(Alliance News) - Stock prices in London are seen treading water on Friday, as traders nervously await the latest US nonfarm payrolls report, in the wake of Wednesday's hawkish Federal Reserve minutes which hit US stocks overnight again.
IG futures indicate the FTSE 100 index is to open 3.5 points, or 0.1%, lower at 7,446.87. The blue-chip index closed down 66.50 points, 0.9%, at 7,450.37 on Thursday. So far this week, the FTSE has advanced 0.9%, however.
In UK corporate news, Royal Dutch Shell said it will continue a share buyback scheme at speed, as the oil major provided a fourth-quarter update. The statement also featured a warning on the timing of payments related to emission schemes.
Luxury carmaker Aston Martin Lagonda warned earnings will be slightly below forecasts, due to fewer deliveries of its hypercar than expected, while motor retailer Lookers tipped annual profit to top market expectations.
Shell said it will continue to distribute the remaining USD5.5 billion proceeds from its Permian assets divestment through share buybacks. These distributions will be made "at pace", it said.
"The Permian related distributions are in addition to the distributions of 20% to 30% of cash flow from operations as per our existing capital allocation framework. Further details of the amount and pace of total shareholder distributions will be disclosed at the fourth quarter results announcement," Shell added.
It will release full quarterly results on February 3.
Elsewhere in the fourth quarter note, Shell warned on "significant outflows" of cash from operations in its Integrated Gas arm.
"[Cash flow from operations] excluding working capital is expected to have significant outflows from variation margin impacts on the back of the prevailing gas and electricity price environment, including the unprecedented gas price volatility at the end of the fourth quarter," the company said.
However, trading results from the unit are tipped to be "significantly higher" quarter-on-quarter. This is despite "ongoing supply issues".
On its oil products arm, Shell added: "Marketing results are expected to be in line with the fourth quarter 2020 but lower compared with the third quarter 2021 due to seasonal trends, the demand impact due to the Omicron virus and foreign exchange impacts in Turkey."
Cash flow from operations at the unit will be hit by USD1 billion worth of outflows, however. This is down to the timing of payments related to emission schemes on product sales in both Europe and North America.
Carmaker Aston Martin said its adjusted earnings before interest, tax, depreciation and amortisation will be GBP15 million lower than anticipated.
The luxury automaker said 10 of its Aston Martin Valkyrie and Valkyrie AMR Pro vehicles were shipped in the fourth quarter, fewer than planned.
"The impact is timing only, all Aston Martin Valkyrie coupes are sold and remain allocated to customers with significant deposits. An associated reduction in 2021 depreciation and amortisation is expected to result in a broadly net neutral impact on adjusted operating profit. This timing change will see deliveries and the associated Ebitda continue through 2022 as planned and now through 2023," Aston Martin added.
Beyond hypercars, Executive Chair Lawrence Stroll said he was "extremely pleased" by Aston Martin's core business.
Wholesales - meaning deliveries to dealers - grew 82% to 6,182 in 2021, in line with plans. Meanwhile, retails - dealer sales to customers - outpaced wholesales.
"I am extremely pleased that our core business has delivered to plan with over 6,000 core wholesales in the year whilst driving inventory to levels that are appropriate for an ultra-luxury business. The evidence is there that our strategy is working, as retail sales are well ahead of wholesales supported by strong pricing and improving residual values. It is a very long time since the core business was in such good health as it is today," Stroll said.
"With a full year of DBX deliveries completed and our compelling product pipeline, including a new generation of front-engine sports cars in 2023, I am more assured than ever of achieving our medium-term objectives of revenues of GBP2 billion and adjusted Ebitda of GBP500 million by 2024-25."
Car dealer Lookers said it expects "record" underlying pretax profit in 2021, ahead of company compiled market consensus of GBP82 million.
It plans to restore its dividend alongside its 2021 results, which will be published on April 13.
The results will include a strategy update. Lookers began a strategic review back in October.
In the fourth quarter of 2021, aftersales revenue rose 7.1% annually on like-for-like basis. Like-for-like new retail unit sales increased by about 2.0%, though used unit sales were down roughly 14%.
"The group has had an exceptional year in 2021 and is starting 2022 with an excellent new car order bank. However, given ongoing global supply chain disruptions, uncertainty as to the availability of new vehicles and the sustainability of used car margins at current levels, the board believes it is right to remain cautious," Lookers added.
Shares in AdvancedAdvt will be suspended from trading in London from Friday, as the investor confirmed it is pursuing an share-exchange merger with M&C Saatchi. This would constitute a reverse takeover of M&C Saatchi by AdvancedAdvt, which this week bought a 9.8% stake in the ad agency.
Market focus will be on the US nonfarm payrolls report for December, released at 1330 GMT. Elsewhere, Friday's economic calendar has eurozone inflation at 1000 GMT.
"After this week's hawkish FOMC meeting minutes, traders are now pricing in more than a 70% chance of a rate hike in March, meaning that the next three NFP reports could well determine if interest rates lift off in about two months or closer to four when the Fed meets in May," analysts at Forex.com commented.
"After nearly two full years of ZIRP (zero interest rate policy) from the Federal Reserve, interest rate increases are nigh, and market volatility is likely to pick up from here."
Tokyo's Nikkei 225 closed fractionally lower on Friday, though the S&P/ASX 200 in Sydney added 1.3%. In China, the Shanghai Composite ended down 0.2%, while the Hang Seng in Hong Kong was up 1.7% in late trade.
The pound fetched USD1.3540 early Friday, firm on USD1.3534 at the London equities close on Thursday. The euro stood at USD1.1305, flat on USD1.1304. Against the yen, the dollar rose to JPY115.87 from JPY115.76.
Gold was quoted at USD1,790.17 an ounce early Friday, down slightly from USD1,791.00 late Thursday. A barrel of Brent oil changed hands at USD82.44, flat from USD82.42.
By Eric Cunha; ericcunha@alliancenews.com
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