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(Alliance News) - London's FTSE 100 is called to open lower on Friday, with hawkish remarks from Federal Reserve policymakers and fears of ratcheting Middle East tensions giving investors little to cheer about ahead of the latest US jobs data.
Confidence in three rate cuts from the Federal Reserve this year, beginning in June, is being tested by a string of recent data indicating the US economy remains in rude health, while bank officials have done little to soothe concerns.
Minneapolis Fed chief Neel Kashkari said Thursday that there was a chance of no reductions this year, calling inflation figures in January and February "a little bit concerning" and adding that he wanted to see more positive data.
His Philadelphia counterpart Patrick Harker warned prices were still rising too sharply and that "we're not where we need to be", while Richmond boss Thomas Barkin called it "smart" to take time to get a clearer idea about the path for inflation.
Eyes now turn to Friday's nonfarm payrolls reading, at 1330 BST, which is expected to show the pace of jobs growth eased to 200,000 in March, from 275,000 in February, according to FXStreet.
In the Middle East, meanwhile, Israeli Prime Minister Benjamin Netanyahu has threatened consequences in the event of an Iranian attack on his country. Fears of rising tensions there sent Brent above USD91 a barrel.
In early UK corporate news, Shell set out a somewhat mixed first-quarter in its customary pre-results outlook note. Car dealership software provider Pinewood Technologies set out a returns plan.
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 0.9% at 7,901.69
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Hang Seng: flat at 16,731.52
Nikkei 225: down 2.0% at 38,992.08
S&P/ASX 200: down 0.6% at 7,773.30
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DJIA: closed down 1.4% at 38,596.98
S&P 500: closed down 1.2% at 5,147.21
Nasdaq Composite: closed down 1.4% at 16,049.08
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EUR: down at USD1.0827 (USD1.0865)
GBP: down at USD1.2615 (USD1.2667)
USD: down at JPY151.29 (JPY151.67)
GOLD: down at USD2,277.80 per ounce (USD2,292.67)
(Brent): up sharply at USD91.13 a barrel (USD89.13)
(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 BST eurozone construction PMI
10:00 BST eurozone retail sales
09:30 BST UK construction PMI
13:30 BST US nonfarm payrolls
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Annual growth in UK house prices slowed last month, and they went back into decline on a monthly basis, numbers from mortgage lender Halifax showed. UK house price growth ebbed to 0.3% year-on-year in March, Halifax said, from a 1.6% hike in February. Prices fell 1.0% in March from February. They had risen 0.3% in February from January. It was the first monthly fall since September, while the annual reading was the tamest since November. "That a monthly fall should occur following five consecutive months of growth is not entirely unexpected, particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022. Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs," Halifax analyst Kim Kinnaird commented. "Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates. This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly."
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A pre-Easter bank holiday surge in UK properties coming on the market has been recorded by a website. Rightmove said the Thursday immediately before the Easter bank holiday weekend was the biggest day for new home-sellers coming to market so far this year. Thursday March 28 2024 was also the third-biggest day for new property listings since August 2020, with Boxing Day in 2022 and 2023 being the only days with more properties coming to market in one day, Rightmove said. There were 45% more homes added to Rightmove on March 28 than on the previous Thursday.
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Ireland's ministers for finance and public expenditure have said there are no plans to bring forward a mini-budget as Simon Harris prepares to be named as the next taoiseach on Tuesday. Harris, who is currently the minister for further & higher education, said he plans to "flesh out" his priorities for his tenure during the Fine Gael Ard Fheis being held this weekend. He has previously mentioned costs facing small businesses, farmers and crime among the areas he wants to focus on. Minister for Finance Michael McGrath said the focus was still on implementing the budget announced last October.
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Planned strikes by London Underground drivers have been called off. Members of Aslef were due to walk out on Monday April 8 and Saturday May 4. The union said that after a series of meetings at the conciliation service Acas, its negotiating team has received a proposal that resolves the key issues in the dispute. An official said: "Management have confirmed that they have disbanded their 'Trains Modernisation' team and will not be implementing their plans to change drivers' working arrangements without agreement. "They have also agreed to reinstate annual refresher training stopped during the pandemic." Acas director of dispute resolution Kate Nowicki said: "After intense discussions, we are pleased that there is a proposed agreement and that we have been able to make a positive impact. We thank the parties for their hard work and commitment throughout the negotiations."
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BROKER RATING CHANGES
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RBC reinitiates Direct Line with 'sector perform' - price target 200 pence
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COMPANIES - FTSE 100
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Oil major Shell announced results from its Integrated Gas arm in the first-quarter are expected to be "significantly lower" than in the fourth, and it said it expects write-offs worth USD600 million in its Upstream division. Shell expects Integrated Gas adjusted earnings before tax and depreciation between USD1.2 billion and USD1.6 billion. "Trading & optimisation results are expected to be strong, but significantly lower than an exceptional Q4," it cautioned. In Upstream, it warned of USD600 million in exploration well write-offs, largely in Albania. Elsewhere, in Chemicals & Products, "trading & optimisation is expected to be significantly higher" than a quarter earlier. In Renewables & Energy Solutions, it has an adjusted earnings outlook ranging from a USD100 million loss to a USD500 million profit.
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AstraZeneca said its Imfinzi treatment boosted survival of patients suffering a form of small cell lung cancer. A trial of the drug showed a "clinically meaningful improvement in the dual primary endpoints" of overall survival, and progression-free survival, the latter being the time a sufferer lives with the disease without it getting worse. The Adriatic phase 3 trial involved sufferers of limited-stage small cell lung cancer, who had not progressed following concurrent chemoradiotherapy. "Small cell lung cancer is a highly aggressive form of lung cancer that typically recurs and progresses rapidly despite initial response to chemotherapy and radiotherapy in LS-SCLC patients. The prognosis is particularly poor for LS-SCLC, as only 15-30% of these patients will be alive five years after diagnosis," AstraZeneca said. It added: "These data will be presented at a forthcoming medical meeting and shared with global regulatory authorities."
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COMPANIES - FTSE 250
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Lender OSB Group named Victoria Hyde as its chief financial officer, with effect May 10. Hyde had joined OSB as deputy CFO back in September 2022. "Prior to joining OSBG, during a 21-year career at Barclays, Victoria undertook several complex roles across product control, treasury finance and financial planning & analysis. Most recently, she served as Finance Director of the Barclays consumer, cards and payments businesses," the firm added. OSB back in November said April Talintyre was to retire as CFO, though at the time, it did not confirm when.
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OTHER COMPANIES
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Pinewood Technologies said it is plans to return GBP358 million to shareholders through a special dividend of 24.5 pence per share. The car dealership management software provider is also proposing
capital reorganisation to reduce the number of shares in issue. Back in February, Pendragon completed the sale of its dealership and leasing business to Lithia Motors, marking the beginning of its transformation into Pinewood. The sale was worth GBP367 million and was made alongside a subscription by Lithia for 279.4 million new shares for GBP30 million in total.
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By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
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