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(Alliance News) - Stocks in London are seen opening higher on Friday following gains in the US overnight as markets look to recover from the hit taken this week after hawkish tones from the Federal Reserve.
In early company news, online trading company CMC Markets expects income at the top of guidance after a strong performance in the fourth quarter. Speciality chemicals company Johnson Matthey expects annual results in line with forecasts. Ukraine-focused iron ore pellet producer Ferrexpo reported a quarter-on-quarter fall in production.
IG futures indicate the FTSE 100 index is to open 41.39 points higher at 7,593.20. The index closed down 35.89 points, or 0.5%, at 7,551.81 Thursday.
CMC Markets said the fourth quarter was the strongest quarter of its recently ended financial year, leaving annual net operating income at the top end of guidance at around GBP280 million.
CMC said active monthly trading client numbers continue to remain at similar levels as reported earlier in the year. Its APAC stockbroking business finished financial 2022 with record assets under administration and a record number of annual active clients.
Operating costs for the year ended March 31, excluding variable remuneration, are expected to be GBP173 million, up from GBP168 million the year before. The increase primarily reflects higher personnel costs to deliver strategic objectives, CMC explained.
The company also said CMC Invest, its UK non-leveraged platform, has already launched internally with the full market release set for mid-2022. The platform is ahead of schedule and on budget, it noted.
Looking ahead, CMC said financial 2023 will be another year of investment in strategic initiatives, which it said aims to deliver future revenue growth. In addition to the incremental investment, 2023 costs are expected to grow with higher marketing spend and further investment in personnel, it added.
"I am delighted to report another year of strong performance both strategically and financially. Outside of the pandemic year (Financial year ending March 2021), this is a record net operating income result for the company. The performance reflects the ongoing success of our B2B technology partnerships and focus across our leveraged and non-leveraged businesses," said Chief Executive Officer Peter Cruddas.
Johnson Matthey said it expects to report full year results in line with market expectations, buoyed by good performances from its Clean Air and Efficient Natural Resources units.
The speciality chemicals company said growth was driven by improved performance in Clean Air, where it saw increased activity in autos as end markets partially recovered and support from the continued delivery of its transformation programme.
The Efficient Natural Resources arm had a strong year, it said, with operating performance expected to be materially above the prior year, driven by PGM Services which benefited from higher average precious metal prices.
For the year ended March 31, average rhodium, platinum and palladium prices were up 29%, 11% and 6% year-on-year respectively.
In Hydrogen Technologies, the performance reflected investment and scale up of this business.
Johnson Matthey added that the Health unit was below expectations and, as previously announced, it agreed the disposal of this business which is expected to complete in mid-2022.
Looking ahead, Johnson Matthey said it was entering a period of "greater political and economic uncertainty" with both the ongoing disruptive effects of Covid-19 and the impacts of the conflict in Ukraine.
The company said: "We expect continued supply chain disruption for our automotive customers, increased cost inflation which we will seek to recover through pricing and efficiencies, and continued near-term market volatility. We are navigating this challenging period with a strong focus on enhancing our overall efficiency and disciplined execution of our strategic priorities.
"Longer term we expect the current geopolitical situation to drive a significant acceleration towards a net zero carbon economy, with corresponding investment to position us for the significant growth opportunities from our sustainable technology portfolio."
Ferrexpo reported total iron ore pellet production of 2.7 million tonnes in the first quarter of 2022, in line with the same period in 2021, and 11% below the fourth quarter due to operational and logistical constraints following Russia's invasion of Ukraine.
Ferrexpo said production continued to comprise entirely of high grade forms of iron ore, which are those with an iron ore grade of 65% Fe or above. It also generated first-quarter sales of 2.6 million tonnes, scaling production activities to meet accessible pellet demand.
Logistics pathways to Europe via rail and barge remain open, while activities at the Black Sea port of Pivdennyi continue to be suspended, it explained.
Chief Executive Officer Jim North said: "Our operations and local communities are outside the main conflict zones within Ukraine, enabling us to continue our activities, including the delivery of iron ore pellets to customers in Europe via rail and barge, which have historically represented approximately 50% of sales. The port of Pivdennyi in southwest Ukraine, where the Group's berth is located, remains closed, and we are reviewing alternative methods of delivering our products to seaborne markets."
In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.3%, S&P 500 up 0.4% and Nasdaq Composite up 0.1%.
In Asia on Friday, the Japanese Nikkei 225 index closed up 0.4%. In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was down 0.3%. The S&P/ASX 200 in Sydney ended up 0.5%.
As well as hawkish Fed minutes, the war in Ukraine also weighed on markets on Thursday.
"Scepticism around progress on peace talks between Russia and Ukraine also didn't help with Ukrainian President Zelensky accusing the Kremlin leadership of not being serious about them. Given the behaviour of Russia's soldiers towards Ukrainian citizens and the increasing evidence of atrocities that probably isn't surprising. This is because any peace deal would need to deal with this horrific issue, as a priority, which would mean that Russia would have to acknowledge culpability, something that they have to do," said CMC Markets analyst Michael Hewson.
He added: "As we look to today's European open, because of the positive finish in US markets last night we look set for a positive open, however as far as the weekly performance is concerned it's a more mixed picture."
US Congress voted Thursday to end normal trade relations with Moscow, as the White House ratcheted up pressure on President Vladimir Putin over his invasion of Ukraine. The legislation – which also applies to Russia's ally Belarus and enables President Joe Biden to inflict steep tariff hikes on imports – passed the Senate unanimously before being rubber-stamped by the House of Representatives.
The EU on Thursday said it had approved an embargo on Russian coal and the closing of the bloc's ports to Russian vessels over the Ukraine war. An official from the French presidency of the European Council said the moves spearhead a "very substantial" fifth round of sanctions against Moscow.
That package also includes a EUR10 billion ban on exports to Russia, including high-tech goods, and the freezing of several Russian banks' assets. In addition to the sanctions, the EU also backed a proposal to boost its funding of arms supplies to Ukraine by EUR500 million, taking it to a total of EUR1.5 billion.
The euro was priced at USD1.0862, down from USD1.0900. Against the yen, the dollar was trading at JPY124.00 in London, up from JPY123.85.
The pound was quoted at USD1.3062 early Friday, up from USD1.3057 at the London equities close Thursday.
UK Prime Minister Boris Johnson is set to meet German Chancellor Olaf Scholz as they look to discuss how to help European countries wean themselves off Russian gas following the attack on Ukraine.
The PM will host Scholz at Downing Street on Friday, with a press conference planned for the afternoon. Johnson is expected to offer assistance to Berlin, which is still heavily reliant on Russian gas, to reduce its dependence on Moscow's energy exports in a bid to starve Vladimir Putin's war machine of funds.
The UK has pledged to end all imports of Russian coal and oil by the end of 2022, with gas to follow as soon as possible.
Brent was quoted at USD101.00 a barrel on Friday morning, up from USD99.08 a barrel Thursday evening. Gold stood at USD1,930.02 an ounce, soft against USD1,931.30.
The main data print on a quiet Friday will be wholesale inventories from the US at 1500 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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