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(Alliance News) - Stocks in London are likely to open lower on Friday, with investors feeling frosty ahead of a US inflation print this afternoon, amid sobering UK economic growth data.
Investors are keeping an eye on a key US personal consumption expenditures price index print on Friday. It is the Federal Reserve's preferred metric of inflation.
According to FXStreet, the core PCE index is expected to cool to 3.3% in November year-on-year, from 3.5% in October. The core reading, the Fed's preferred inflation gauge, does not include food or energy.
"Today's inflation print is the Fed puzzle's last crucial piece. If today's PCE print comes in as soft as expected, or ideally softer-than-expected, we shall see the rally in bonds – and perhaps in stocks – extend the Santa rally," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
In early UK news, the Office for National Statistics reported that estimates of growth in the UK in the third and second quarters were downgraded, with a slight contraction seen in the third quarter. More positively, though, retail sales unexpectedly rose in November.
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 0.2% at 7,677.33
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Hang Seng: down 1.7% at 16,334.50
Nikkei 225: closed up 0.1% at 33,169.05
S&P/ASX 200: closed down marginally at 7,501.60
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DJIA: closed up 322.35 points, 0.9%, at 37,404.35
S&P 500: closed up 48.40 points, 1.0%, at 4,746.75
Nasdaq Composite: closed up 185.92 points, or 1.3%, at 14,963.87
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EUR: up at USD1.0997 (USD1.0988)
GBP: down at USD1.2691 (USD1.2734)
USD: down at JPY142.27 (JPY142.35)
Gold: up at USD2,048.02 per ounce (USD2,040.66)
Oil (Brent): up at USD80.01 a barrel (USD79.05)
(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 GMT Ireland WPI
12:30 GMT UK Christmas Eve: financial markets close early
08:30 EST US personal income and outlays
10:00 EST US state personal income
10:00 EST US University of Michigan survey of consumers
10:00 EST US new residential sales
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UK retail sales unexpectedly rose in November, new figures showed, but estimates on growth in the UK in the third and second quarters were downgraded. According to the Office for National Statistics, retail sales rose by 0.1% annually in November, following a 2.5% drop a month earlier. The November read was better than feared, with markets expecting a 1.3% decline, according to FXStreet-cited consensus. From November to October, retail sales jumped by 1.3%, after being unchanged month-on-month in October. October's figure was revised from a 0.3% fall in October. Markets were expecting a 0.4% increase in November.
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The ONS reported second estimates for gross domestic product growth in the UK. In the third quarter, the ONS estimates that registered a 0.1% fall quarter-on-quarter, having previously estimated that growth was stagnant. In the second quarter, the economy saw no growth from the first quarter, revised down from a 0.2% expansion. On an annual basis, GDP grew 0.3% in the third quarter, halved from the prior estimate of 0.6%.
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BROKER RATING CHANGES
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Berenberg raises M&G price target to 225 (208) pence - 'hold'
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COMPANIES - FTSE 100
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HSBC said the sale of its business in Canada to Royal Bank of Canada has received approval from the Canadian minister of finance, enabling the deal to proceed. HSBC and RBC announced had announced the agreement in November last year. Toronto-headquartered RBC will buy all the shares of HSBC Bank Canada for CAD13.5 billion, around USD10.16 billion, in cash. "HSBC and RBC continue to make progress on implementation, and the transaction is expected to close in the first quarter of 2024. HSBC remains committed to considering the payment of a special dividend of USD0.21 per share as a priority use of the proceeds from this sale in the first half of 2024," the Asia-focused lender said on Friday.
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AstraZeneca celebrated the news that eplontersen was approved by the US Food & Drug Administration. AstraZeneca developed the medication with Ionis Pharmaceuticals. Cambridge, England-based AstraZeneca said eplontersen, brand name Wainua, is now authorised in the US to treat the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adults, commonly referred to as hATTR-PN or ATTRv-PN. The pharmaceutical company said the approval was based on positive interim results from the NEURO-TTRansform Phase 3 trial.
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COMPANIES - FTSE 250
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Octopus Renewables Infrastructure Trust proposed a combination with Aquila European Renewables. It said that this would "create one of the largest LSE-listed diversified renewable energy investment trusts", with a market capitalisation of about GBP745 million. Octopus Renewables said it has sought on "several occasions" during 2023 to engage with Aquila, approaches were initially made in March and May, and most recently in November. "Against this backdrop and the strong rationale for the proposed combination, over the past few days, ORIT has consulted with a number of AERI shareholders, receiving support for the boards of ORIT and AERI to enter substantive discussions regarding the proposed combination. Since the shareholder consultation, ORIT has again contacted the board of AERI to seek to progress discussions regarding the proposed combination and looks forward to further expected interaction over the coming weeks," it said.
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OTHER COMPANIES
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Shares in Shenzhen-based technology and entertainment conglomerate Tencent were down 15% in Hong Kong. China on Friday announced new plans to restrict the online gaming industry by limiting in-game purchases and compulsive playing behaviour. The regulations would introduce limits on recharging in-game wallets and abolish features meant to increase gameplay time such as rewards for daily log-ins, a draft published online by the regulator showed.
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The Co-operative Bank and Coventry Building Society have entered into talks over a possible merger of the two high street lenders. Co-op Bank on Thursday said it had begun "exclusive discussions" with the building society in order to "evaluate the merits of a combination" of the firms. It follows speculation this year over a string of potential bidders for the lender which has turned around its financial performance and recovered its profits. Potential bidders for the group were thought to at one stage include specialist lenders Shawbrook and Aldermore. The bank is no longer part of the wider Co-operative Group after parting ways in 2017 when it fell into deep financial difficulty. It is now owned by a group of private equity investors including US-based JC Flowers and Bain Capital Credit who bought a stake in 2021.
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tinyBuild late Thursday confirmed it raised USD12.0 million from a placing and subscription of new shares at 5 pence each and expects to raise USD2.2 million more from an open offer to existing shareholders. The equity raise was underwritten by tinyBuild Chief Executive Officer Alex Nichiporchik, whose stake in the Seattle, Washington-based video game developer and publisher may rise to as high as 59% from the current 37.8%, depending on take-up of the open offer, which will be on the basis of one new share for every six already held. Also, taking part in the equity raise was French videogame firm Atari, which bought USD2.0 million worth of new shares. "tinyBuild is an amazing company, with industry leading games and benefiting from an expansive fan base," said Atari Chair & CEO Wade Rosen. "Atari is excited to participate in the current capital transaction as tinyBuild's approach to the indie games market is in line with Atari's long-term approach." tinyBuild calls special meeting of shareholders for January 18 to approve the raise.
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By Sophie Rose, Alliance News senior reporter
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