LONDON (Alliance News) - UK shares are set to open higher Friday, rebounding from Thursday's disappointment in the European Central Bank's asset-backed securities programme and ahead of US non-farm payrolls figure for September.
Futures indicate the FTSE 100 to open 53 points higher at 6,499.5.
The index closed Thursday at its lowest level in eight months, at 6,446.39, as the ECB's asset-backed securities programme failed to convince markets across Europe of its effectiveness. ECB President Mario Draghi said that the central bank would start purchasing covered bonds and asset-backed securities in the fourth quarter, starting with covered bonds in the second-half of October. The bank said it will buy senior tranches with credit assessments of at least BBB-, but surprised markets by including Greek and Cypriot assets, albeit with special conditions attached.
"The end result yesterday was that Mr Draghi ended up pleasing no one, and the markets, expecting some significant detail about a large-scale EUR1 trillion easing program, got some pretty vague promises about starting asset purchases this month, including Greek and Cyprus junk rated bonds with strict conditionality, but on an insufficient scale to really alter the economic dynamics, currently at play in Europe, sending stock markets sharply lower," says CMC Markets chief market analyst Michael Hewson.
The CAC 40 and DAX both recorded heavy losses on the back of the announcement, closing Thursday down 2.8% and 2% respectively. The German index will be closed Friday to celebrate the Day of German Unity.
The US stock market recovered from initial losses Thursday, with the three main indices ending the day broadly flat.
Early Friday, Chinese non-manufacturing purchasing managers index for September showed a slowdown in expansion from August. The figure came in at 54.0 from 54.4 last month.
Japan's services sector, meanwhile, swung back to expansion in September, the latest survey from Markit Economics revealed, with a PMI score of 52.5. The figure is up from 49.9 in August.
The Hang Seng has resumed trading on Friday after two days of holiday for China's National Day. The index has reversed early losses to trade up 0.6% as the protests in Hong Kong continue.
The most recent developments has seen pro-democracy demonstrators force Hong Kong government offices to stay shut Friday even as the numbers of protesters out on the streets decreased in the Chinese territory. The protesters stopped some civil servants from entering official buildings, and all visits to central government offices were postponed or cancelled.
The Shanghai Composite remains closed Friday, while the Japanese Nikkei 225 has closed the day up 0.3%.
EasyJet raised its full-year pretax profit guidance, saying it had taken about GBP5 million of revenue from Air France after that airline was hit by a costly pilots strike and after fuel prices swung in its favour. In a trading update, the low-cost airline said it now expects pretax profit for the year that ended on September 30 to come in between GBP575 million and GBP580 million, up from the GBP545 million to GBP570 million guidance it gave in July.
Homewares retailer Dunelm Group said, in an interim management statement, that first quarter trading has been strong with total sales up 17% in the period to GBP180.6 million from GBP154.3 million in the same time last year. The company also said that first quarter like-for-like sales are up 8.9% from last year, attributing some of the rise to weaker comparatives.
The main economic focus for Friday will be the US non-farm payrolls for September to be released at 1330 BST. The figure is expected to come in at 215,000, up from August's print of 142,000. US unemployment rate for September will be released simultaneously, while ISM non-munfacturing PMI for the same month will be released at 1500 BST.
Th morning's focus will be on Markit services PMI data for September from a host of European countries, and the UK.
By Neil Thakrar; neilthakrar@alliancenews.com
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Dunelm (DNLM)
easyJet (EZJ)