(Alliance News) - Stocks in London are set for a flat start on Friday, with the monthly US jobs report for March the day's key data point.
The US is expected to have added 490,000 jobs in March, according to FXStreet consensus, which would be down from 678,000 in February. The data is due out at 1330 BST.
Traders are likely to be "very cautious" ahead of the US report, said AvaTrade's Naeem Aslam.
"The range of US NFP estimates for today's number is wide, and it is expected to be anywhere between the 400K to the 600K mark. But we think the most important number is 500K. Meanwhile, anything lower than 250K, could throw the stock market out of balance and the Fed. That's because if the number comes out below the 250K reading, market players will begin to question the current aggressive stance from the Fed," said Aslam.
In contrast, a significant nonfarms beat could shore up the likelihood of a larger-than-normal 50 basis points interest rate hike from the Fed.
IG says futures indicate the FTSE 100 index of large-caps to open up 3.22 points at 7,520.70 on Friday. The FTSE 100 closed down 63.07 points, or 0.8%, at 7,515.68 on Thursday.
The dollar was on the front foot ahead of the jobs data.
Sterling was quoted at USD1.3124 early Friday, lower than USD1.3155 at the London equities close on Thursday. The euro traded at USD1.1051, down from USD1.1111 late Thursday. Against the yen, the dollar rose to JPY122.38 versus JPY121.43.
In early UK company news, Sanne reported a widened annual loss as its takeover by Apex progresses.
Net revenue for 2021 rose 14% to GBP194.2 million from GBP169.7 million in 2020, but the firm swung to a pretax loss of GBP2.2 million from a profit of GBP20.5 million a year ago.
Sanne booked non-underlying items of GBP50.8 million in the year, more than double the GBP24.1 million registered in 2020. These included costs related to its takeover by Apex.
"Whilst the acquisition represents a good outcome for Sanne shareholders, it has resulted in a significant amount of additional transaction related costs in 2021," the company said.
Apex had battled it out with Cinven for ownership of Sanne, and finally came to an agreement at 920 pence per share - a figure which was put forward by Apex in early August. The 920p deal values Sanne's entire issued share capital at GBP1.51 billion. The stock closed on Thursday at 914.00p.
"Despite the material distractions arising from well-publicised offers for the company during the year, 2021 has seen a strong financial performance from the group, with impressive double-digit growth and maintenance of healthy profit margins and cash conversion," the company said.
Sanne said it now expects the deal to complete either late in the second quarter or early in the third quarter of this year.
Stockbroker Numis said interim revenue is expected to decline on a record performance a year before, with the firm confident on the M&A outlook but more cautious on capital markets.
Revenue in the six months to the end of March is expected to be around GBP74 million, down 36% on the record performance achieved in the same period a year ago.
M&A and Growth Capital Solutions delivered "strong" revenue in line with a year ago, Numis said, but this was offset by a decline in equity capital markets activity across the industry which hurt Investment Banking performance.
The outlook for M&A in the second half is positive, with the London-based stockbroker and investment bank describing its pipeline as strong.
"The outlook for capital markets is less certain, however, markets have mostly recovered to levels apparent before the war in Ukraine, which gives us some confidence that market activity will recover to some extent during the second half. Whilst we do not anticipate IPOs to feature prominently in the near term, the current pipeline reflects the ambition of our broad corporate client base to finance their inorganic growth strategies," said Numis.
Peer Peel Hunt said it has traded ahead of revised analyst expectations following February's profit warning.
The UK investment bank said its Execution & Trading business finished the year strongly, and revenue for the financial year that ended Thursday is expected to be around GBP131 million.
This followed Peel Hunt in February warning that revenue for the year would be "marginally below" the bottom of guidance and annual earnings "commensurately lower" amid delays to its Investment Banking pipeline.
The company on Friday said Investment Banking delivered record revenue for the year despite slowing activity across global capital markets amid worries over inflation, interest rates, and the war in Ukraine. The pipeline of deals in this arm remains strong, though there is "heightened execution and timing risk" in the current environment.
In the US on Thursday, Wall Street ended in the red. The Dow Jones Industrial Average closed down 1.6%, the S&P 500 fell 1.6%, and the Nasdaq Composite declined 1.5%.
"Equities are selling off with no further progress in Russia/Ukraine talks and macro data supporting the stagflation narrative. A hot PCE inflation reading came in as expected but fused bearishly with a below [expected] personal spending printout, spelling stagflation and supporting the crash landing thesis," said Stephen Innes, managing partner at SPI Asset Management.
Figures from the Bureau of Economic Analysis on Thursday showed inflationary pressures in the US accelerated in February, though at a slower pace than expected.
The personal consumption expenditures price index accelerated to 6.4% yearly in February from 6.0% in January. February's figure came in below market estimates of 6.7%.
Core PCE, which excludes food and energy and is the Federal Reserve's preferred inflation measure, accelerated to 5.4% yearly in February from 5.2% in January. The core PCE figure undershot an FXStreet-cited market estimate of 5.5%.
Personal consumption expenditures rose 0.6% monthly in February, slowing from 0.5% in January. Monthly core PCE growth ebbed to 0.4% in February from 0.5% in January.
Russia threatened Thursday to turn off its gas taps to Europe, opening up a new front in its war in Ukraine, amid growing scepticism over Moscow's claim it is scaling back its onslaught.
Over a month into Russia's invasion of its neighbour, Vladimir Putin's troops have devastated cities such as Mariupol with shelling, killing at least 5,000 people in the port city alone. But they have struggled to take any significant territory.
Moscow insisted things were going to plan as it said this week it would scale back attacks on capital Kyiv and the northern city of Chernigiv. But Ukrainian President Volodymyr Zelensky has dismissed the promise as a red herring, and US President Joe Biden said he was "sceptical".
The EU plans to used a virtual summit being held in Brussels on Friday to send a stark message to China that helping Russia in Ukraine is not in Beijing's economic interest.
In Asia on Friday, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite was up 0.8% in late trade, while the Hang Seng index in Hong Kong was down 0.5%. The S&P/ASX 200 ended down 0.1%.
Gold was quoted at USD1,935.20 an ounce early Friday, lower than USD1,941.55 on Thursday. Brent oil was trading at USD104.06 a barrel, down from USD108.02 late Thursday.
The economic events calendar on Friday has manufacturing PMI readings from the eurozone at 0900 BST, the UK at 0930 BST, and the US at 1445 BST, though the US nonfarm payrolls figure will dominate attention.
By Lucy Heming; lucyheming@alliancenews.com
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