4th Oct 2019 07:41
(Alliance News) - Stocks are set for rebound on Friday following a string of losses as investor focus shifts towards the all-important US nonfarm payroll data due this afternoon.
In early corporate news, oil major BP became the latest FTSE 100 firm to say goodbye to its chief executive, AstraZeneca's Fasenra has been approved by US regulators for self-administration and the UK regulators believe home and motor insurance is "not working well" for consumers.
IG says futures indicate the FTSE 100 index to open 34.66 points higher at 7,112.30 on Friday. The London large-cap index closed down 44.90 points, or 0.6%, at 7,077.64 on Thursday.
Sterling was quoted at USD1.2348 early Friday, lower than USD1.2410 at the London equities close on Thursday.
"Yesterday there was further evidence the global economy is cooling down. Broadly disappointing services data from Europe as well as the US added weight to the argument the world economy is dropping down a gear," said CMC Markets' David Madden.
He continued: "The sharp decline in global stock markets on Thursday was accelerated by the poor US ISM manufacturing figures. The reading was the weakest in 10 years, and it is fair to say that traders were given a rude awakening. The update highlighted that fact the US-China trade spat is impacting the US too. The US ISM non-manufacturing cooled from 56.4 to 52.6 – the lowest level in three years. The news initially drove US equity benchmarks lower, but a rebound was staged and the major indices finished higher. Stocks in Asia were muted ahead of the US jobs report, which is due out later today."
The latest ISM manufacturing data, while missing expectations, provided a lift to Wall Street – which had plunged more than one percent on Tuesday and Wednesday – as dealers bet on another interest rate reduction. Expectations are high for such a move.
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average closing up 0.5%, the S&P 500 up 0.8% and the Nasdaq Composite up 1.1%.
In Asia on Friday, the Japanese Nikkei 225 index closed up 0.3%. Markets in China remain closed this week, though in Hong Kong the Hang Seng is 1.5% lower.
Friday's focus will firmly be on the US non-farm payrolls data due at 1330 BST.
On Wednesday, US ADP employment data disappointed in September, lowering expectations for a blow-out nonfarm payrolls reading.
Payroll processor ADP said 135,000 jobs were added in the US in September, below expectations, according to FXStreet, of 140,000. Further, August's reading was revised down sharply to 157,000 from 195,000.
The ADP data is considered a predictor for the nonfarm reading.
In early UK company news, BP CEO Bob Dudley will retire after 40 years at the oil major. He will step down following the release of BP's financial 2019 full year results on February 4, then will retire on March 31, 2020.
He will be replaced by Bernard Looney, current Upstream CEO. Looney will remain in his current role until February.
Looney has been Upstream CEO since 2016 and is in charge of BP's oil and gas exploration, development and production activities worldwide.
BP has also appointed Lamar McKay, currently deputy CEO as chief transition officer.
"These decisions are the result of a comprehensive and deliberate search process, including consideration of a range of internal and external candidates," BP added.
Dudley continues the trend of UK company chief departing this week, with Alison Cooper leaving FTSE 100-listed cigarette maker Imperial Brands, Andrew Pardey departing FTSE 250 miner Centamin Dave Lewis, whose surprise plan to step down as Tesco chief executive was announced on Wednesday, which also saw departure announcements for two founders, Martin Gilbert at Standard Life Aberdeen and Vernon Hill at Metro Bank.
AstraZeneca's Fasenra has been approved by the US Food & Drug Administration for self-administration, in a pre-filled, single-use auto-injector - which Astra calls the "Fasenra Pen".
The pharma giant said the decision supports the data from the Phase III GRECO trial and the Phase I AMES trial. "The safety and tolerability of Fasenra in these trials were consistent with the established profile of the medicine," Astra added.
Fasenra self-administration and the Fasenra Pen are also approved in the EU. Fasenra is currently approved as an add-on maintenance treatment for severe eosinophilic asthma in the US, EU, Japan and other countries.
Meggit secured a five-year contract with the US Army. The indefinite demand/indefinite quantity deal will see Meggitt supply the US aerial weapons scoring systems.
The full-service contract is worth USD48 million.
Elsewhere, the UK Financial Conduct Authority published the interim report of its market study into the pricing of home and motor insurance, saying that competition in the sector is "not working well for all consumers".
The regulator said it is concerned about how pricing in the sector "leads to consumers who do not switch or negotiate with their provider paying high prices for their insurance".
The FCA set out a series of potential changes for insurer to remedy the situation, including banning the practice of increasing prices for customer who renew policies year on year - which could involve insurers automatically moving customers to cheaper equivalent deals.
The FCA is also recommending insurers end the practice of discouraging customers to switch policies and also be more "clear and transparent" in their dealing with customers.
Turning to the ongoing trade conflict between the world's two largest economies, Washington on Thursday announced another round of steep tariffs on Chinese goods.
About USD4.4 billion of wooden cabinets and vanities imported from China will face additional duties because they are being dumped on the American market at less than fair value, the Commerce Department said.
Chinese exporters will face tariffs of 28.7% to 251.6% to level the playing field, Commerce said in its preliminary decision.
The imported cabinets already faced tariffs August 8 after Commerce determined the Chinese manufacturers received government subsidies.
The latest announcement is one in series of cases Commerce has pursued against many product lines, usually at the request of American companies claiming to be hurt by imports from China or other trading partners.
But it is separate from the broader trade dispute in which President Donald Trump plans to impose tough taxes on nearly all imports from China.
Outside the US nonfarm payroll data, the economic calendar on Friday looks quiet. At 1330 BST there is US trade balance figures with US average hourly earnings out at the same time.
By Paul McGowan; [email protected]
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