7th Feb 2020 07:42
(Alliance News) - Stock prices in London appeared set for a muted end to the week, with the day's final direction to be determined by the key US jobs report this afternoon.
In early UK company news, luxury fashion house Burberry said the coronavirus in China is hurting demand, insurer Admiral said it expects "strong" 2019 profit, and housebuilder Bellway said it saw a record interim volume output in the first half.
IG says futures indicate the FTSE 100 index of large-caps to open 11.29 points lower at 7,493.50 on Friday. The FTSE 100 index closed up 22.31 points, or 0.3%, at 7,504.79 on Thursday.
"Global stock markets have been blessed with four straight days of gains this week. Whether we can get five-for-five will probably rest with the monthly US jobs figures later," London Capital Group's Jasper Lawler commented.
Asian stocks gave back some of Thursday's strong gains following news the doctor who first warned the Chinese government about the deadly coronavirus has died from the disease.
Tokyo's Nikkei 225 index closed down 0.2%, while in China, the Shanghai Composite is down 0.3%, and the Hang Seng index in Hong Kong is 0.6% lower.
The doctor's death sparked an outpouring of grief and anger over a worsening crisis that has now killed more than 630 people.
At least 31,000 people have now been infected by a virus that ophthalmologist Li Wenliang and colleagues had first brought to light in late December.
The disease has since spread across China, prompting the government to lock down cities with tens of millions of people, while global panic has risen as more than 240 cases have emerged in two dozen countries.
A quarantined cruise ship in Japan now has 61 confirmed cases.
Chinese President Xi Jinping and US President Donald Trump, whose countries have tussled over trade and human rights, spoke on the phone about the health emergency on Friday.
On Wall Street the Dow Jones Industrial Average and the S&P 500 both closed up 0.3% and Nasdaq Composite ended 0.7% higher.
On the London Stock Exchange, fashion brand Burberry said the coronavirus in China is having a "material negative effect on luxury demand".
Burberry said 24 of its 64 stores in mainland China are closed, with the open stores working on reduced operating hours - where footfall has declined "significantly".
"The spending patterns of Chinese customers in Europe and other tourist destinations have been less impacted to date but given widening travel restrictions, we anticipate these to worsen over the coming weeks," Burberry added.
Nonetheless, the fashion label said it is taking "mitigating actions" and is "confident" in its strategy.
FTSE 100-listed insurer Admiral said it expects its 2019 pretax profit to be "strong" due to higher than expected reserve releases in UK motor insurance.
Admiral is guiding for pretax profit between GBP510 million and GBP540 million, which would represent anywhere between a 6% and 13% rise year on year.
"The higher than expected profit is due to unusually positive development, during 2019, in the cost of UK motor bodily injury claims from a number of prior underwriting years. This has led to elevated reserve releases and profit commission revenue," Admiral explained.
The insurer did note, however, its loss ratio will be higher than recent years, due to higher levels of claims inflation during 2019.
Housebuilder Bellway said it completed 5,321 new homes in the six months to March 31, a new record for the company, and a 6.3% rise year on year.
Pretax profit is expected in line with market forecasts, Bellway said. Housing revenue is guided to rise by about 4% to GBP1.53 billion from GBP1.47 billion a year before.
The rise in completions was partially offset by a 2.5% slip in the average selling price to GBP286,500 from GBP293,882. The reservation rate for private homes was up 11% to 151 per week, with a 6% rise in the overall reservation rate to 194 per week.
Peter Hargreaves, the co-founder of Hargreaves Lansdown, has sold GBP550 million million worth of stock in the fund supermarket, via an accelerated share bookbuild offering to institutional investors.
He sold 34.4 million shares at 1,600.00 pence per share. Hargreaves Lansdown shares closed at 1,708.50 pence each in London on Thursday.
Following the sale, Peter Hargreaves still holds an interest in about 24% of the company's issued share capital.
The placing was extended from the original GBP500 million Hargreaves was hoping to raise due to "strong investor demand".
Peter Hargreaves said the sale is part of a "process of long-term financial planning" to diversify his assets. "I remain, and will continue to be, a substantial shareholder in Hargreaves Lansdown. I am very proud of the business that I co-founded and helped build."
The economic events calendar on Friday has UK Halifax house price index data at 0830 GMT and the US jobs report for January at 1330 GMT.
Swissquote's Ipek Ozkardeskaya said: "The US nonfarm payrolls report is the highlight of today’s economic calendar. On Wednesday, the ADP report surprised significantly on the upside with a solid 291,000 print versus 157,000 expected by analysts and 199,000 printed earlier. Today's data may show that the US economy added 160,000 new nonfarm jobs in January, more than 145,000 printed a month earlier but less than the past twelve-month average of 170,000.
"Even though a solid ADP number doesn't necessarily predict a strong NFP read, the ADP report has a certain influence on the sentiment before the monthly NFP release, and that sentiment is positive this month."
In forex, sterling was quoted at USD1.2938 early Friday, soft compared to USD1.2990 at the London equities close on Wednesday.
The euro was trading at USD1.0974 early Thursday, slightly lower on USD1.0980 late Thursday. Against the yen, the dollar was quoted at JPY109.96 flat versus Thursday.
Gold was quoted at USD1,565.78 an ounce early Friday, versus USD1,563.48 on Thursday.
Brent oil was at USD54.98 a barrel early Friday, lower against USD55.14 late Thursday.
By Paul McGowan; [email protected]
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