London share prices had a bright start on Friday, as markets close out a mostly negative week filled with company earnings and central bank decisions, including interest rate hikes in the US, EU and Australia.
While Wall Street closed lower on Thursday, Apple earnings after the New York close provided some better news leading into the European day.
Ahead on Friday is the US nonfarm payrolls report for April, together with a steady stream of UK local election results.
The FTSE 100 index opened up 56.10 points, 0.7% at 7,758.74. It remains down 1.7% for the shortened week as a whole.
The FTSE 250 was up 78.16 points, 0.4%, at 19,323.07, and the AIM All-Share was up 2.62 points, 0.3%, at 827.60.
The Cboe UK 100 was up 0.7% at 776.27. The Cboe UK 250 was up 0.5% at 16,950.10. The Cboe Small Companies was marginally lower at 13,513.74.
In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.5%.
Sterling climbed to $1.2631 early Friday, firm on $1.2565 at the London equities close on Thursday.
The euro was stronger, following a 25 basis point interest rate hike by the European Central Bank on Thursday.
The single currency traded at $1.1045 early Friday, higher than $1.1002 late Thursday. Against the yen, the dollar was quoted at JP¥133.95, unchanged from JP¥133.94.
Investors in New York on Thursday continued to be spooked by developments in the banking sector, with the Dow Jones Industrial Average ending down 0.9%, the S&P 500 down 0.7% and the Nasdaq Composite down 0.5%.
Shares in PacWest fell 51% after the regional lender said it had been approached by potential partners and investors over a potential sale. Blue-chip banks also closed in the red.
However, Apple rose 2.5% in after-hours trading.
The Cupertino, California-based company reported a slight decline in second-quarter revenue and earnings, but its results exceeded forecasts. In particular, iPhone sales of $51.33 billion beat market expectations of $48.66 billion.
The latest numbers come after the company in February posted its first quarterly revenue drop in nearly four years after pandemic-driven restrictions on its China factories curtailed sales of the latest iPhone during the holiday season.
On Friday afternoon, London time, there will be the latest US jobs print. Nonfarm payroll net additions are expected to have slowed to 179,000 in April from 236,000 in March, according to FXStreet.
‘A soft NFP read, and ideally softening wages growth could further fuel the Fed doves and boost Fed rate cut expectations,’ said Swissquote Bank’s Ipek Ozkardeskaya
In the FTSE 100, British Airways-owner International Consolidated Airlines rose 4.1%. IAG reported a strong performance in the first quarter, as capacity recovered to close to pre-pandemic levels.
Revenue rose 71% year-on-year to €5.89 billion from €3.44 billion. Loss before tax narrowed substantially to €121 million from €916 million.
The performance was stronger than expected at all of its airlines, with BA returning to profit for the first since the beginning of 2019. The outperformance was mostly thanks to leisure demand for both long-haul and short-haul flights, IAG said.
‘We are seeing healthy forward bookings with leisure demand particularly strong, while business travel continues to recover more slowly,’ said CEO Luis Gallego.
IAG raised guidance for annual pre-exceptional operating profit to above the top end of previous guidance of €1.8 to €2.3 billion.
InterContinental Hotels fell 1.3%, after it updated on trading in the first quarter and announced the departure of its CEO.
Revenue per available room rose 33% year-on-year. RevPAR was up 18% in the Americas, up 68% in Europe, Middle East & Africa, and by 75% in Greater China. RevPAR also was ahead of pre-pandemic 2019 levels in all regions, except Greater China, where it remained down 9.1%.
‘We look forward to making additional progress over the course of 2023 in further evolving our brand portfolio, increasing RevPAR and expanding our system size,’ said CEO Keith Barr.
IHG separately announced Barr will step down at the end of June, to return to his family in the US. He will be succeeded by Elie Maalouf, who currently is head of Americas.
In the FTSE 250, Ithaca Energy rose 4.7%, as it signed an agreement with Shell setting out a marketing process for some or all of Shell’s 30% working interest in the Cambo field in the UK North Sea.
Shell has decided to sell its stake after an internal review.
The agreement allows for a range of possibilities, but Ithaca will retain a 50% stake in Cambo in all eventualities. It also gives Shell the option of selling any of its stake, which is not sold to a third party, to Ithaca. This will follow the conclusion of a six-month marketing process.
‘Securing a new owner for Shell’s stake is an important step in Ithaca Energy progressing to final investment decision,’ Ithaca CEO Alan Bruce explained.
Shell was up 1.7%. BP added 2.8%.
Brent oil fetched $73.42 a barrel early Friday, higher than $72.38 late Thursday.
Oil prices have come under pressure amid recession concerns in the US, and an unexpected contraction in China’s manufacturing sector.
China’s services sector saw strong growth in April, though at a slightly slower pace than the month before, survey data showed, helping to offset a contraction in manufacturing.
The latest Caixin services purchasing managers’ index fell to 56.4 points in April from 57.8 in March. Falling closer towards the 50-point no-change mark, it shows growth slowed slightly during the month.
However, being the second-best reading since November 2020, it still points to a strong expansion of activity in the services sector. The strong expansion helped to offset a decline in manufacturing, as the composite PMI - which weighs the services and manufacturing sectors - fell to 53.6 from 54.5, but remained above 50.
In China, the Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong was up 0.4%. Financial markets in Japan were closed for Children’s Day. The S&P/ASX 200 in Sydney was closed up 0.4%.
Back in London, AIM-listed IT consulting firm TPXImpact rose 12%.
The company raised its annual guidance for financial 2024, after a strong final quarter ended March 31. Trading was at the higher end of previous guidance during the quarter, with the board now expecting annual revenue of around £83 million for financial 2023. This would be up from £79.7 million the year before.
For financial 2024, TPXImpact raised its guidance for organic revenue growth to a 15% to 20% range, from 10% to 15% previously.
‘April 2023 marked a record for the group with new business wins exceeding £80 million, highlighting the opportunity available for TPX as it secures larger contracts while optimised for efficiency under one brand,’ the company said.
Meanwhile in the UK, votes were being tallied in the 230 local authorities in England that held elections on Thursday.
Early results indicated major losses for Rishi Sunak’s Conservative party in his first electoral test as prime minister, as the Tories ceded control of several councils to Labour and the Liberal Democrats.
Labour claimed the results suggest leader Keir Starmer will be able to replace Sunak in No 10 next year.
Gold was quoted at $2,048.23 an ounce early Friday, edging down from $2,049.92 on Thursday.
In the economic calendar, the eagerly-awaited US non-farm payrolls will be released at 1330 BST. Before that, there’s a UK construction PMI at 0930 BST, and EU retail sales at 1000 BST.
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