(Alliance News) - Stock prices in London are set to extend gains into Friday as investors breathe a sigh of relief following largely upbeat US banking earnings and reassuring factory price data.
"After a choppy start to the week, equity markets appear to be leaning towards a narrative that companies can continue to grow profits, despite the combined pressures of higher energy prices, and supply chain disruptions," said Michael Hewson, chief market analyst at CMC Markets.
In early UK company news, Hargreaves Lansdown reported a dip in revenue as share dealing volumes eased post-lockdown. Pearson backed full-year forecasts despite a decline in US higher-education enrolment. Electra Private Equity set out plans to demerge TGI Fridays restaurant chain owner Hostmore.
IG says futures indicate the FTSE 100 index of large-caps to open up 26.69 points, or 0.4%, at 7,234.40 on Friday. The FTSE 100 closed up 65.89 points, or 0.9%, at 7,207.71 on Thursday.
"As we look towards today's European open the FTSE 100 looks set to open at an eighteen-month high," CMC's Hewson said.
This follows a buoyant performance in New York and Asia overnight.
The Dow Jones Industrial Average closed up 1.6% on Thursday, the S&P 500 up 1.7%, and the Nasdaq Composite up 1.7%
In Asia on Friday, the Japanese Nikkei 225 index ended up 1.8%. In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was up 1.1%. The S&P/ASX 200 in Sydney ended up 0.7%.
Sterling was quoted at USD1.3682 early Friday, flat against USD1.3680 at the London equities close on Thursday.
The euro traded at USD1.1607 early Friday, higher than USD1.1587 late Thursday. Against the yen, the dollar was quoted at JPY114.06 versus JPY113.63 - the dollar breaking above the JPY114.0 mark for the first time in nearly three years.
Gold was quoted at USD1,791.09 an ounce early Friday, down from USD1,797.11 on Thursday. Brent oil was trading at USD84.87 a barrel, up from USD83.75 late Thursday.
"Market risk sentiment improved noticeably as US banking heavyweights rolled out a procession of strong earnings prints, weekly initial jobless claims fell by much more than expected, and US [year-on-year] and [month-on-month] headline and core [producer price index] rose by less than expected," said Jeffery Halley, senior market analyst at Oanda.
Data on Thursday showed weekly US initial jobless claims hit a fresh post-pandemic low, at 293,000, while factory prices rose 8.6% annually at their fastest rate since November 2010, but not quite as fast as the 8.7% growth analysts had pencilled in.
Capping off the week's data calendar are US retail sales at 1330 BST on Friday.
Meanwhile, Goldman Sachs will top off the third-quarter reporting season for US banks, after a string of broadly well-received results from peers such as JP Morgan and Bank of America.
In early UK company news, wealth management platform Hargreaves Lansdown reported a slight dip in revenue as it said the normalisation of trends post-pandemic has been in line with its expectations.
Assets under administration stood at GBP138.0 billion at the end of September, up 2% since June 30. It reported net new business of GBP1.3 billion in the quarter and net new clients at 23,000, slowing from the year ago's addition of 31,000, to take active client numbers to 1.7 million.
Revenue slipped to GBP142.2 million from GBP143.7 million a year ago. Asset-based revenue was higher, but this was more than offset by a drop in interest on client money and a reduction in share-dealing revenue.
"As anticipated share-dealing volumes have declined post Covid lockdowns and across the quarter averaged 861,000 deals per month versus 980,000 in the quarter last year and 479,000 the year before," the company said.
Nonetheless, Chief Executive Chris Hill remained confident in HL's prospects.
"Today we report a good start to our financial year, with continued growth in clients and assets in what is typically our quietest quarter...These results are against the backdrop of an easing out of lockdown and ongoing market uncertainty and highlight the importance of a resilient business and the strength of our proposition," said Hill.
Educational publisher Pearson backed full-year forecasts as it continues to bolster its digital offering.
For the nine months to the end of September, total sales were up 10% on an underlying basis.
All segments saw growth except for Higher Education, where sales fell 7% as growth in international courseware, including Canada and the UK, was more than offset by a 9% decline in US Higher Education Courseware. Pearson pointed to a decline in US enrolments, particularly in community colleges.
More positively, its new US learning app, Pearson+, launched in late July and is "progressing well" with over two million users.
Pearson said it remains on track to deliver full-year adjusted operating profit in line with market expectations, which it placed at GBP377 million. This would be up from GBP313 million in 2020, but still far lower than the GBP581 million achieved in 2019.
Electra Private Equity provided more detail on its plan to demerge Fridays restuarant chain operator Hostmore, with trading in London set to start early next month.
Fridays, previously branded as TGI Fridays, is an American-themed casual dining brand.
"While Fridays has been trading for over three decades in the UK, Hostmore was established in 2021 to provide a platform for the development of hospitality brands under the leadership of an experienced management team that has a track record of building businesses in the hospitality and leisure sectors," Electra said.
Over the 20 weeks since indoor dining resumed in the UK, Hostmore reported like-for-like growth of 11% versus 2019. In the 11 weeks since the further relaxation of Covid-19 restrictions in July, like-for-like growth averaged 12%.
"The demerger and listing of Hostmore leaves us well placed to continue to develop enduring value through our existing and future brands and we look forward to the future with excitement and confidence," said Hostmore Chief Executive Robert Cook.
By Lucy Heming; lucyheming@alliancenews.com
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Pearson (PSON)
Hargreaves Lansdown (HL.)