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(Alliance News) - Stock prices in London were pointed towards a muted open Friday, amid fears of a second wave of coronaviruses cases and following another verbal blow-up between the US and China.
In London, Rio Tinto will investigate its Western Australia operations after an Aboriginal site was destroyed. John Wood Group sees "resilient" trading. Studio Retail's Findel Education sale is to be reviewed by regulators.
IG says futures indicate the FTSE 100 index of large-caps to open 2.27 points down at 6,221.80 on Friday. The blue-chip index closed down 29.18 points, or 0.5%, at 6,224.07 on Thursday. So far this week, the FTSE 100 is up 1.9%.
"Health concerns were doing the rounds yesterday, and European equity markets lost a little ground," CMC Markets analyst David Madden commented. "Recently there have been fears that the reopening of economies has brought about a rise in new Covid-19 cases, and that theme has dominated the past week. It was reported the lockdown conditions in Beijing are getting worse. In addition to that, US states such as Arizona, Florida and Texas registered a rise in the number of new cases. Even though it appears the health crisis is a bigger issue in the US than it is in Europe, the S&P 500 finished the session essentially unchanged on the day."
Wall Street ended mixed on Thursday. The Dow Jones Industrial Average ended down 0.2%, but the S&P 500 added 0.1% and the Nasdaq Composite closed 0.3% higher.
Another 1.5 million US workers filed for unemployment benefits last week, the Labor Department said, bringing the number of people laid off, at least temporarily, by Covid-19 to 45.7 million. The entire population of the US is about 330 million.
Sentiment also was dented by data showing increased cases in Florida, Texas and other states as well as isolated instances in which hospitals are near full capacity.
In Asia on Friday, the Japanese Nikkei 225 index closed up 0.6%. In China, the Shanghai Composite closed up 1.1%, while the Hang Seng index in Hong Kong is 1.2% higher in late trade.
US President Donald Trump warned Thursday that "complete decoupling" between the deeply intertwined US and Chinese economies remains a potential policy.
"The US certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!" Trump tweeted.
He wrote that he was responding to comments by his trade representative Robert Lighthizer, who has been at the forefront of trade war negotiations with Beijing.
On Wednesday, Lighthizer told a congressional committee that China was so far living up to the terms of an agreement easing the dispute and that decoupling the two economic giants was now impossible.
Retail sales in the UK partly rebounded in May from the record fall seen in April, the Office for National Statistics said Friday.
The volume of retail sales in May jumped 12% versus the previous month, when sales volume plunged 18%. In value terms, retail sales were 12% higher in May. Market consensus, according to FXStreet, was for a 5.7% volume rise on April.
Despite May's strong rise, the ONS noted sales were still down 13% compared to February, before the coronavirus pandemic hit the UK.
Year-on-year, retail volumes were down 13% in May, while retail value was 14% lower.
In early UK company news, mining giant Rio Tinto launched a high-level review of its operations in Western Australia on Friday, after the company blew up a 46,000-year-old Aboriginal heritage site to expand an iron ore mine.
In announcing the move, Rio Tinto Chair Simon Thompson issued a formal apology to indigenous communities for the destruction on May 24 of ancient rock shelters in the Juukan Gorge in Western Australia's Pilbara region.
"The decision to conduct a board-led review of events at Juukan Gorge reflects our determination to learn lessons from what happened and to make any necessary improvements to our heritage processes and governance," he said in a statement.
He said the review will begin immediately and will work with the Pinikura & Puutu Kunti Kurrama Aboriginal communities who are the traditional owners of the region.
It will issue a final report by October, the company said. Rio Tinto initially defended its blasting in the Juukan Gorge as authorised under a 2013 agreement with the state government.
John Wood Group said its like-for-like revenue in the first half was down 11% but noted it has secured USD1.3 billion of new orders in April and May.
The oilfield services firm said it saw "relatively robust activity" in chemicals & downstream and in built environment markets.
"Despite the disruption, we are continuing to successfully win and execute work, supported by our strategy of broadening the business across the global energy market & the built environment. The relative strength we are seeing in chemicals & downstream, the built environment and renewables, where we will double our revenues in 2020, is helping to mitigate the impact of challenging conditions in upstream and midstream oil & gas," Chief Executive Robin Watson commented.
In M&A news, the UK competition regulator has decided to refer Studio Retail's Findel Education sale to a Phase 2 review unless undertakings are given.
In December, the retail and education company had agreed to sell Findel Education to the Council of the City of Wakefield for GBP50 million on a debt and cash free basis. It said cash realised from the sale would be used to make a voluntary payment to the company's defined benefit pension fund with the remainder used to reduce debt.
Studio Retail said that while it previously expected the sale to complete in April, the regulatory authority has experienced difficulty in compiling third-party views in relation to the disposal due to the Covid-19 outbreak.
Elsewhere, Studio Retail said it has continued to trade strongly and well-ahead of the prior year, with product sales over the first eleven weeks of the new financial year up 55% against the year before.
"This has been driven by particularly strong demand for ranges such as toys, games, electricals, fitness and garden," Studio Retail said.
Currency manager Record said its financial 2020 performance was in line with internal expectations, noting its "resilient" performance allowed it to keep shareholder payouts in line with its dividend policy.
For the year ended March 31, Record's pretax profit slipped to GBP7.7 million from GBP8.0 million the year before.
Revenue, however, was up 2.4% to GBP25.6 million from GBP25.0 million.
AuME ended March 31 at USD58.6 billion, up 2.3% on the year before, following USD4.6 billion of net inflows recorded during the year.
Record declared a final dividend of 1.15 pence, giving the firm an unchanged total annual dividend of 2.30p. The company also declared a 0.41p special dividend, but this is lower than the 0.69p special payout the year before.
Chair Neil Record said: "This financial year has seen an important change in strategic focus for the group coupled more latterly with extreme market volatility and disruption to working practices linked to the Covid-19 pandemic."
Sterling was quoted at USD1.2440 early Friday, firmer than USD1.2421 at the London equities close on Thursday.
The Bank of England upped its quantitative easing programme by GBP100 billion on Thursday, as widely anticipated by markets, in a less-dovish-than-expected meeting.
The nine-strong Monetary Policy Committee was unanimous in keeping the Bank Rate at 0.1%, but there was one dissenter on the move to increase the total stock of asset purchases to GBP745 billion. Andrew Haldane preferred to maintain the target at GBP645 billion, the BoE minutes showed.
Lloyds Bank pointed to Haldane's dissent as an indication that the MPC is "less downbeat" about the UK's near-term prospects.
The euro traded at USD1.1212 early Friday, softer than USD1.1220 late Thursday. Against the yen, the dollar was quoted at JPY106.80, flat from JPY106.77 a day before.
In commodities, Brent oil was trading at USD41.87 a barrel early Friday, up versus USD41.20 late Thursday. Gold traded at USD1,727.00 an ounce early Friday, higher than USD1,721.16 on Thursday.
By Paul McGowan; paulmcgowan@alliancenews.com
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