LONDON MARKET PRE-OPEN: UK retail sales hit by Omicron in December

(Alliance News) - Stocks in London are set to open lower on Friday after a sell-off in the US overnight.

In early UK data, retail sales were down 3.7% month-on-month in December as the Omicron variant hit footfall. However, sales were still 2.6% higher than pre-virus levels.

Sterling was quoted at USD1.3588 following the data, down from USD1.3657 at the London equities close on Thursday.

IG says futures indicate the FTSE 100 index of large-caps to open down 69.21 points, or 0.9%, at 7,515.80 on Friday. The FTSE 100 closed ended up 4.65 points, or 0.1%, at 7,585.01 on Thursday.

"Yesterday's late US sell off looks set to prompt a sharply lower open for markets here in Europe later today, after Asia markets followed suit with the Nikkei also sliding to a 3-month low," said Michael Hewson at CMC Markets.

In the US on Thursday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.9%, the S&P 500 down 1.1% and the tech-heavy Nasdaq Composite down 1.3%.

Stocks in New York ended lower, unable to sustain an attempted rebound at the open, as investors continued to fret over a rising interest rate environment.

Netflix shares tanked 20% after-hours as the video streaming platform hailed content like Squid Game for aiding its popularity, though rising competition and slowing subscriber growth took the gloss off a strong end to 2021.

Fourth quarter net income was USD607 million, or USD1.33 per diluted share, rising from USD542 million, or USD1.19 diluted earnings per share, the year before.

Looking ahead, Netflix said for the first quarter of 2022, it expects to add 2.5 million subscribers, down from the 3.98 million it added at the same time in 2021. Netflix pointed to increased competition from other companies, such as Walt Disney and Apple, as a reason for the slowdown as it battles for market share.

"The inability of US markets to hold onto yesterday's move higher is a worry and could well indicate the potential for further losses in the coming days," said CMC's Hewson.

In Asia on Friday, the Japanese Nikkei 225 index ended down 0.9%. In China, the Shanghai Composite ended down 0.9%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney ended down 2.3%.

In early UK company news, Restaurant Group said it now expects full-year profit at the top end of forecasts.

In previous guidance, the Wagamama dining chain owner said it expects adjusted earnings before interest, tax, depreciation and amortisation in a range of GBP73 million to GBP79 million and year-end net debt less than GBP190 million.

Following cost control and continued strong trading, it now expects earnings at the top of the forecast range and net debt less than GBP180 million.

The brighter outlook comes despite the UK government's 'Plan B' coronavirus restrictions introduced in December to stem the spread of the Omicron variant.

"Whilst we are encouraged with the recent government announcement that all "Plan B" restrictions will be lifted next week, we expect consumer confidence may take longer to recover. We are also mindful that the recovery in air passenger volumes remains dependant on the timing of changes to both UK and International restrictions," said Restaurant Group.

Promotional merchandise marketer 4imprint Group said revenue in its 2021 financial year was USD787 million, up 41% on the year before. Pretax profit is to be towards the top end of analyst forecasts, it added.

"Even as challenges remain regarding the supply chain, inflationary pressures and the lingering effects of the pandemic, our performance in 2021 further demonstrates the flexibility and resilience of our business model," said 4imprint.

Close Brothers said it expects a "solid" first half performance even as trading income at Winterflood "moderated".

In Banking, the loan book increase to GBP8.69 billion at January 31 from GBP8.44 billion at the end of July. CBAM continued to deliver good growth in the period, achieving annualised net inflows of 8%.

"As highlighted in the Q1 2022 trading update, Winterflood's trading performance has moderated since the end of the 2021 financial year. As a result, operating profit in the period is broadly in line with the H1 2020 run rate," the merchant bank said.

London- and Johannesburg-listed Ninety One reported assets under management of GBP141.7 billion at the end of 2021, up on both GBP140.0 billion at the end of September and GBP128.6 billion at the end of 2020.

Advertising agency M&C Saatchi said the UK Financial Conduct Authority is closing an investigation into the company and no enforcement action will be taken.

The company added that it now expects headline pretax profit in 2021 to be "materially ahead" of previous expectations. "Momentum has continued into the start of 2022 with major client wins," it said.

The euro traded at USD1.1332 early Friday, lower than USD1.1359 late Thursday. Against the yen, the dollar was quoted at JPY113.85 versus JPY114.00.

Gold was quoted at USD1,841.51 an ounce early Friday, lower than USD1,845.00 on Thursday. Brent oil was trading at USD86.93 a barrel, down from USD88.67 late Thursday.

By Lucy Heming; lucyheming@alliancenews.com

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