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LONDON BRIEFING: Stocks seen higher; UK house prices continue to fall

1st Sep 2023 07:49

(Alliance News) - Stocks in London are set to open higher on Friday as markets looked ahead to a data-heavy day.

The economic calendar has a slew of manufacturing purchasing managers' index prints, starting with France at 0850 BST. However, the main event for markets will be the release of US employment data at 1330 BST.

Michael Hewson, chief market analyst at CMC Markets, said the non-farm payrolls report shows a "modest slowdown" in the rate of jobs growth, similar to that seen in the ADP jobs report earlier in the week, then there could be further gains in stock markets, as bets increase that the Federal Reserve may be done when it comes to further rate hikes.

"At the very least it could go some way to signalling a pause as the US central bank looks to assess the effects recent rate hikes are having on the US economy," he said.

In China, the Hang Seng index in Hong Kong was unexpectedly closed as Super Typhoon Saola barrelled towards China's southern coast.

The finance hub issued a T8 threat warning – the city's third-highest – around 0240 HKT, and the city's bourse said the "morning trading sessions for all markets will be cancelled".

In early UK corporate news, Diversified Energy reported record average net daily production in the first half of 2023, as well as higher adjusted earnings.

Here is what you need to know at the London market open:




FTSE 100: called up 9.67 points, or 0.1%, at 7,448.80


Hang Seng: closed due to typhoon

Nikkei 225: closed up 0.3% at 32,710.62

S&P/ASX 200: closed down 0.4% at 7,278.30


DJIA: closed down 168.33 points, 0.5%, at 34,721.91

S&P 500: closed down 0.2% at 4,507.66

Nasdaq Composite: closed up 0.1% at 14,034.97


EUR: lower at USD1.0834 (USD1.0847)

GBP: lower at USD1.2644 (USD1.2671)

USD: lower at JPY145.58 (JPY145.65)

Gold: lower at USD1,938.88 per ounce (USD1,942.51)

(Brent): higher at USD87.01 a barrel (USD85.88)

(changes since previous London equities close)




Friday's key economic events still to come:

UK BoE Chief Economist Huw Pill speaks at South African Reserve Bank Biennial Conference

08:30 EDT Canada GDP

09:30 EDT Canada manufacturing PMI

09:30 CEST EU EuroCOIN indicator of euro area economic activity

10:00 CEST EU manufacturing PMI

09:50 CEST France manufacturing PMI

09:55 CEST Germany manufacturing PMI

11:00 IST Ireland GDP

09:45 CEST Italy manufacturing PMI

10:00 CEST Italy GDP

11:00 CEST Italy PPI

11:00 SAT South Africa Absa PMI

09:15 CEST Spain manufacturing PMI

08:30 CEST Switzerland CPI

09:30 CEST Switzerland PMI

07:00 BST UK Nationwide house price index

09:30 BST UK manufacturing PMI

08:30 EDT US employment report

09:45 EDT US S&P Global manufacturing PMI

10:00 EDT US ISM manufacturing PMI


UK house prices saw further weakness in August, according to the latest Nationwide house price index. House prices fell 0.8% month-on-month in August, picking up pace from a 0.3% fall in July. On an annual basis, prices are now 5.3% below their August 2022 peak, accelerating from a 3.8% fall in July. Nationwide noted this was the weakest rate since July 2009. The average house price in August was GBP259,153 on a non-seasonally adjusted basis, down from GBP260,828 the previous month. "The softening is not surprising, given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels. For example, mortgage approvals have been around 20% below the 2019 average in recent months and mortgage application data suggests the weakness has been maintained more recently," said Robert Gardner, Nationwide's chief economist.


Output from factories in Australia shrank for the ninth month in a row in August, though marginally, as supply conditions and price pressures worsened, according to the results of a private sector survey. The Judo Bank manufacturing purchasing managers' index remained at 49.6 points last month, unchanged from July. This was the PMI's sixth month in a row below the neutral 50-point mark, indicating slight contraction in the sector. However, it was better than the flash reading of 49.4 points and indicates only "a mild cyclical slowdown", according to survey sponsors Judo Bank.


