11th Sep 2015 06:33
LONDON (Alliance News) - London stocks are set to open higher Friday, taking the lead from a positive close on Wall Street and a relative calm session for Asian shares, with UK consumer inflation expectations and US producer prices expected to provide the main data interest.
IG says futures indicate the FTSE 100 index to open higher at 6,175.20. The index closed lower on Thursday at 6,155.81.
In Asia on Friday, the Japanese Nikkei 225 index closed down 0.2%. In China, Hong Kong's Hang Seng index is up 0.4% and the Shanghai Composite is down 0.7%
"European shares look set to open higher, tracking the advance on Wall Street but with a week to go until the US Federal Reserve makes its decision, markets are likely to remain on edge with volatile moves possible in either direction," says CMC Markets analyst Jasper Lawler.
US investors focused again Thursday on employment data coming from the US as they looked for clues as to whether the Fed will raise rates at next week's Federal Open Market Committee meeting.
The US Labor Department released a report showing that jobless claims fell slightly, in line with estimates in the week ended September 4. The report said initial jobless claims fell to 275,000, a decrease of 6,000 from the previous week's revised level of 281,000.
The report showed a slight increase in continuing jobless claims, a reading on the number of people receiving ongoing unemployment assistance. Continuing claims increased by 10,000 in the week ended August 28.
Oanda analyst Craig Erlam believes that the uncertainty is causing more problems in the markets than the prospect of a rate hike itself.
"This view is increasingly shared by many emerging market central bankers who think the Fed should just raise rates already and remove the uncertainty from the markets," says Erlam.
Wall Street ended higher Thursday, with shares in tech-giant Apple regaining the losses seen after the launch of new versions of its key products on Wednesday. The DJIA and the S&P 500 closed up 0.5%, while the Nasdaq Composite finished up 0.8%.
The only significant economic data release expected Friday in the UK is consumer inflation expectations, due at 0930 BST.
Oanda's Erlam explains that, in a period of low inflation, it is important for inflation expectations to remain high or the consumer may start putting off large purchases and wait for cheaper prices, or just not be worried about them rising much.
"In a country like the UK, that could lead to some serious problems and consumer spending is so important to the economy," Erlam says.
On the UK corporate front, JD Wetherspoon reported a drop in pretax profit in its recently-ended financial year, despite growth in revenue, as it took a hit to its profit margin due to higher staff and utilities costs.
The pub company reported a 2% fall in pretax profit in the year ended July 26 to GBP77.8 million from GBP79.4 million the year before, although revenue rose 7.4% to GBP1.51 billion from GBP1.41 billion.
Operating margin before exceptional items decreased to 7.4% from 8.3% which Wetherspoons said was due to lower gross margin and increases in staff costs, utilities and depreciation, which put pressure on profit. The group will pay a total dividend of 12.0 pence, which is flat year-on-year.
FTSE 100-listed outsourcer G4S said it has secured a USD187.0 million contract to provide security services to Basra Gas Co in Iraq and to the UK Foreign and Commonwealth Office in Afghanistan.
G4S said the contract will start in January 2016 and includes a two-year extension option which would increase the total value of the deal to USD270.0 million.
Aerospace and engineering group Rolls-Royce Holdings said it has won a contract from French airplane maker Airbus to provide Trent 700 engines and TotalCare engine service support for five Beluga XL air transporter aircraft.
Rolls-Royce said the deal is worth USD700.0 million and will replace the current Airbus Beluga fleet, which is powered by engines from a different manufacturer.
In the economic calendar, in the US, the producer price index is due at 1330 BST, before the Reuters/Michigan consumer sentiment index, due at 1500 BST.
By Daniel Ruiz; [email protected]
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