22nd Oct 2021 08:33
(Alliance News) -Â News that Chinese property giant Evergrande narrowly managed to avoid a default lifted sentiment on Friday, supporting European stock markets into the end of the week.
The FTSE 100 index was up 12.40 points, or 0.2%, at 7,202.70 early Friday. The mid-cap FTSE 250 index was down 20.60 points, or 0.1%, at 22,896.45. The AIM All-Share index was down 1.53 points, or 0.1%, at 1,239.84.
The Cboe UK 100 index was up 0.2% at 714.19. The Cboe 250 was down 0.2% at 20,639.49, and the Cboe Small Companies down 0.1% at 15,524.20.
In mainland Europe, the CAC 40 in Paris was up 0.5% while the DAX 40 in Frankfurt was up 0.3% early Friday.
"European markets have opened higher with the FTSE 100 inching closer to 7,200 as the next key resistance, thanks to risk-on sentiment after Evergrande's reported bond payment lifted Asian markets," said Victoria Scholar, head of investment at Interactive Investor.
Embattled Chinese property titan Evergrande made a key offshore interest payment a day ahead of a weekend deadline, state media said, averting a default for now.
The crisis at one of China's biggest property developers, which is drowning in USD300 billion of debt, has hammered investor sentiment and fuelled fears of a spillover into the wider economy.
After tumbling 13% on Thursday - when the collapse of a planned USD2.5 billion sale of a property services unit heightened fears that the company's collapse was imminent - Evergrande shares were trading 3.1% higher in late trade in Hong Kong on Friday.
The Hang Seng index in Hong Kong was up 0.4% in late trade, while the Shanghai Composite closed down 0.3%. The Nikkei 225 index in Toyko ended up 0.3%. The S&P/ASX 200 in Sydney ended marginally higher.
At the top of the FTSE 100 in early trade was JD Sports, up 2.8% after buying an 80% stake in Crete-based Cosmos Sport. Cosmos operates 57 stores in Greece and three in Cyprus across its Cosmos fascia - its core offering which has an elevated sporting goods and lifestyle proposition - and Sneaker 10, a premium footwear offering.
JD Sports didn't provide financial details for the acquisition - saying it is too small for that to be required - but said it has agreed put and call options for the remaining 20% stake with the company founders, the Tsiknakis family. Cosmos Sport had EUR52 million in revenue in 2020.
Athleisurewear purveyor JD Sports gained despite downbeat news for the UK retail sector on Friday.
The Office for National Statistics said that on a monthly basis, UK retail sales volumes fell 0.2% in September, following August's 0.6% decline. While this was an improvement on August's result, markets had been expecting a rebound in September, according to FXStreet, as analysts had pencilled in growth of 0.5%.
Darren Morgan, director of Economic Statistics at the ONS, said household goods were the main driver of September's decline.
Morgan added: "Petrol sales exceeded their pre-pandemic level for the first time, with filling stations reporting very strong sales during the last week of September."
Despite this, the FTSE 350 retailers index was up 0.5% in early trade.
Dragging at the bottom of the FTSE 100 was London Stock Exchange Group, down 2.9% despite reporting growth in its third quarter as it continues to integrate Refinitiv.
LSEG reported a "strong performance across all divisions", leading to 2.1% growth in total income to GBP1.78 billion in the third quarter of 2021 and gross profit growth of 2.4% to GBP1.56 billion.
It has continued to integrate financial information and trading platform Refinitiv and is "comfortably" on target for full-year run-rate cost synergy delivery of GBP125 million.
"The group is well placed as we make targeted investments in product and technology enhancements to help us meet the needs of our customers and capitalise on the growth trends driving change across our industry," said Chief Executive David Schwimmer.
IHG fell 1.4% as it said performance remains some way off pre-virus levels, but is getting there.
The Holiday Inn hotel owner reported third-quarter RevPAR - revenue per available room, a key hospitality metric - growth of 66% on a year ago, though it remained down 21% on 2019. In its half-year results, IHG reported RevPAR up 20% on 2020 and down 43% on 2019.
In the Americas, RevPAR was up 76% on 2020 and down 10% on 2019, with US RevPar down just 7% on pre-virus levels. In Europe, Middle East, Africa & Australia, RevPAR was down 43% on 2019.
In greater China, RevPAR was down 30% on 2019, with IHG noting that in July, this was down just 6% due to strong domestic leisure demand. However, a resurgence in Covid cases in August saw RevPAR weaken to a 55% decline in August, though the recovery resumed once more in September.
"While we remain vigilant to fluctuating Covid restrictions in different markets, the pace of returning demand is very encouraging as travel increasingly re-opens in every region," said Chief Executive Keith Barr.
Elsewhere in London, SIG rallied 5.4% after lifting guidance. The building products supplier reported like-for-like sales growth of 17% in the third quarter of 2021 on a year ago, following on from 33% growth in the first half - a figure the company said was "distorted" by Covid a year ago.
Against pre-Covid 2019 comparatives, third quarter growth was 9%, up from the 1% growth seen in the first half.
"Whilst supply issues persist across many product groups, order books continue to build and the outlook for materials shortages has become clearer. We are mindful of the potential impact of these shortages should the situation persist for an extended period, but remain highly confident in the effectiveness of our supply chain management and commercial agility," said SIG.
The company now expects full-year underlying operating profit to be ahead of current market forecasts. For 2020, SIG made an underlying operating loss of GBP53.3 million, swinging from a profit of GBP42.5 million in 2019.
The dollar was on the front foot at the end of the week.
The euro traded at USD1.1641 early Friday, flat against USD1.1640 late Thursday. Against the yen, the dollar rose to JPY114.04 versus JPY113.85.
Sterling was quoted at USD1.3791 early Friday, soft against USD1.3808 at the London equities close on Thursday.
The pound slipped even after the UK central bank's new chief economist told the Financial Times that the Bank of England's November policy meeting will have a "live" decision about whether or not to raise interest rates.
Huw Pill said the rate of UK consumer price inflation is likely to be "close to or even slightly above 5%" early next year. As a result, the decision at the Monetary Policy Committee's November 4 meeting "is finely balanced", he told the newspaper, adding: "I think November is live."
The comments less than a week after BoE Governor Andrew Bailey cautioned that the central back will have to act to ease inflationary pressures.
Data on Wednesday showed the UK annual inflation rate eased to 3.1% in September from August's 3.2% growth. Analysts had been expecting the September reading to remain stable at 3.2%, according to FXStreet.
The economic events calendar on Friday has PMI readings from Germany, the eurozone, the UK and the US at 0830 BST, 0900 BST, 0930 BST and 1445 BST respectively.
Gold was quoted at USD1,791.75 an ounce early Friday, higher than USD1,780.15 on Thursday. Brent oil was trading at USD84.31 a barrel, firm against USD84.12 late Thursday.
By Lucy Heming;Â [email protected]
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