London pre-open: FTSE still struggling for direction, Shell exits New Zealand
London stocks were expected to resume their decline on Friday after a ending a three-day losing streak in the previous session and a mixed day overnight on Wall Street.
The FTSE 100 was being called seven points lower by traders in the City, having finished seven points higher at 7,139.76 the day before and with the Dow Jones likewise ending a three-day skid but the S&P 500 and Nasdaq closing lower.
Helping the Dow was the easing trade war fears after the appointment of Larry Kudlow as the White House economic advisor, said market analyst Jasper Lawler at London Capital Group, who expected a small rise in the Footsie.
"The markets are rather relieved by Trump’s choice, as reflected by industrials moving higher early on. Kudlow is known as an advocate of free trade, so given the protectionist policy concerns and trade war fears circulating, the fact that Trump is even willing to have Kudlow on his team, is an encouraging sign.
"Trading has been extremely choppy over the last week as investors have focused almost single mindedly on the White House and trade war fears. Whilst these concerns are likely to hang around for a while, the FOMC next week and US earning season in two weeks, will provide distractions to traders. This is especially given the strong earnings expectations, which could serve to underpin the markets as uncertainties over the direction of Trump’s administration unnerve traders and as the Fed hikes rates."
Friday's economic data focus is on the eurozone, where consumer price inflation is expected to have ticked down slightly in February to 1.2% year on year, from 1.3% in January. Month on month inflation is expected to have increased to 0.2% from a particularly disappointing January print of -0.9%. Core inflation is forecast to remain constant at 1%.
This CPI data comes after dovish ECB chief Mario Draghi was seen as responsible for pulling the euro lower earlier in the week, as his concerns over a strong euro and sluggish eurozone inflation weighed on sentiment for the common currency, with Kudlow's history of supporting a stronger dollar also somehow boosting the dollar overnight.
In London corporate news, Royal Dutch Shell agreed overnight a deal to sell its shares in Shell entities in New Zealand to OMV for US$578m. Shell also agreed with OMV to sell its interest in and operatorship of the Great South Basin venture, which includes a drilling commitment currently estimated to be $50m.
Also overnight, NEX Group, the company formerly known as Icap, confirmed that it has received a preliminary approach by US giant CME Group regarding a potential acquisition of NEX. "Discussions are at an early stage and there can be no certainty that an offer for NEX will be made, nor as to the terms of any offer, if made."
Berkeley Group reported a resilient level of house sales over the past four months and was confident enough about the "compelling" fundamentals of the London and South East housing market to maintain profit and dividend guidance. Although sales in the second half have been above the level of its business plan, the FTSE 100 housebuilder blamed its inability to increase production beyond this level due to factors outside its control: high transaction costs, the limits on income multiples for mortgage borrowing and prevailing economic uncertainty.
Old Mutual said it had agreed to sell its Latin American businesses to CMIG International, a financial holding company based in Singapore for an undisclosed sum. Proceeds from the sale will be retained for general corporate purposes by Old Mutual Emerging Markets, which is now focused on sub-Saharan Africa.
Facilities management company Mitie said it expected full operating profits to be slightly below 2016 after modest growth in sales. The company said revenue growth should be in the range of 2-2.5% at around £2.2bn.
Pub operator JD Wetherspoon served up a modest 3.1% rise in revenue before exceptional items in its half-year to 28 January to £840.3m, with like-for-like sales improving 6.1%. The FTSE 250 company's profit before tax shot up 20.6% during the period, which included the busy Christmas season, while its operating profit was up 13.6% at £74m. Earnings per share were 35.2% higher at 45.7p.