London shares were lagging other markets in Europe and Asia on Friday, after a strong rally on Wall Street overnight. The pound moved above $1.26, holding back the FTSE 100 index and its many dollar earners.
The key market event to end the week is the latest US personal consumption expenditure price gauge at 1330 BST. The core index reading is the Fed’s preferred gauge of inflation.
According to FXStreet-cited consensus, annual PCE inflation is expected to be stable at 6.6% in April. Core PCE inflation is forecast to slow to 4.9% from 5.2%.
Economists at Lloyds Bank forecast the core PCE inflation rate to ease to 5.1%.
‘That would confirm the message given by CPI data two weeks ago that inflation probably peaked near term in March,’ the bank said.
‘With inflation still well above the Fed‘s 2% target, the reduction seems unlikely to be enough to prevent the Fed form hiking interest rates again in June and July. What happens after that point will be partly determined by the pace at which inflation falls in the second half of the year.’
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally lower, down 2.11 points at 7,562.81
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Hang Seng: up 2.2% at 20,552.20
Nikkei 225: closed up 0.7% at 26,781.68
S&P/ASX 200: closed up 1.1% at 7,182.70
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DJIA: closed up 516.91 points, or 1.6%, at 32,637.19
S&P 500: closed up 79.11 points, or 2.0%, at 4,057.84
Nasdaq Composite: closed up 305.91 points, or 2.7%, at 11,740.65
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EUR: up at $1.0743 ($1.0725)
GBP: up at $1.2618 ($1.2580)
USD: down at JP¥127.02 (JP¥127.37)
Gold: up at $1,853.46 per ounce ($1,846.75)
Oil (Brent): soft at $116.98 a barrel ($117.05)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday’s key economic events still to come
1000 CEST EU monetary developments in euro area
0830 EDT US advance economic indicators report
0830 EDT US personal income & outlays
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The US has rejected Russian President Vladimir Putin’s call for the West to lift its economic sanctions. According to the Kremlin, Putin told Italian Prime Minister Mario Draghi that Russia would release ships carrying food and fertilizer in order to ease a looming food crisis around the world, but only ‘on condition of the end of the politically motivated restrictions imposed by the West’. Earlier, Kremlin spokesperson Dmitry Peskov said grain exports from Ukraine would be allowed to resume if the sanctions against Russia are lifted. However, White House spokeswoman Karine Jean-Pierre said it was Russia’s naval blockade that had stopped tons of product from being shipped, not sanctions. There was currently no discussion about lifting sanctions, Jean-Pierre said. ‘There is no conversation. This is Russia’s doing,’ she said.
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China will hold naval exercises in the South China Sea on Saturday, its maritime authority said, after a week of recrimination from Western powers over its military ambitions across the Pacific region. The exercises, set to take place in the sea less than 25 kilometres off the coast of south China’s Hainan province, come as the US leads warnings over China’s growing military and economic presence in an area spanning from the South China Sea to the Pacific Islands. China routinely conducts similar drills in waters near its shores, with an exercise in another area of the sea near Hainan scheduled for next week, as well as multiple others along the country’s eastern coastline. But the latest exercises come as Beijing faces a growing chorus of warnings from the US and Western allies over its naval ambitions, which critics say are a beachhead for a wider attempt to change the regional balance of power.
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BROKER RATING CHANGES
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Bernstein cuts Royal Mail to ’market-perform’ (op) - price target 375 (700) pence
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JPMorgan raises Rightmove to ’neutral’ (underweight) - price target 574 (617) pence
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JPMorgan raises Auto Trader to ’neutral’ (underweight) - price target 601 (516) pence
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COMPANIES - FTSE 100
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Pharmaceutical firm GSK said China’s National Medical Products Administration has approved a two-dose vaccine schedule for Cervarix to be administered to girls aged between 9 and 14. The jab prevents certain types of cancer-causing human papillomavirus, a viral condition. The green light adds to two-dose approvals in roughly 100 other countries, including in the European Union, Asia, Africa, and Latin America. Earlier in May, the company formally changed its name to GSK from GlaxoSmithKline. The west London-based firm at the time added that it is still proceeding with the demerger of its Consumer Healthcare business, which was first started in early 2020 and is expected to be completed in July.
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COMPANIES - FTSE 250
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Workspace is considering disposing of the light industrial assets that were formerly owned by McKay. Workspace sealed the acquisition of property firm McKay earlier in May for £272 million. Workspace, real-estate investment trust, on Friday said it has ‘received unsolicited indications of interest from a number of parties’ for the portfolio of light industrial assets. ‘Workspace confirms that it is now considering disposing of the light industrial assets,’ Workspace explained. Following the completion of the McKay acquisition, Workspace’s portfolio consisted of £2.9 billion worth of gross property assets, with 5.5 million square feet of lettable space.
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COMPANIES - SMALL CAP
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Transport provider Stagecoach, itself set to be acquired, has agree to acquire Kelsian Group’s east London bus operations and depot at Lea Interchange for £20 million. ‘Upon completion, £10 million will be payable, with a further £1 million per annum payable for ten years commencing on the first anniversary following completion, subject to certain conditions,’ Stagecoach explained. ‘The acquisition is a good strategic fit with Stagecoach’s existing operations in east and south-east London. Lea Interchange depot is well located close to Stratford, the busiest station in the UK.’ The new acquisition operates 11 contracts on behalf of Transport for London. It has an annual revenue of £38 million. On Thursday, Stagecoach said its shares are to be cancelled by June 27. Earlier in May, Pan-European Infrastructure III SCSp, an infrastructure fund managed by DWS Infrastructure, said its £594.9 million offer for Stagecoach became unconditional.
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Car dealer Caffyns resumed paying a final dividend, amid annual earnings growth, but cautioned on supply chain worries and UK consumer confidence. In the financial year that ended March 31, revenue climbed 36% to £223.9 million from £165.1 million. Pretax profit jumped to £4.4 million from £1.4 million. Caffyns declared a final dividend of 15.0 pence per share. Its annual payout totals 22.5p. It did not pay a dividend in financial 2021. Chief Executive Simon Caffyn commented: ‘The underlying profit before tax of £4.6 million was a significant improvement on the prior year. Despite limited new car supply, operating profits improved due to very buoyant trading in used cars and our strong focus on improving operational effectiveness.’ Caffyns said it has kicked off the new year with ‘a sense of optimism’ but it is ‘mindful’ of supply chain disruption and consumer confidence.
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Friday’s shareholder meetings
AG Barr PLC - AGM
Big Technologies PLC - AGM
Coca-Cola Europacific Partners PLC - AGM
Destiny Pharma PLC - AGM
Hostmore PLC - AGM
Lancashire Holdings Ltd - AGM
Lekoil Ltd - EGM re appointment and remuneration of auditors
LSL Property Services PLC - AGM
Malin Corp PLC - AGM
Old Mutual Ltd - AGM
Oxford BioMedica PLC - AGM
Renewables Infrastructure Group Ltd - AGM
Spectris PLC - AGM
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