news InterContinental Hotels hailed buoyant UK travel demand, while kitchenware company ProCook is "cautious" heading into the festive trading period.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 0.6% at 7,453.53
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Hang Seng: down 0.7% at 17,169.75
Nikkei 225: down 0.5% at 31,259.36
S&P/ASX 200: down 1.1% at 6,900.70
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DJIA: closed down 250.91 points, or 0.8%, at 33,414.17
S&P 500: closed down 0.9% at 4,278.00
Nasdaq Composite: closed down 1.0% at 13,186.18
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EUR: down at USD1.0566 (USD1.0576)
GBP: down at USD1.2094 (USD1.2149)
USD: flat at JPY149.92 (JPY149.92)
GOLD: up at USD1,974.97 per ounce (USD1,952.66)
(Brent): up at USD93.03 a barrel (USD91.28)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
11:00 IST Ireland WPI
09:00 EDT US Fed Philadelphia President Patrick Harker speaks
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UK retail sales were markedly weaker than expected last month, hurt by cost-of-living pressure and unseasonably warm weather, numbers showed. According to the Office for National Statistics, retail sales volumes declined 1.0% year-on-year in September, easing from a 1.3% decline in August. However, retail sales had been expected to be flat on-year, according to FXStreet cited consensus. Retail sales declined 0.9% in September from August, falling short of consensus. A monthly decline of 0.1% was forecast, according to FXStreet. In August, retail sales had fallen 0.4% from July. "Non-food stores sales volumes fell by 1.9% in September 2023; retailers reported that the fall over the month was because of continuing cost of living pressures, alongside the unseasonably warm weather reducing sales of autumn-wear clothing," the ONS said. "Non-store retailing (predominantly online retailers) sales volumes fell by 2.2% in September 2023, following a fall of 0.9% in August."
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UK consumer confidence has plunged in the run-up to the festive season as uncertainties posed by conflict in the Middle East add to accelerating energy, fuel and mortgage costs. GfK's long-running consumer confidence index fell nine points to minus 30 in October, taking it back to a level last seen in July last year. The index's major purchase measure – an indicator of confidence in buying big ticket items – saw the sharpest drop of 14 points, in a significant turnaround from last month's four-point increase which will concern retailers in the run-up to Christmas.
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The UK's Labour party has dealt a double by-election blow to Prime Minister Rishi Sunak by overturning huge Tory majorities in Tamworth and Mid Bedfordshire. Keir Starmer claimed Labour was "redrawing the political map" by taking seats which had been comfortably Conservative ahead of the general election expected next year. In Tamworth, Labour's Sarah Edwards defeated Tory Andrew Cooper by a majority of 1,316. The Conservatives were defending a 19,634 majority, but a 24 percentage point swing to Labour saw that eradicated. Just half-an-hour later, there was even better news for Starmer as Mid Bedfordshire saw the largest majority overturned by Labour at a by-election since 1945.
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UK PM Sunak will travel to Egypt as part of an intensive diplomatic effort to prevent the Israel-Hamas war spiralling into a wider regional conflict. The PM has already held talks with Israeli counterpart Benjamin Netanyahu and Saudi Arabia's Crown Prince Mohammed bin Salman. Downing Street said he would hold further meetings with counterparts from the region in Egypt. "In all these conversations the prime minister has stressed the imperative of avoiding regional escalation and preventing the further unnecessary loss of civilian life," a No 10 spokesman said. The prime minister's continued tour of the Middle East comes as he faces domestic difficulties from the loss of two safe Tory seats in Westminster by-elections. The dangers of the Hamas conflict spilling over were illustrated as the US said one of its warships had intercepted cruise missiles and drones launched from Yemen "potentially towards targets in Israel".
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BROKER RATING CHANGES
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Bernstein cuts Just Eat Takeaway price target to 1,750 (2,400) pence - 'market perform'
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Goldman Sachs cuts Rentokil Initial price target to 685 (710) pence - 'neutral'
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COMPANIES - FTSE 100
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InterContinental Hotels Group said travel demand was "very healthy" in the third-quarter of 2023, with a key performance marker topping pre-pandemic levels once again. The owner of the Holiday Inn and Crowne Plaza hotel brands said its revenue per available room in the third-quarter rose 11% year-on-year. It delivered growth of 4.1% in the Americas region, 16% in the Europe, the Middle East, Asia & Africa segment and 43% in Greater China alone. Compared to 2019 levels, InterContinental Hotels Group said its revenue per available room was 13% higher in the third-quarter. "Travel demand remained very healthy during the quarter, and I would like to thank all our teams for supporting another strong trading period," Chief Executive Elie Maalouf said. "Greater China continued its excellent rebound with RevPAR now above 2019, which the Americas achieved in the second quarter of last year and EMEAA in the fourth quarter. Group-wide occupancy was 72%, just one percentage point behind 2019 which further confirms the near-complete return to pre‑Covid levels of demand. Pricing remained very robust." The company's 2023 share buyback programme of USD750 million is "94% complete". The firm added: "Having already returned USD500 million of surplus capital via the 2022 programme and USD750 million which is being returned over the course of 2023, the highly cash generative nature of our business model means we expect to have significant ongoing capacity to return further surplus capital to shareholders, both in the ordinary course and as we look to move leverage into our target range over time. The board's next assessment in relation to the amounts, mechanisms and timings of future capital returns will be carried out in early 2024, taking into account macro-economic conditions and the trading outlook at that time."
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OTHER COMPANIES
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Atlantic Lithium said it has been granted a mining lease for its flagship Ewoyaa lithium asset in Ghana, "enabling the advancement of the project towards commercial production". It is the first mining lease to be granted for lithium in Ghana, the firm explained. Atlantic Lithium has the right to carry out mining and commercial production activities over lease area for an initial 15-year period. Executive Chair Neil Herbert said: "As the first to be granted for lithium in the country, the award of the mining lease for the Ewoyaa lithium project is auspicious for both Ghana and Atlantic Lithium. It serves as Ghana's statement of intent to establish itself as a leading hub in Africa in the electric vehicle supply chain through the long-term production of lithium, with Atlantic Lithium as its partner of choice in this objective."
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Pots and pans seller ProCook said it remains "cautious" about its full-year outlook, despite feeling "well prepared" for the pivotal Christmas period. ProCook said revenue in the second quarter ended October 15 fell 1.8% on-year to GBP15.7 million. However, revenue was 0.8% higher on a "continuing business basis", excluding Amazon EU, where it discontinued sales last year. ProCook said: "The second quarter results reflect a strong Summer Sale performance during July and August, aided by considerably more favourable weather year on year. Trading in September and into early October has been markedly softer, with lower footfall and traffic, and customers increasingly seeking out greater value and promotional offers." ProCook, which generates around 60% of its full-year sales in the second half of its financial year, said it is "well prepared for this peak trading period". It added: "However, the board remains cautious with regards to the FY24 outlook given the highly challenging market conditions which persist, and the current trading volatility and sales trends over recent weeks, with customers seeking more value and taking more time to research before committing to purchase. Whilst forecasting the specific timing and pace of the market recovery is challenging, the board is confident it will recover given the attractive market dynamics. When it does recover, the board believes ProCook is well positioned to deliver improved financial performance and further market share gains given the strength of the brand and operating model."
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By Eric Cunha, Alliance News news editor
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