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London open: Stocks edge up ahead of US retail sales, bank earnings
London stocks edged higher in early trade on Friday, taking their cue from positive sessions in the US and Asia, as investors eyed US retail sales and bank earnings.
At 0820 BST, the FTSE 100 was up 0.2% at 7,854.86, with sentiment lifted by a cooler-than-expected US inflation print.
Figures released on Thursday by the US Department of Labor showed that the producer price index for March fell 0.5% against expectations for a flat reading. Year-on-year, it rose 2.7%, down from 4.9% in February and below consensus expectations for a 3.4% increase.
Richard Hunter, head of markets at Interactive Investor, said: “While the consensus remains that there is one more hike of 0.25% to come in May, there are no more rate rises expected thereafter this year.
“Indeed, some are projecting that interest rate cuts could follow before the end of the year, depending on the severity of the recession which is expected to follow, although this is not currently the Fed’s base case.”
The focus on Friday will be on US retail sales data March, due at 1330 BST. Investors will also watch out for first-quarter results from JPMorgan, Citigroup and Wells Fargo.
In UK equity markets, Dechra Pharmaceuticals rocketed after confirming late on Thursday that it has entered into discussions with private equity firm EQT about a possible all-cash recommended offer for the company. Under the terms of the offer, Dechra shareholders would receive 4,070p per share in cash.
Dechra said that if a firm offer is made, it is currently being discussed that the private equities investment department of the Abu Dhabi Investment Authority (ADIA), through a wholly-owned subsidiary of ADIA, would be a co-investor with EQT.
Online electricals retailer AO World shot higher after saying it expects full-year profit to be around the top end of its guidance range as it continues to see positive traction from its initiatives to cut costs and improve margins.
888 surged after the William Hill owner said it expects “significantly” higher adjusted core profit for this year, but that revenue could be lower by a low-to-mid single digit percentage.
Iconic boot maker Dr Martens ticked up despite lowering profit guidance for the second time in four months due to higher costs at its Los Angeles distribution centre and lower wholesale revenues.
Fashion retailer Superdry tumbled as it withdrew its “broadly breakeven” full-year profit guidance, pointing a challenging trading environment and disappointing retail sales in February and March.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Halma Plc | +1.85% | +41.00 | 2,256.00 |
| 2 |  |
Hikma Pharmaceuticals Plc | +1.71% | +30.50 | 1,812.00 |
| 3 |  |
Rightmove Plc | +1.68% | +9.60 | 579.40 |
| 4 |  |
Spirax-sarco Engineering Plc | +1.64% | +190.00 | 11,780.00 |
| 5 |  |
Standard Chartered Plc | +1.62% | +10.00 | 628.60 |
| 6 |  |
Whitbread Plc | +1.59% | +48.00 | 3,064.00 |
| 7 |  |
Croda International Plc | +1.53% | +104.00 | 6,896.00 |
| 8 |  |
Itv Plc | +1.39% | +1.12 | 81.90 |
| 9 |  |
Ferguson Plc | +1.33% | +135.00 | 10,310.00 |
| 10 |  |
Smurfit Kappa Group Plc | +1.29% | +38.00 | 2,982.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | -0.88% | -1.50 | 168.65 |
| 2 |  |
National Grid Plc | -0.74% | -8.50 | 1,135.50 |
| 3 |  |
Rolls-royce Holdings Plc | -0.74% | -1.10 | 148.05 |
| 4 |  |
Bp Plc | -0.69% | -3.70 | 535.00 |
| 5 |  |
Tesco Plc | -0.67% | -1.80 | 267.20 |
| 6 |  |
Aviva Plc | -0.61% | -2.60 | 422.50 |
| 7 |  |
United Utilities Group Plc | -0.55% | -6.00 | 1,084.50 |
| 8 |  |
Rio Tinto Plc | -0.52% | -29.00 | 5,508.00 |
| 9 |  |
Anglo American Plc | -0.52% | -14.00 | 2,692.50 |
| 10 |  |
Sainsbury (j) Plc | -0.47% | -1.30 | 276.90 |
US close: Stocks rise as producer inflation shows signs of easing
Wall Street trading ended on a positive note on Thursday, with the boost for US stocks being led by gains in the technology sector.
The Dow Jones Industrial Average rose 1.41% to close at 34,029.69, while the S&P 500 climbed 1.33% to finish at 4,146.22.
The tech-heavy Nasdaq Composite had the strongest performance, finishing 1.99% higher at 12,166.27.
Investor sentiment was buoyed by data showing a continued easing on upward price pressure, as the latest figures on producer price inflation were released.
