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(Alliance News) - Stocks in London were called higher on Friday, ahead of a key inflation reading in from the US.
Friday's economic calendar has the US personal consumption expenditures data at 1330 GMT.
"Investors will also be paying close attention to the January core PCE deflator numbers, which is the Fed's preferred inflation measure, and which has fallen back sharply in the last few months from 5.2% in September, falling to its lowest level since October 2021 in December at 4.4%," said CMC Markets analyst Michael Hewson.
"The sharp fall from those peaks certainly helped drive the disinflation narrative that got the markets speculating that we might start to see some of the recent rate hikes start to get reversed before the end of this year before the January payrolls report blew that bit of wishful thinking out of the water," Hewson added.
Core PCE is expected to fade to 4.3% in January, from 4.4% in February.
Hewson added: "Given the strength of recent economic data, today's January numbers may call time on the trend of lower prices."
Meanwhile, official figures showed the German economy shrunk by 0.4% in the fourth quarter of 2022, which was worse than a preliminary estimate of a 0.2% contraction.
In early corporate news, British Airways parent International Consolidated Airlines swung to an annual profit, while Cineworld confirmed its reorganisation plans will likely entail no value being returned to its shareholders.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.2% at 7,921.72
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Hang Seng: down 1.2% at 20,103.11
Nikkei 225: closed up 1.3% at 27,453.48
S&P/ASX 200: closed up 0.3% at 7,307.00
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DJIA: closed up 108.82 points, or 0.3%, at 33,153.91
S&P 500: closed up 0.5% at 4,012.32
Nasdaq Composite: closed up 0.7% at 11,590.40
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EUR: up at USD1.0599 (USD1.0593)
GBP: flat at USD1.2022 (USD1.2023)
USD: down at JPY134.67 (JPY134.72)
GOLD: up at USD1,824.61 per ounce (USD1,821.05)
OIL (Brent): up at USD82.93 a barrel (USD81.71)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
08:30 EST US weekly export sales
08:30 EST US personal income and outlays
10:00 EST US new residential sales
10:00 EST US University of Michigan survey of consumers
11:30 EST US FRB St. Louis President James Bullard speaks
16:30 GMT US BOE Monetary Policy Committee member Silvana Tenreyro speaks
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The German economy saw a worse contraction than initially thought in the final quarter of 2022. According to Destatis, German gross domestic product fell by 0.4% in the fourth quarter from the previous quarter, worsening from a preliminary forecast of a 0.2% contraction. In the third quarter, GDP grew 0.5% from the second quarter. The German economy had grown 0.1% in the second quarter and 0.8% in the first. On an annual basis, the German economy grew 0.9% in the fourth quarter, slowing from 1.4% annual growth seen in the third quarter.
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The shift to electric car production has continued in the UK, figures showed. The Society of Motor Manufacturers & Traders reported that combined battery electric, plug-in hybrid and hybrid electric vehicle production increased by almost 50% last month compared with a year ago. The total of 28,329 represented more than four in every 10 cars made in January, a near-record monthly share. The society said total car production was "stable" last month, with output down by 0.3% to 68,575, equivalent to 215 fewer cars.
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UK consumer confidence has made a surprise rebound from historic lows despite ongoing cost-of-living woes, figures show. GfK's long-running consumer confidence index rose by a significant seven points in February, although the headline score remains at a "severely depressed" negative 38. Confidence in the general economic situation over the next 12 months is up by 11 points but remains at negative 43 and on a par with last February.
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Boris Johnson declined to say whether he would back any new deal negotiated by UK Prime Minister Rishi Sunak on the Northern Ireland protocol, as talks continue between the UK and EU. The former prime minister pitched the Northern Ireland protocol bill, put forward by his administration and which effectively rips up parts of the agreement with Brussels, as the best solution as he declined to say whether a new deal would have his support. Johnson, who sits on the backbenches but who retains a loyal following within the Conservatives, appeared to warn against any settlement that would create "other problems". It comes as negotiations between London and Brussels continue, following talks between Northern Ireland Secretary Chris Heaton-Harris and the EU's Maros Sefcovic in Belgium on Thursday.
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BROKER RATING CHANGES
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Goldman Sachs raises SSE price target to 2,343 (2,189) pence - 'buy'
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Barclays raises Howden Joinery price target to 800 (715) pence - 'overweight'
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COMPANIES - FTSE 100
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International Consolidated Airlines Group said annual revenue in 2022 was EUR23.07 billion, up from EUR8.46 billion a year before. The British Airways parent swung to a pretax profit of EUR415 million from a EUR3.51 billion loss. The strong recovery was driven by sustained leisure demand and the reopening of markets, IAG said. The firm said forward bookings are "robust", and it expects pre-exceptional annual operating profit to be between EUR1.8 billion and EUR2.3 billion in 2023. "However, we are mindful of uncertainty in the macro environment and fuel and non-fuel cost inflation," IAG said. On Thursday, the firm had announced the acquisition of Air Europa for EUR500 million from the Spanish company Globalia. "This acquisition will enable us to grow Madrid as a hub, offering a gateway to Latin America and beyond," Chief Executive Luis Gallego said.
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COMPANIES - FTSE 250
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Jupiter Fund Management said, at December 31, assets under management fell 17% year-on-year to GBP50.2 billion from GBP60.5 billion. Pretax profit plunged 68% over in 2022 to GBP58.0 million. The London-based investment manager blamed macro-economic events, which hit market valuations and investor sentiment. The second half was more positive, with positive net inflows for the first time since 2017. The fund cut its dividend to just 8.4 pence, from 17.1p in 2021. It extended its share buyback programme by up to GBP16 million, bringing the total programme to GBP26 million.
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OTHER COMPANIES
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Veterinary services provider CVS Group said revenue in the half-year ended December 31 rose 8.2% year-on-year, to GBP296.3 million from GBP273.7 million. Pretax profit jumped 22% to GBP28.0 million from GBP22.9 million. CVS said the veterinary market remains "resilient", seeing strong demand. It is confident its annual results will be in line expectations.
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Cineworld said it has received non-binding proposals from a number of counterparties for some or all of its businesses. "None of these proposals involves an all-cash bid for the entire business," the beleaguered cinema chain confirmed. At present, Cineworld said that none of the proposals received to date would provide "any recovery" for holders of its equity interests. Cineworld said there is unlikely to be sufficient creditor support for any reorganisation plan that includes any recovery of shareholder value. It now expects to emerge from Chapter 11 proceedings in the first half of the year. Business operations continue as usual, the firm said.
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By Elizabeth Winter, Alliance News senior markets reporter
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