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(Alliance News) - London's FTSE 100 is set to round off a quiet week with a marginal rise on Friday, as traders in New York return to desks for an abbreviated session.
The FTSE has achieved a 1.1% rise so far this week, mostly thanks to a sizeable climb on Tuesday.
Financial markets in New York were closed on Thursday for the Thanksgiving Day holiday. Wall Street re-opens for a shortened session on Friday, closing at 1pm local time - 1800 GMT.
The day's 'Black Friday' shopping event puts retailers in focus.
"It's Black Friday, where the world waits with bated breath for Americans to click the global economy back to health while fighting off heartburn," analysts at Rabobank commented.
"If sales are dismal, stocks and bonds will both rally, and the dollar will wobble even further, which temporarily sits alongside lower, not higher, commodity prices."
There was deal-making aplenty in early UK corporate updates. SSE has shifted a stake in its transmission arm, Helios has edged closer to buying into a portfolio of telecommunications assets in Oman, and Devro has agreed to a takeover offer.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called up 0.2 points at 7,466.80
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Hang Seng: down 0.4% at 17,588.30
Nikkei 225: down 0.4% at 28,283.03
S&P/ASX 200: closed up 0.2% at 7,259.50
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EUR: up at USD1.0420 (USD1.0405)
GBP: soft at USD1.2120 (USD1.2125)
USD: flat at JPY138.48 (JPY138.49)
GOLD: down at USD1,754.47 per ounce (USD1,756.76)
OIL (Brent): higher at USD85.58 a barrel (USD85.08)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
14:30 GMT US weekly export sales
18:00 GMT US stock markets close early
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French President Emmanuel Macron and Irish Prime Minister Micheal Martin believe there is "a crucial window of opportunity to resolve" post-Brexit trade disputes with London over Northern Ireland, according to an Irish statement issued after the pair met in Paris. The UK region of Northern Ireland is locked in a political stalemate following disagreements over the Northern Ireland protocol negotiated when the UK left the EU. Martin "expressed his thanks to the president for France's unswerving solidarity with Ireland throughout Brexit," according to the statement, released after a lunch meeting at the Elysee Palace. "Both leaders agreed on the importance of a new and vital partnership with the UK and believe that there is now a critical window of opportunity to resolve issues relating to the protocol," it added. On November 10, Martin met with UK Prime Minister Rishi Sunak, who expressed a willingness to end the disputes.
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UK Deputy Prime Minister Dominic Raab has defended himself against allegations of bullying and using his personal email for government business as Sunak continued to back his embattled deputy. Raab, also the justice secretary, said he had always adhered to the ministerial code and "behaved professionally" as fresh bullying claims emerged. Downing Street said on Thursday that Sunak still had full confidence in him as a number of Raab's former private secretaries were expected to lodge formal complaints against his conduct.
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Boris Johnson and Liz Truss have joined a Tory backbench rebellion against a de-facto ban on new onshore windfarms, in a blow to PM Sunak's authority. The former prime ministers signed an amendment to the government's Levelling Up bill tabled by Simon Clarke, who served as a minister in both their governments, to allow onshore wind development. It marks the pair's first major parliamentary interventions since departing Downing Street. Truss moved to relax planning rules during her short tenure at No 10, but Johnson did not seek to overturn the effective moratorium on onshore wind, in place since 2015, when he was in office. Sunak has already faced a significant challenge over planning policy from within his own party. The PM pulled a vote, scheduled for Monday, on legislation that would set a target of building 300,000 homes per year after about 50 Tory members of Parliament threatened to rebel.
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UK car production returned to growth last month but is still well below pre-pandemic levels, new figures show. A total of 69,524 cars were built in October, an increase of 7.4% on the same month a year ago, said the Society of Motor Manufacturers & Traders. The rise followed a fall in September, which came after four consecutive months of growth, which the SMMT said illustrated how supply chain turbulence, in particular global chip shortages, continues to affect UK car manufacturers. Exports of the latest volume, luxury and specialist models drove last month's output, with more than eight in 10 cars made heading overseas, equivalent to 56,469 units, while 13,055 cars were turned out for the domestic market. UK production of battery electric, plug-in hybrid and hybrid vehicles rose again, with combined volumes up 20% to 24,115 units.