On the currency front, the dollar was last unchanged against sterling at 79.85p, while it fell 0.01% on the euro to trade at 90.52 euro cents.
Against the yen, the greenback last dropped 0.02% to change hands at JPY 132.55.
“The afternoon has seen stocks bolstered by weaker PPI figures in the US, along with a rise in jobless claims,” said IG chief market analyst Chris Beauchamp earlier.
“This means that the market is once again back to hoping that more bad news will tilt the Fed further towards a pause beyond the next meeting, though hopes for a ‘no change’ at the upcoming get-together remain dim.”
Beauchamp said it was, however, “just an appetiser” ahead of earnings, which would take centre stage for at least the next fortnight.
“Tomorrow’s bank figures of course will focus on the prospect of any further crisis in the sector, and hints that credit conditions are worsening could also go into the ‘bad news is good news’ pile – as long as there isn’t too much of it.”
Producer price inflation shows signs of easing
In economic news, US producer prices saw an unexpected decline in March, largely due to falling energy and services prices, according to the Department of Labor.
Final demand prices dropped by a seasonally-adjusted 0.5% month-on-month, after economists predicted no change.
Specifically, final demand goods prices fell 1.0%, with energy costs driving that decline, as they dropped 6.4%.
Food inflation rose 0.6% in the month, but only after three consecutive monthly drops.
Final demand services prices also declined, with trade falling by 0.9% and transportation and warehousing by 1.3%.
On a year-on-year basis, the increase in total final demand prices decreased to 2.7% from 4.9%.
Meanwhile, the US labour market showed signs of further easing last week, with seasonally-adjusted initial unemployment claims rising by 11,000 to reach 239,000 for the seven days ended 8 April, according to the Labor Department.
Economists polled by Dow Jones Newswires had predicted an increase from the prior week’s preliminary estimate of 228,000, to 235,000.
The four-week moving average of first-time claims rose by 2,250 to reach 240,000.
Secondary unemployment claims – those not being filed for the first time and referencing the week ended 1 April – decreased 13,000 to reach 1.81 million.
Match Group sparks interest as airlines descend
In equities, shares in dating app conglomerate Match Group rose 3.93% after Barclays upgraded the stock to ‘overweight’.
On the downside, Delta Air Lines descended 1.1% after the legacy carrier reported record summer travel bookings and forecast a full-year profit, but also unveiled a quarterly loss.
Similarly, American Airlines Group was in the red for a second day, with a 0.38% slide after its raised profit outlook failed to meet investor expectations.
Friday newspaper round-up: Sainsbury’s, Glencore, LSE
The Ministry of Defence has awarded £650m to manufacturers working on its Tempest fighter jet, in the latest sign that the UK is pushing forward with the aim of producing the aircraft by 2035. The companies who will receive the money are led by manufacturer BAE Systems, jet engine maker Rolls-Royce, and the UK arms of Italy’s Leonardo and European missile-maker MBDA. – Guardian
Sainsbury’s has followed Tesco in cutting the price of milk by 5p a pint as supermarkets take advantage of a spring boost to production amid lacklustre demand. Tesco, the UK’s biggest supermarket, cut the price of milk to 90p for a pint or £1.55 for four pints – a reduction of 10p – for the first time since 2020 this week. – Guardian
Britain’s flagship heat pump scheme has been branded an “embarrassment” after badly missing its target of 30,000 annual installations and spending just 40pc of its budget. Fewer than 10,000 heat pumps were installed in the first year of the grant programme, which gives households money to pay for them as part of net zero efforts to wean Britain off gas. – Telegraph
Jeremy Hunt has warned that workers are not getting good enough returns from their pension investments and vowed to overhaul Britain’s retirement regime. The Chancellor said that Britain’s pension industry was in need of “big reform” and should follow the likes of Australia and Canada by allowing more money to be put into lucrative but potentially more risky assets such as infrastructure. – Telegraph
Glencore’s $23 billion takeover tilt at Teck suffered further setbacks yesterday when it was rebuffed once more by its Canadian target and was criticised by a high-profile shareholder. Teck called Glencore’s attempt to merge the two companies and spin off their combined coal assets “opportunistic and unrealistic”. – The Times
A former investment banker and hedge fund manager have teamed up with the London Stock Exchange Group to launch a service enabling institutional clients to take leveraged bets on bitcoin. Arnab Sen, 44, co-founder of London-based GFO-X, revealed plans yesterday to go live in the fourth quarter of this year, announcing that the LSEG’s LCH clearing house operation in Paris had been signed up to clear the derivatives trades. – The Times
