LONDON MARKET OPEN: US jobs data looms; UK house prices turn downward

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Stock markets lacked clear direction on Friday morning, with the week's last major risk event - US jobs figures - set for early afternoon.

The data for July comes as the US Federal Reserve tightens monetary policy in a bid to quell rampant inflation. It has enacted successive 75-basis-point rate increases. On Thursday, the Bank of England approved its first 50-point interest rate hike since 1995.

The FTSE 100 was down 15.81 points, 0.2%, at 7,432.25 early Friday. The FTSE 250 index was up just 1.48 points at 20,157.24. The AIM All-Share index was up 2.67 points, or 0.3%, at 925.39.

The Cboe UK 100 index was down 0.3% at 741.80. The Cboe 250 was up 0.1% at 17,548.64. The Cboe Small Companies was up 0.1% at 13,894.73.

In Paris, the CAC 40 stock index was up 0.1%, while in Frankfurt, the DAX 40 was marginally lower.

The July US nonfarm payrolls report is at 1330 BST. It follows Thursday's jobless claims data, which showed initial claims for unemployment support were slightly higher than expected last week.

New jobless claims have now risen in four out of the last five weeks, suggesting the US economy's momentum is waning.

According to the Department of Labor, initial jobless claims increased to 260,000 in the week that ended July 30, from 254,000 the week earlier. The prior week's figure was downwardly revised from 256,000.

The US economy is expected to have added 250,000 jobs in July, according to consensus cited by FXStreet, slowing from 372,000 in June.

In New York on Thursday, the Dow Jones Industrial Average closed down 0.3%, the S&P 500 slipped 0.1%, though the Nasdaq Composite added 0.4%.

The dollar was largely weaker despite the somewhat uncertain mood in financial markets on Friday.

The pound was quoted at $1.2161 early Friday in London, up from $1.2115 at the London equities close on Thursday. The euro stood at $1.0235, up slightly from $1.0220. Against the yen, the dollar was trading at JP¥133.31, unchanged from JP¥133.30.

In the UK, house prices declined on a monthly basis for the first time in over a year in July, figures from mortgage lender Halifax showed. House prices in the UK declined 0.1% on a monthly basis in July, defying expectations of a 0.9% rise, according to FXStreet. In June, prices had risen 1.4% from May.

‘Following a year of exceptionally strong growth, UK house prices fell last month for the first time since June 2021, albeit marginally. This left the average house price at £293,221, down £365 from the previous month's record high,’ Halifax Managing Director Russell Galley said.

On an annual basis, growth slowed to 12% in July, from a 13% hike in June.

Commented Andrew Wishart, senior property economist at Capital Economics: ‘The direction of travel is clear. The reduction in households' real spending power due to high inflation and the drag on buyer demand from rising mortgage rates are now weighing on prospective buyers' budgets and sentiment. Indeed, the RICS survey points to house prices falling on a sustained basis by year-end.’

Among London stocks, Hargreaves Lansdown added 3.7%, as it posted a weaker annual outturn but promises growth in its ordinary dividend.

Retail investment platform Hargreaves Lansdown said it sees ‘continued, economic and geopolitical turbulence’ ahead.

‘This will continue to impact key drivers of our business including asset levels and investor confidence. We have supported clients through such events and period for many years, and each time we have come through stronger. This time will be no different,’ the FTSE 100 listing said.

Pretax profit in the year that ended June 30 fell 26% to £269.2 million from £366.0 million. Revenue declined 7.6% to £583.0 million from £631.0 million. Over the financial year, assets under administration declined by 8.6% to £123.8 billion from £135.5 billion, ‘driven by market falls’.

HL raised its annual ordinary dividend by 3.1% to 39.7 pence from 38.5p. However, including a special payout of 12.0p for financial 2021, the total annual dividend is down 24% from 50.5p.

Looking ahead, HL expects 3% ordinary dividend growth for financial 2023.

London Stock Exchange Group added 3.6% as it said results in the first half of 2022 improved, as this year's interim period had an extra month's worth of contribution from recent acquisition Refinitiv.

LSEG completed the $27 billion acquisition of financial market data and trading infrastructure provider Refinitiv in January 2021, ending a long process after first making its interest clear back in July 2019.

LESG's total income excluding recoveries jumped by 24% year-on-year to £3.57 billion from £2.87 billion. Including recoveries, the measure was up at the same rate to £3.74 billion from £3.02 billion.

Pretax profit jumped 73% to £803 million from £463 million.

The stock exchange operator said its offering benefits from market price volatility. Revenue from the Capital Markets unit alone jumped 34% year-on-year. Its largest revenue contributor, Data & Analytics, saw a top-line improvement of 26%.

LSEG lifted its interim dividend by 27% to 31.7p per share from 25.0p. It will also launch a £750 million buyback, ‘phased over multiple tranches over 12 months’. This kicks off on Friday.

Advertising agency WPP upped its annual outlook. It now expects organic revenue to rise by between 6.0% and 7.0% for 2022. It had initially guided for a 5.5% to 6.5% rise.

Reported pretax profit in the first half of 2022 climbed 6.1% year-on-year to £419 million from £394 million. Headline pretax profit surged 12% to £562 million from £502 million a year earlier. Revenue increased 10% to £6.76 billion from £6.13 billion. WPP upped its payout by 20% to 15.0p from 12.5p.

It was not all good news, however. WPP noted that media investment firm GroupM now expects global advertising to grow by 8.4% in 2022, down from a previous growth estimate of 9.7%. There is a ‘softer outlook’ for advertising in China due to ‘ongoing lockdowns’, WPP noted.

WPP shares slid 6.1%, the worst large-cap performer.

Pendragon shares rose 8.5% to 23.33p, giving it a market capitalisation of £326.0 million.

Pendragon said a ‘large international corporate’ bidder for the car dealership chain has decided against pursuing takeover talks. The potential suitor, which wasn't named, had made a bid of 29p per share. This would value Pendragon's share capital at around £405.1 million.

Pendragon was unable to engage with one of its five largest shareholders, the London-listing explained.

‘The proposal was contingent on receipt of irrevocable commitments from all of Pendragon's major shareholders. The board of Pendragon concluded that the proposal merited engagement with its five largest shareholders and received strong support for the proposal from four of these shareholders who were willing to sign irrevocable commitments. However, Pendragon was unable to engage with one of these shareholders and therefore, given this lack of certainty, the bidder has withdrawn its non-binding offer and both parties have terminated discussions,’ it said.

In March, Sky News reported that Pendragon had rejected a £400 million takeover approach from 27% shareholder Hedin Mobility Group. According to Sky, Hedin, a Swedish firm that operates more than 200 vehicle showrooms in Belgium, Norway, Sweden and Switzerland through its subsidiary Hedin Bil, had tabled a secret 28p offer.

In Tokyo, the Nikkei 225 ended 0.9% higher. In China, the Shanghai Composite was up 1.1%. The Hang Seng in Hong Kong was 0.3% higher. The S&P/ASX 200 closed up 0.6% in Sydney.

Gold stood at $1,790.54 an ounce early Friday in London, up from $1,785.66 late Thursday.

Brent oil was quoted at $94.66 a barrel, flat from $94.65. A week ago, a barrel of Brent fetched $107.80.

‘Crude oil prices are down 10% this week, adding to global demand concerns that have been evident in industrial metals for months,’ SPI Asset Management analyst Stephen Innes commented.

BP fell 1.9% in early trade in London, fellow oil major Shell shed 1.3%. TotalEnergies lost 1.0% in Paris.

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