Japan's factory sector remained in contraction in August, according to survey results. The headline au Jibun Bank manufacturing purchasing manager's index was unchanged at 49.6 points in August compared to July, the third consecutive month of contraction, and revised downward from a flash estimate of 49.7. The decline was the result of weak domestic and global economic trends, said index compilers S&P Global, as well as a continued downturn in production and order books, while increasing prices also impacted the sector.


The manufacturing sector in China returned to growth last month, according to the results of a survey, amid a renewed increase in order intake. The Caixin China general manufacturing purchasing managers' index reading for August was 51.0 points, up from 49.2 in July. The reading was above the neutral score of 50 points, meaning growth, and was the best since February. It was the third time in the past four months that the PMI score for China's factory sector has improved. "Despite the impact of high temperature on some manufacturers' production, overall market demand improved, and supply increased, with the gauges for total new orders and output both returning to expansionary territory," commented Wang Zhe, senior economist at Caixin Insight Group. "Overseas demand continued to drag on performance."




Jefferies raises Whitbread price target to 4,400 (4,200) pence - 'buy'


Jefferies raises Target Healthcare REIT to 'buy' (hold) - price target 107 pence


Jefferies cuts Renishaw price target to 3,070 (3,270) pence - 'underperform'




GSK announced that the Japanese Ministry of Health, Labour & Welfare has accepted for review a supplementary new drug application for Nucala, also known as mepolizumab, as a treatment for chronic rhinosinusitis with nasal polyps in adults. The supplementary new drug application is based on the results of the phase three Merit trial which studied the efficacy and safety of mepolizumab over a year period. Chronic rhinosinusitis affects 2% to 4% of the general population, according to GSK. It is chronic inflammation of the nasal lining. If approved, GSK said mepolizumab would be the first anti-IL-5 biologic for adults with inadequately controlled chronic rhinosinusitis with nasal polyps in Japan.




Diversified Energy said its latest half-year results reflected the "resilience" and "consistency" of its business as it reported record average net daily production and higher adjusted earnings. In the six months ended June 30, the US-focused energy company reported a "record" average net daily production of 852 million cubic feet equivalent per day, up from 816 million cubic feet equivalent per day the year prior. Its adjusted earnings before interest, tax, depreciation and amortisation increased to USD283 million from USD224 million as its adjusted cost per unit reduced to USD1.66 per million cubic feet equivalent from USD1.84 per million cubic feet equivalent.




CentralNic said it has acquired Adrenalads LLC for USD2.4 million in cash. The internet services holding company that develops and manages online marketplaces described Adrenalads as a "premium source" of tier-1 search and direct navigation traffic, catering specifically to e-commerce platforms. It is expected the acquisition will be immediately earnings accretive. In 2022, Adrenalads reported reported of revenue of USD2.7 million and adjusted earnings before interest, tax, depreciation and amortisation of USD700,000. CentralNic plans to integrate Adrenalads into the Zeropark ecosystem. Zeropark is the company's commerce media offering.


Johnson Service Group announced it has acquired the entirety of Harkglade, along with its subsidiaries Celtic Linen and Millbrook Linen, for a total consideration of EUR31.5 million. The acquisition is expected to be immediately earnings enhancing and should further diversify the company's customer base. "We are delighted to have completed the acquisition of Celtic Linen, which represents a further significant step in our strategy to expand the range and scale of services we offer. I have known Celtic Linen for many years and have been very impressed with the quality of the business, its reputation for excellent customer service and the growth it has achieved in recent years," commented Chief Executive Peter Egan. According to Johnson Service, Celtic Linen is the largest linen supplier to Ireland's healthcare sector and is the second largest linen supplier to the country's hotel, restaurant and catering sector.


By Heather Rydings, Alliance News senior economics reporter

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