LONDON (Alliance News) - London share prices are set to open higher Friday, with an early focus on UK gross domestic product, due at 0930 BST, before attention turns later in the day to the Jackson Hole symposium taking place in the US.
IG says futures indicate the FTSE 100 to open 9 points higher at 6,201.80. The index closed up 3.6% at 6,192.0 on Thursday.
Lloyds Bank notes the first estimate for UK GDP for the second quarter indicated that activity picked up by 0.7% quarter-on-quarter from a 0.4% print in the first quarter.
"While we expect the preliminary figure to be repeated, there will be some interest in the expenditure breakdown which is anticipated to show a strong, albeit likely temporary, contribution from net trade," says the bank.
London shares also are expected to take a lead from Asian stocks, which are trading higher Friday. The Japanese Nikkei 225 closed up 3.0%, while in China, the Hang Seng is up 0.4% and the Shanghai Composite is up 2.8%.
Amid concerns about economic growth of the country and several stimulus measures by the People's Bank of China, data from the National Bureau of Statistics showed Friday that profits earned by Chinese industrial enterprises decreased in July after rising in the previous month.
Industrial profits fell 2.9% year-over-year to CNY471.56 billion in July following a 0.3% rise in the preceding month. The agency said the fall in industrial profit for the month was impacted by a slowdown in industrial production and sales growth, a decline in industrial producer prices and raw material purchase price, and a fall in investment income.
London-listed oil-related stocks are expected to rise again after Thursday's gains, following a jump in Brent and West Texas Intermediate crude oil prices overnight. Brent oil is currently at USD48.27 a barrel, having traded at USD45.81 a barrel at the London close on Thursday, while WTI is at USD43.31 a barrel, having traded at USD41.92 a barrel when European markets closed.
"Having just touched fresh six-and-a-half year lows this week, sentiment was very bearish on oil, but strengthening economic growth in the US should increase oil demand so shorts got caught in a massive squeeze," said CMC Markets analyst Jasper Lawler.
The US Commerce Department released a report Thursday showing that US real gross domestic product increased by 3.7% in the second quarter compared to the previously reported 2.3% growth. With the upward revision, the pace of GDP growth in the second quarter was even stronger than the 3.2% jump expected by economists.
Meanwhile, the Labor Department data showed that first-time claims for US unemployment benefits decreased modestly in the week ended August 22nd. The report said initial jobless claims edged down to 271,000, a decrease of 6,000 from the previous week's unrevised level of 277,000. Economists had expected claims to dip to 270,000.
Wall Street enjoyed another positive session Thursday, with the Dow 30 closing up 2.3%, the S&P 500 up 2.4% and the Nasdaq Composite up 2.6%.
Investors are focusing on the Jackson Hole Symposium, which started on Thursday, where key Fed officials are expected to speak. While US Fed Chair Janet Yellen is not expected to attend, Fed Vice-Chairman Stanley Fischer speaks on Saturday.
On the UK corporate front, advertising and marketing giant WPP said its MediaCom subsidiary has acquired a minority stake in Australia's Rapid Media Services Pty. Rapid Media Services is a media communications agency with offices in Melbourne, Brisbane and the Gold Coast. It has been affiliated with MediaCom in Australia since 2001. No financial details on the deal were disclosed.
The Restaurant Group reported growth in profit in the first half of 2015 as it achieved strong trading in each of its brands and business areas and said that the company is set for continued strong growth for the remainder of the year. The company, which owns chains including Frankie & Benny's, Garfunkel's and Chiquito, said its pretax profit in the 26 weeks ended June 28 rose 10% to GBP36.9 million from GBP33.7 million in the same period the year before, as revenue grew 8% to GBP334 million from GBP308 million
The Restaurant Group will pay an interim dividend of 6.8 pence, an 11.5% rise on the 6.1p it paid the prior year.
Meanwhile, Rotork said it has agreed a GBP125.0 million deal to acquire Manchester-based pneumatic and hydraulic instrument valves and components company Bifold Group. The FTSE 250 actuators and flow control products manufacturer said Bifold has leading positions in a number of niche sectors, including subsea and wellhead control systems. It will be integrated into Rotork's instruments division following the acquisition.
Barclays has cut its Diageo price target to 1,950 pence from 2,000p, keeping an Overweight rating, while the bank also has cut its Unilever price target to 2,900p from 3,050p. UBS has downgraded Debenhams to Sell from Neutral, cutting its price target to 70p from 90p, while it has upgraded Dunelm Group to Buy from Neutral, lifting its price target to 1,020p from 905p.
Also in the economic calendar, eurozone consumer confidence data are due at 1000 BST, while the German consumer price index is due at 1300 BST. In the US, personal income and spending are expected at 1330 BST, while the Reuters/Michigan consumer sentiment index is due at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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Unilever (ULVR)
Diageo (DGE)
Dunelm (DNLM)
Rotork (ROR)
WPP (WPP)