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(Alliance News) - Stocks in London are expected to open lower on Friday, as stubborn US inflation data tests the recent optimism about the path of interest rates.
The US yearly inflation rate was unmoved at 3.7% in September, according to the Bureau of Labor Statistics. It had been expected to cool to 3.6%, according to FXStreet-cited consensus.
While investors still largely expect that US interest rates have already peaked, the data means they now expect potential rate cuts to be further away.
Meanwhile, the latest series of Chinese data pointed to ongoing weakness in the country's economic recovery. Prices remained flat annually in September, suggesting the country could return to a state of deflation. Trade data also revealed an ongoing slump, though exports didn't fall by as much as expected.
"The only thing that's exciting about China is the expectation that the government will throw more money on to the Chinese problems, and that could, maybe, inflate asset prices," said Swissquote Bank's Ipek Ozkardeskaya.
In company news, St James's Place confirmed it was still reviewing its fee structures, following reports that it was facing pressure from regulators. Ashmore said its assets under management fell in the first quarter, due to a combination of negative investment performance and net outflows.
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 7.5 points, 0.1%, at 7,637.28
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Hang Seng: down 2.4% at 17,806.98
Nikkei 225: closed down 0.6% at 32,315.99
S&P/ASX 200: closed down 0.6% at 7,051.00
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DJIA: closed down 173.73 points, 0.5%, 33,631.14
S&P 500: closed down 0.6% at 4,349.61
Nasdaq Composite: closed down 0.6% at 13,574.22
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EUR: flat at USD1.0546 (USD1.0547)
GBP: down at USD1.2204 (USD1.2209)
USD: down at JPY149.71 (JPY149.77)
Gold: up at USD1,877.29 per ounce (USD1,871.43)
Oil (Brent): up at USD86.70 a barrel (USD86.58)
(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 CEST EU industrial production
08:30 EDT US import and export price index
08:30 EDT US weekly export sales
09:00 EDT US Fed Philadelphia President Patrick Harker speaks
10:00 EDT US University of Michigan survey of consumers
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Rishi Sunak has called on Israel to "protect ordinary Palestinians" as it hunts down Hamas militants. Downing Street confirmed the prime minister spoke to Netanyahu on Thursday after agreeing to send Royal Navy vessels and Royal Air Force surveillance planes to support Tel Aviv after Hamas' attack. A No 10 spokesperson said that during the phone call Sunak "reiterated that the UK stands side by side with Israel in fighting terror" and that Hamas should "never again be able to perpetrate atrocities against the Israeli people".
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BROKER RATING CHANGES
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Barclays raises South32 to 'overweight' (underweight) - price target 225 (180) pence
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JPMorgan raises Deliveroo to 'neutral' (underweight) - price target 142 (113) pence
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COMPANIES - FTSE 100
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St James's Place responded to media reports that it is under pressure to change its fee and charges structures for clients. The wealth manager said it was continuing to build on the work completed for Consumer Duty, as previously disclosed, which includes an assessment of its fees and charging models. SJP said it was "engaging with all of [its] primary regulators during this process". It added: "Whilst the evaluation has not yet been completed and therefore no decision has been made, we are confident that all the options under consideration will ensure value for clients and a strong, secure, and sustainable business for all stakeholders." The Financial Times had reported SJP was facing pressure from regulators to change its fee structure, with critics citing "opaque and expensive charges" for financial advice, as well as "stiff penalties" for early withdrawals.
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COMPANIES - FTSE 250
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Emerging market asset manager Ashmore Group said its total assets under management fell 7.5% over its first quarter, which ended September 30. At the end of the period, AuM totalled USD51.7 billion, down from USD55.9 billion at the end of June. "Net outflows were at a similar level to the prior quarter, primarily reflecting continuing institutional risk aversion. The outflows were mainly in the external debt and corporate debt themes, with smaller net outflows in blended debt and equities. There were net inflows in the local currency and alternatives themes," Ashmore explained. The firm's CEO, Mark Coombs, said it was "normal" to see a period of consolidation within a longer recovery cycle, after the previous three quarters of positive returns.
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OTHER COMPANIES
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The UK Competition & Markets Authority said it has cleared the revised merger deal proposed by Microsoft for its USD68.7 billion takeover of Activision Blizzard. The revised deal would see Activision's cloud gaming rights sold to an independent third party, Ubisoft Entertainment , before Microsoft completes the takeover. The CMA said: "The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers." The regulator had said in late September that it was "minded to approve" the revised deal. Whilst it had identified some "limited residual concerns", the CMA said it is now satisfied with the undertakings offered by Microsoft.
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By Elizabeth Winter, Alliance News senior markets reporter
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