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BROKER RATING CHANGES
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RBC cuts NatWest to 'sector perform' (outperform) - price target 290 (300) pence
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RBC raises Lloyds Banking to 'outperform' (underperform) - price target 57 (44) pence
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RBC raises Virgin Money price target to 190 (160) pence - 'sector perform'
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COMPANIES - FTSE 100
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SSE said it has reached a deal to offload a 25% holding in its SSEN transmission unit, roughly a year after the energy company announced it intended to sell a stake. The Ontario Teachers' Pension Plan Board will buy into the unit. SSE expects GBP1.47 billion in proceeds for the stake sale in the electricity transmission network business. "This successful transaction reflects both the current value and significant growth potential of SSEN Transmission as one of Europe's fastest growing transmission networks. SSE continues to believe SSEN Transmission has a central role to play in meeting net zero and bolstering the UK's energy security by unlocking the vast renewable resources in the north of Scotland and transporting that homegrown low carbon power to demand centres further south," SSE said. "The proceeds released through this stake sale will support the significant growth SSE continues to see in SSEN Transmission and further growth opportunities across SSE's other core businesses, while ensuring an attractive balance of capital allocation across the group." SSE a year ago said it planned to sell 25% stakes in each of its SSEN Transmission and SSEN Distribution arms. The process to sell a stake in the electricity distribution business is expected begin "in early 2023".
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COMPANIES - FTSE 250
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Helios Towers said all closing conditions for the acquisition of a tower infrastructure portfolio in Oman have been satisfied. The purchase is now unconditional and the telecom tower infrastructure company expects the deal to be sealed next month. The asset will hold Oman Telecommunications Co's passive tower infrastructure portfolio. The Africa-focused mobile phone tower developer agreed to purchase 70%, after finding a partner for the deal, it had said in June. Oman Infrastructure Fund, through its wholly-owned subsidiary Rakiza Telecommunication Infrastructure, will buy the remaining 30%, Helios said. Helios first had announced the acquisition in May 2021, originally intending to be the sole purchaser. The USD575 million cash consideration due to Oman Telecommunications for the assets will remain the same, but will be split between the two parties according to their stake in the holding company.
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OTHER COMPANIES
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Construction materials firm Breedon said it has managed to "fully recover" accelerating input costs, thanks to price hikes. It said revenue in the four months to October 31 was up 16% year-on-year. For the 10 months to the end of October, revenue was 14% higher at GBP1.19 billion. "Trading conditions during the second half remained supportive, enabling the group to fully recover rising input costs through robust pricing and disciplined cost management," Breedon said. Volumes are behind 2021 levels, but ahead of 2019 on a like-for-like basis. Breedon said it is on track for record earnings this year. It said it has noticed a "softening" in construction output so far in the second half of 2022, but said its "end-markets remain resilient". Results for the year will be in line with expectations.
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Devro has agreed to a takeover by food manufacturing company Saria. The deal values the sausage casings maker's equity at GBP540 million and gives it an enterprise value, including debt, of GBP667 million. Saria, which manufacturers products for human and animal consumption, will pay 316.1 pence per Devro share, a 65% premium to its 192.0p closing price on Thursday. "Saria believes that Devro represents an attractive opportunity to acquire a highly regarded global business of scale which will accelerate the growth of the Bidco group and deliver a number of benefits to the enlarged Saria business, its employees, customers and suppliers," the Selm, Germany-based firm said. Separately, Devro said its "traded strongly" in the four months to October 31. Revenue was up 16% year-on-year, or 10% at constant currency. "Constant currency revenue growth was driven by higher pricing, successful recovery of inflation, as well as good volume increases led by our mature markets. Volume growth continues to reflect the successful execution of our strategy. Operating margins in the period were up on the prior year and well ahead of those achieved in the first half," the company said. Devro said current trading is "slightly ahead of the board's expectations".
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Furniture and upholstery seller ScS said it is trading in line with expectations. Sales have picked up recently after a slightly tricky start to the year. In the 16 weeks to November 19, like-for-like order intake was down 9.1% year-on-year. In the first 10 weeks of the period, it was 14% lower. However, between weeks 11 and 16, order intake was 1.3% higher on a year before. ScS added: "The board is encouraged by the group's recent performance and current trading is in line with its expectations for the full year. The group is preparing for the important winter sales trading period and, as always, its success will be a key factor in the results for the full year. The business is planning to approach the winter sales period in a manner consistent with that which has proved successful in prior years."
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By Eric Cunha; ericcunha@alliancenews.com
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