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(Alliance News) - Stocks in London are set for a positive start on Friday, ahead of a series of manufacturing PMI prints, following some positive news from China's manufacturing sector.
In early UK corporate news, steel miner Evraz said its output fell in the third quarter, and interdealer broker TP ICAP saw revenue rise with strong growth from its Global Broking unit. Rentokil acquired a US pest control firm and Irish Allied Banks sold a portfolio of non-performing loans.
IG says futures indicate the FTSE 100 index of large-caps to open 29.62 points higher at 7,278.00 on Thursday. The FTSE 100 index closed down 1.1% at 7,248.38 Thursday.
In the US on Thursday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.5%, the S&P 500 down 0.3% and the Nasdaq Composite 0.1%.
London Capital Group analyst Ipek Ozkardeskaya commented: "US equities reversed gains from all-time highs amid Chinese officials voicing their concerns about the feasibility of a long-term comprehensive deal with the US and about the volatile nature of US President Donald Trump. With the APEC summit cancelled on social unrest, investors start questioning whether Donald Trump and Xi Jinping will organize a bilateral meeting to discuss about the much-expected partial deal."
In further mixed news from Asia this morning, China and Japan's manufacturing industry experienced different fortunes in October.
In Asia on Friday, the Japanese Nikkei 225 index closed down 0.3%. In China, the Shanghai Composite closed up 1.0%, while the Hang Seng index in Hong Kong is up 0.6%.
October's Chinese manufacturing data showed the strongest improvement in conditions since 2017, the latest figures from Caixin showed.
The Caixin China General Manufacturing purchasing managers' index rose to 51.7 in October from 51.4 in September. The index has now signalled an improvement in operating conditions for three months running, Caixin noted, with the latest improvement the strongest seen since February 2017.
Total new work received by Chinese firms rose "solidly" in October, with the rate of expansion the quickest recorded for 81 months. Notably, new export business increased for the first time in five months, albeit marginally.
Neighbour Japan's manufacturing economy sank deeper into contraction territory during October, according to the latest Jibun Bank Japan Manufacturing purchasing managers' index.
The PMI fell to 48.4 in October, from 48.9 in September, representing the lowest reading in nearly three-and-a-half years. Any reading above 50 indicates expansion, while one below signals contraction.
The sharper deterioration in business conditions was driven by a steeper drop in demand, with survey data pointing to a "marked decline" in new orders.
Total new orders fell at the fastest rate since May 2016, while new export business also declined for an eleventh successive month.
Adding to the negative news, Japan's unemployment rate climbed to 2.4% in September from 2.2% in the previous month, the government said Friday. The number of those employed rose 0.8% from a year earlier to 67.68 million, the Ministry of Internal Affairs and Communications said.
Manufacturing PMI prints are due from the UK at 0930 GMT and the US at 1345 GMT. Elsewhere in the US, the key October jobs report is released at 1230 GMT, and the US oil rig count is due at 1700 GMT.
CMC Market's David Madden said: "The non-farm payrolls report will be closely watched. The headline figure is expected to be 89,000, which would be a decline from the 136,000 posted in September. Unemployment is tipped to creep up from the 50-year low of 3.5% to 3.6%. Average earnings are expected to edge up to 3% from 2.9%."
In London, Evraz said its total crude steel production slipped 3.4% in the third quarter compared to the previous quarter to 3.4 million tonnes, with the miner's Russia operations seeing a 1.8% decline in production.
Evraz blamed scheduled downtimes and weaker demand.
Total third-quarter sales were flat compared to the previous quarter at 3.3 million tonnes.
In the nine month period, however, crude steel production was 4.5% higher year on year at 10.4 million tonnes, with sales 6.1% higher at 9.9 million tonnes.
Interdealer broker TP ICAP said its third-quarter revenue was 17% higher year on year at GBP478 million, with the firm's Global Broking unit recording 10% revenue growth to GBP334 million and its Energy & Commodities business seeing 24% growth to GBP98 million.
"Today's strong trading update demonstrates that TP ICAP's trading portfolio is well placed to capitalise on volatile macro market conditions," Chief Executive Nicolas Breteau commented.
TP ICAP left its 2019 guidance of "low single-digit revenue growth" unchanged despite the strong quarter.
Rentokil said it has acquired Florida Pest Control, which serves both commercial and residential customers.
Based in Gainesville, Florida Pest Control was established in 1949 and today employs 600 people in 20 branches throughout central and northern Florida. Rentokil said the company generated revenue of USD66 million in 2018.
Irish lender AIB Group has sold a non-performing loan portfolio to Everyday Finance DAC, a consortium with affiliates of Cerberus Capital Management, for EUR700 million in cash.
"The proceeds will be used for general corporate purposes including the continuation of support for customer restructuring. The sale is expected to have a negative P&L impact but overall will be capital accretive due to the reduction in RWAs, the timing of which will occur upon receipt of proceeds in early 2020," AIB explained.
The portfolio has a gross value of EUR850 million and incurred a loss of EUR52 million in 2018.
AIB said the sale means the bank remains on track to meet its 5% non-performing loan deleveraging strategy by the end of 2019.
Car dealership Lookers said its first half was "challenging", and Chief Executive Officer Andy Bruce and Chief Operating Officer Nigel McMinn will be leaving the company immediately.
The company continued: "This was driven by ongoing weakness in consumer confidence in the light of political and economic uncertainty, pressure on used car margins and retail cost inflation. The board expected these conditions to continue to impact the group during the second half, but trading, particularly over recent weeks since mid-September, has been much more challenging than expected."
As a result, Lookers expects to report 2019 underlying pretax profit of GBP20 million. The company reported an adjusted pretax profit of GBP67.3 million in 2018.
Miner BHP Group said it has approved USD44 million for work relating to the restart of a concentrator at Samarco Mineracao SA's Germano compex.
Samarco's operations were suspended following the failure of the Fundao dam in 2015.
BHP has approved the funding for BHP Billiton Brasil Ltda's share of the work needing to be done. The funds will enable the construction of a filtration plant over the next 12 months and the "commencement of operation readiness activities" for restart.
The pound was quoted at USD1.2958 early Friday, higher versus USD1.2927 at the London close on Thursday.
By Paul McGowan; paulmcgowan@alliancenews.com
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