10th Jan 2020 07:34
(Alliance News) - Stock prices look set to open in the green on Friday in London, with investors digesting a new twist to events in the Middle East as well as progress in the US-China trade dispute.
In the UK, Ryanair has boosted profit guidance after a strong festive period, while JD Sports reported encouraging trading and Mondi announced the departure of its chief executive.
IG futures indicate the FTSE 100 index is to open 30.3 points higher at 5,628.42. The blue chip index closed up 23.19 points, or 0.3% at 7,598.12 on Thursday.
US President Donald Trump said Thursday he had "suspicions" about the crash of a Ukrainian airliner outside Tehran that killed all 176 people aboard, as US officials reported it had been mistakenly shot down by Iran.
Unnamed officials told US media that Iran fired two surface-to-air missiles at the aircraft as it took off on Wednesday morning, bringing it down in a blaze of flames before it exploded on the ground.
The US conclusion was reportedly based on satellite, radar and electronic data indicating a tragic error.
The disaster unfolded just hours after Tehran launched ballistic missiles at US military targets in Iraq to retaliate for the US drone strike in Baghdad last week that killed a top Iranian general.
ABC News said an unnamed official called the two-missile scenario "highly likely".
"They say a week is a long time in politics, and this week it's also been true for financial markets, given some of the hyperbolic talk of World War Three that was doing the rounds early on Monday morning," said Michael Hewson at CMC Markets UK.
Brent oil was quoted at USD65.30 a barrel early Friday, down from USD66.80 at the close Thursday. The price of oil touched USD70 shortly after the US killed Iranian general Qassem Soleimani, but it has since edged back as fears of war have receded.
Negotiations for the second phase of a pending US-China trade deal will begin promptly but the outcome may wait until after this year's elections, Trump said Thursday.
Trump's remarks come days before Beijing's trade envoy is due in Washington to sign a "phase one" agreement, marking a pause in the two sides' nearly two-year trade war.
The US leader also openly cast doubt on whether American farmers would be able to supply China with the massive increases in agricultural exports expected to be part of the deal.
"We'll start right away negotiating phase two. It will take a little time," Trump told reporters.
Hewson added: "With this week's geopolitical risk subsiding as we head towards the weekend, investors now have the opportunity to focus on the signing of the signing of the new US, China phase one trade deal next week, as well as the health of the US economy today, and in particular the labour market which has continued to look resilient."
The US jobs report for December is at 1330 GMT. This follows a report that employment increased by more than expected in December, payroll processor ADP reported on Wednesday.
In November, US non-farm payrolls showed a big 266,000 rise in jobs.
In the US on Thursday Wall Street ended in the green, with the Dow Jones Industrial Average closing up 0.7%, the S&P 500 also up 0.7%, and the Nasdaq Composite 0.8% higher.
The Japanese Nikkei 225 index ended 0.5% higher on Friday. In China, the Shanghai Composite closed 0.1% lower, while the Hang Seng index in Hong Kong is up 0.2%.
In early UK corporate news, budget airline Ryanair said trading was stronger than expected over the festive period, and as a result it has upped profit guidance.
For its year ending March, the Irish carrier sees post-tax profit between EUR950 million to EUR1.05 billion, having previously guided for EUR800 million to EUR900 million.
Ryanair said trading was boosted by better-than-expected close-in bookings over Christmas and New Year, while forward bookings to April are 1% higher year-on-year which will lead to higher-than-expected fares.
One downside for Ryanair is Laudamotion. The recently purchased Austrian airline is underperforming due to lower-than-expected fares over the festive period. Fares are being hurt by intense competition in both Germany and Austria, Ryanair said.
In the FTSE 100, paper and packaging firm Mondi said Chief Executive Peter Oswald is to leave the company at the end of March. He originally joined Mondi in 1992, and has been CEO since early 2017.
Mondi has appointed Chief Financial Officer Andrew King as interim CEO whilst a replacement for Oswald is found, the company added.
Sportswear firm JD Sports Fashion reiterated full-year guidance and reported "positive like-for-like trends" over the pivotal Christmas trading period, despite the UK retail market facing tricky conditions.
The company said full-year headline pretax profit, after removing the impact of IFRS 16, will fall in the "upper quartile" of market consensus range of GBP403 million and GBP433 million. This could represent a annual jump of as much as 27% from last year's pretax profit of GBP339.9 million. IFRS 16 governs the financial treatment of leases.
JD Sports said: "Against a backdrop of widely reported retail challenges in the group's core UK market, it is encouraging to report positive like-for-like trends in the group's global sports fashion fascias, particularly overseas."
FTSE 250 discount retailer B&M European Value Retail reported 9.3% revenue growth excluding currency movements for the 13 weeks to December 28.
In the UK, revenue growth was 8.8%, and the like-for-like growth figure was 0.3%. This came against a backdrop of poor retail conditions and a decision not to carry out any early discounting, B&M said.
Heron Foods is doing well, the company continued, with like-for-like sales growth solid. B&M is making progress at French subsidiary Babou, it added.
However Jawoll, B&M's German business, reported a 1.5% fall in revenue for the quarter at constant currency. A review of the unit's future, announced November, is ongoing.
Elsewhere, fashion retailer Superdry said trading has not been as strong as expected in the period between October 27 and January 4, despite a strong Black Friday.
Superdry said there has been "unprecedented" promotional activity as well as subdued consumer demand post-Christmas.
"These factors, combined with shortages of some better-selling product, driven by the need to reduce our inherited inventory position, adversely impacted our sales during peak trading," Superdry added.
Retail sales have missed expectations by GBP23 million, the company continued, while wholesale operations have suffered a GBP5 million shortfall due to timing issues.
As a result, Superdry now sees underlying pretax profit for its year ending April between zero and GBP10 million.
The UK's exit from the EU moved a step closer after Prime Minister Boris Johnson's Brexit Bill cleared the House of Commons, the lower house of the UK parliament. The EU (Withdrawal Agreement) Bill was given a third reading by 330 votes to 231, a majority of 99.
The comfortable victory for the UK prime minister followed the influx of new Tory MPs and is in marked contrast to the tortuous attempts to steer a Brexit bill through the Commons before the December general election.
The Bill, which paves the way for Brexit on January 31, will now go to the House of Lords – where it could face a more difficult passage as Johnson does not have a majority in the upper chamber.
The pound was quoted at USD1.3075 early on Friday, up from USD1.3045 at the close Thursday.
By George Collard; [email protected]
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