(Alliance News) - Stock trading in London is set for a subdued end to the week, as market participants digest the string of central bank updates on Wednesday and Thursday.
In early UK company news on Friday, London Stock Exchange confirmed it is in talks with Euronext over the sale of Borsa Italiana. Investec guided to a fall in interim earnings, and Man Group is to launch a USD100 million share buyback.
IG says futures indicate the FTSE 100 index of large-caps to open 1.62 points lower at 6,048.30 on Friday. The large-cap index closed down 28.56 points, or 0.5%, at 6,049.92 on Thursday.
"Today's European session is likely to see a cautiously mixed start as we come to the end of a week that has seen central banks decide to sit on the sidelines for the time being," said Michael Hewson, chief market analyst at CMC Markets.
US stocks on Thursday ended in the red, with the Dow Jones Industrial Average ending down 0.5%, the S&P 500 down 0.8% and Nasdaq Composite down 1.3%.
Things were a touch more upbeat in Asia on Friday, with the Japanese Nikkei 225 index ending up 0.2%. In China, the Shanghai Composite is up 1.9%, while the Hang Seng index in Hong Kong is up 0.6%. Â
In early UK company news, London Stock Exchange Group confirmed it has entered into exclusive discussions with peer Euronext over the sale of Borsa Italiana.
"There can be no certainty that a transaction will result from these discussions and any potential sale will be dependent upon the outcome of the European Commission's review of the Refinitiv transaction and that transaction closing in accordance with its terms," the stock exchange operator cautioned.
Financial services firm Investec guided to a fall in interim earnings against a tough backdrop due to Covid-19.
The first half of the year has seen lower average interest rates, reduced client activity and a 22% depreciation of the rand against the pound, the Anglo-South African company said. Investec noted that the challenging environment, brought on primarily by Covid-19, hit economic activity and increased market volatility.
Investec said it expects adjusted earnings per share from continuing operations to fall by as much as 63% on a year ago. Basic EPS is seen between 6.5 pence to 8.4p, as much as 66% lower than a year ago.
"The business has proved resilient in a period characterised by Covid-19 stringent lockdowns in the first quarter, followed by a gradual reopening of the economies. Severe GDP contractions and volatile financial markets negatively impacted revenues," said Chief Executive Fani Titi.
Titi added: "Capital and liquidity ratios remain robust and are expected to be stable. Provisions for ECL are expected to remain elevated in the period under review. Net asset value per share is expected to increase. Costs were well managed."
Investec added that it is proposing a reduction in the UK bank's London-based headcount by about 210 roles, or 13% of the current total.
Man Group said it will launch a new share buyback programme of up to USD100 million.
The share repurchase programme is in line with the company's policy to "distribute capital to shareholders while maintaining a prudent balance sheet". It expects to buy around 66 million shares under the scheme.
Against the yen, the dollar was flat at JPY104.80 early Friday versus JPY104.79.
The euro traded at USD1.1852, higher than USD1.1821 late Thursday.
Sterling was quoted at USD1.2953 early Friday, flat on than USD1.2955 at the London equities close on Thursday.
UK retail sales registered their fourth straight month of growth in August, but the pace of improvement is slowing, the Office for National Statistics showed.
Sales were up 0.8% month-on-month in August, slower than the 3.7% growth posted for July but ahead of expectations, according to FXStreet, of 0.7%. The strength of the retail rebound has been fading since lockdown measures began to be eased, with sales having risen 12% in May and 14% in June.
Annually, sales grew 2.8% in August, accelerating from a rise of 1.4% in July.
The ONS said sales in August were up 4.0% compared to February's pre-pandemic level.
Pantheon Macroeconomic said the August figures will be "as good as it will get for retailers this year".
"Retail sales plausibly will remain above last year's average in the remaining months of this year, as Covid-19 appears to have triggered a rotation away from spending on services towards goods...Nonetheless, we judge that households' overall expenditure still will be about 5% below its pre-Covid level at the end of this year," said Samuel Tombs, chief UK economist at Pantheon.
Elsewhere, the European Commission president has said she is "convinced" a trade deal remains possible with the UK but called Boris Johnson's attempt to override the Brexit treaty an "unpleasant surprise".
Ursula von der Leyen, in comments made to reporters on Thursday, said Downing Street's controversial UK Internal Market Bill had "distracted very strongly" from the two sides being able to secure fresh trade terms before the looming deadline.
The post-Brexit transition period, during which relations between the EU and the UK have remained static, is due to end after December 31 and leaders on both sides of the Channel have warned that an agreement is needed by October if a deal is to be ratified in time for the start of 2021.
With the cliff edge only a month away, the prime minister has faced criticism domestically and on the world stage for pursuing legislation that would defy the Withdrawal Agreement brokered with the EU last year, breaking international law in the process. Johnson was forced on Wednesday to agree to table an amendment to the Internal Market Bill, giving MPs a vote before the government can use the powers related to Northern Ireland which would breach the treaty.
Despite the wrangle over the bill – which has been derided by every living former prime minister, scores of senior Tory backbenchers, US Democratic presidential candidate Joe Biden and Brussels – commission president von der Leyen said she remained sure that consensus on a future partnership with the UK could be reached.
Gold was quoted at USD1,951.80 an ounce early Friday, higher than USD1,946.60 on Thursday. Brent oil was trading at USD43.56 a barrel , up from USD43.22 late Thursday.
By Lucy Heming; lucyheming@alliancenews.com
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