LONDON MARKET PRE-OPEN: UK CMA Launches Probe Into Four Housebuilders

(Alliance News) - Stock prices in London are seen opening lower on Friday sparked by heavy losses in the US on Thursday, as investors look ahead to the US jobs report later in the day.

In early company news, housebuilder Berkeley Group maintained its profit guidance after resilient trading, as the UK Competition & Markets Authority launched a probe into four other London-listed homebuilders. Irish carrier Ryanair Holdings raised EUR400 via a share placing. Ad agency WPP and energy provider Centrica announced respective acquisitions.

IG futures indicate the FTSE 100 index is to open 33.26 points lower at 5,817.60. The blue-chip index closed down 90.09 points, or 1.5%, at 5,850.86 on Thursday.

Berkeley Group, which is holding its annual general meeting on Friday, said recent trading has been resilient.

For the period spanning May 1 to August 31, Berkely said trading has been resilient and supports its existing guidance of GBP500 million of pretax profit for the full-year. The company also reaffirmed its commitment to its shareholder returns programme of GBP280 million per annum.

Berkeley reiterated that a dividend of 107.0 pence will be paid next Friday, with the remainder of the GBP140.1 million return already paid via share buybacks. In addition, the next GBP140.1 million shareholder return will be provided by March-end, through a combination of dividends and share buy-backs.

The upmarket housebuilder added that it anticipated a more even split of profit between the first and second halves of the year, following better-than-expected levels of production and robust pricing.

Berkeley's update comes as the UK Competition & Markets Authority opened enforcement cases focusing on the sale of leasehold homes by four leading housebuilders.

The CMA's probe pertains to Barratt Developments, Countryside Properties, Persimmon and Taylor Wimpey.

The probe comes after the CMA uncovered what it called "troubling evidence of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling."

The watchdog is concerned that leasehold homeowners may have been unfairly treated and that buyers may have been misled by property developers.

WPP said its subsidiary Wunderman Thompson acquired French customer experience consultancy Velvet Consulting, for an undisclosed sum. WPP said the acquisition forms a key part of its wider strategic transformation, which is investment in technology services. Velvet Consulting's clients include L'Oreal, Sephora, Schneider Electric, Fnac Darty, La Poste Group, Pierre Fabre and Sanofi.

Centrica said it has agreed to acquire the energy supply customers of Robin Hood Energy via its British Gas business, for an undisclosed sum.

Robin Hood Energy currently has around 112,000 residential customers, and 2,600 business customers across 10,000 sites. Completion of the transaction is expected on September 16, with customers moving to British Gas over the next few months, Centrica said.

Ryanair Holdings confirmed it raised EUR400 million via the placing of 35.2 million shares at EUR11.35 each. The placing price represents a discount of 2.6% to the closing share price on Thursday.

On Thursday, the Irish carrier said the placing will better position the company to be able to move quickly and capitalise on future opportunities, such as growing its network and expand its fleet.

In the US on Thursday, Wall Street ended firmly in the red, with the Dow Jones Industrial Average down 2.8%, S&P 500 down 3.5% and Nasdaq Composite closing down 5.0%.

All three main indices in New York suffered hefty selling, but the tech-heavy Nasdaq led the way with tech giants such as Apple, Microsoft, Amazon and Facebook among the worst hit.

The Japanese Nikkei 225 index closed down 1.1% on Friday. In China, the Shanghai Composite is down 1.0%, while the Hang Seng index in Hong Kong is down 1.5%.

"Equity markets in Asia are in the red as the massive declines in the US dented sentiment. European markets are tipped to open lower, and US index futures point to further losses," said CMC Markets analyst David Madden.

Investor focus is now on the release on Friday at 1330 BST of US jobs data, which will provide the latest snapshot of the world's largest economy.

US nonfarm payrolls are forecast to rise 1.4 million in August, down from 1.8 million in July. The unemployment rate is predicted to drop to 9.8% in August from 10.2% in July.

The pound was at USD1.3273 early Friday, flat from USD1.3272 at the London equities close Thursday.

UK ministers are under fire from holidaymakers and the travel industry for failing to provide "clarity" after Portugal and Greece retained their places on England's coronavirus quarantine exemption list. Wales and Scotland have added restrictions to passengers returning from the summer holiday hotspots, but the UK government said on Thursday there would be no change to its list.

The euro stood at USD1.1846, up from USD1.1825. Against the yen, the dollar was trading at JPY106.19, flat from JPY106.17.

Gold was quoted at USD1,933.66 an ounce Friday morning, up from USD1,926.09 an ounce at the London equities close Thursday. Brent oil was quoted at USD43.69 a barrel, up from USD43.42.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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