2nd Jul 2020 07:43
(Alliance News) - Stock prices in London are set to open higher on Thursday, lifted by encouraging vaccine testing data from Pfizer and BioNTech, with markets looking ahead to the monthly US jobs report later in the day.
In early UK company news, Associated British Foods guided to a sharp slump in Primark profit for its current financial year. DS Smith said it saw a GBP15 million hit from Covid-19 in its recently-ended year. Ryanair's June traffic, while down sharply on a year ago, saw a slight improvement on May.
IG says futures indicate the FTSE 100 index of large-caps to open 44.04 points higher at 6,202.00 on Thursday. The FTSE 100 index closed down 11.78 points, or 0.2%, at 6,157.96 on Wednesday.
"Equity markets turned in a solid performance overnight, driven by a surprising rebound in US ADP employment data, and positive Covid-19 vaccine trials from Pfizer," said Jeffery Halley, senior market analyst for Asia Pacific at Oanda.
BioNTech of Germany and US pharmaceutical giant Pfizer reported positive preliminary results on Wednesday from a joint project to develop a coronavirus vaccine.
Known as BNT162b1, it produces antibody responses at or above the levels seen in any convalescent serum – blood from people who have recovered – at relatively low doses, according to BioNTech Chief Executive Officer Ugur Sahin. The preliminary data come from a so-called phase 1/2 trial that aimed to show the vaccine is not toxic and triggers an immune system response to prepare the body to fight off the virus.
Of 45 people aged 18 to 55 who took part in the trial, most received two doses, 21 days apart, of the vaccine or a placebo.
A relatively high number of participants developed a fever after the second dose, according to a study uploaded on the pre-publication website medrxiv.org. But this is not unexpected and is not considered a stumbling block.
Oanda's Halley said: "With markets vaccinating themselves over US Covid-19 worries and geopolitical concerns, they are back in peak-virus, buy everything mode. That will continue into Europe with only a severe downward surprise in the US data dump this evening likely to upset the narrative."
In Asia on Thursday, the Nikkei 225 index in Tokyo closed up 0.1%. The Shanghai Composite is up 1.9%. The Hang Seng index is up 1.9% as Hong Kong reopened after a local holiday on Wednesday. Â
In the US on Wednesday, Wall Street ended mostly higher, with the Dow Jones Industrial Average ending down 0.3%, but the S&P 500 up 0.5% and the Nasdaq Composite up 1.0%.
In early UK company news, Associated British Foods said it expects profit at low-cost fashion retailer Primark to be a third of what was achieved a year ago.
AB Foods group revenue for the 40 weeks to June 20 was down 13% on a year ago at constant currency, with sales down 39% in the third quarter alone. Among divisions in the third quarter, grocery was the stand-out performer, with revenue up 9%, while retail sales at Primark slumped a sharp 75%.
Primark stores were closed for most of the third quarter, with revenue recorded in the period relating to two short periods of trading before stores closed in mid-March and after they reopened at the end of the quarter.
The net cash outflow for Primark in the 12 week period to May 23 - when trading was non-existent or minimal - was around GBP800 million. This comprised payments to suppliers and operating expenses.
Looking ahead, AB Foods said: "For the full year we continue to expect strong progress in the aggregate adjusted operating profit of our Sugar, Grocery, Agriculture and Ingredients businesses. This will be mainly driven by a material increase in profit at AB Sugar and another year of good margin and profit growth in Grocery."
Nearly all Primark stores are now trading again, the company said, and absent a significant number of further store closures, adjusted operating profit for Primark, excluding exceptional charges, will be in the range of GBP300 million to GBP350 million for the full year, compared to GBP913 million reported for the last financial year.
Packaging firm DS Smith said it saw a limited impact from Covid-19 in its recently ended financial year, with the firm confident in its prospects.
Revenue for the year to April 30 was down 2% to GBP6.04 million but pretax profit rose 5% to GBP368 million.
Box volumes in the first five months of the second half grew as anticipated, "significantly" ahead of the first half of the year and ahead of the market. The company said its performance over the first 10 months of the year was "robust" with a limited impact - of around GBP15 million - in the final two months from Covid-19.
"New ways of working have been implemented to reflect the latest guidance on safe operations and changes in demand, which has obviously led to some additional costs. We also saw a reduction in our overall box volumes during April and May due to weakness in the industrial customer categories when the crisis was at its peak. We estimate the direct impact to operating profit in 2019-20 to be in the region of GBP15 million. In the new financial year, the recent spike in [old corrugated cases] is expected to have the largest ongoing impact," said DS Smith.
Infrastructure constrains have driven elevated OCC prices, the firm explained, but this impact is expected to be limited to the first half.
"In the medium-term, the growth drivers of e-commerce and sustainability are as strong as ever. The Covid-19 crisis is also expected to accelerate a number of the structural drivers for corrugated packaging, and our scale and innovation-led customer offering positions us well and gives us confidence for the future," said DS Smith.
Pub chain Mitchells & Butlers swung to an interim loss as trading was dealt a blow in the first half from Covid-19 lockdowns.
Total revenue in the 28 weeks to April 11 fell to GBP1.04 billion from GBP1.19 billion and the firm swing to a pretax loss of GBP121 million from a GBP75 million profit.
Trading in the first half included nearly four weeks of enforced closure due to Covid-19, the firm highlighted, with like-for-like sales growth of 0.9% before closure remaining "consistently ahead of the market".
"The business was performing very well before the enforced closure in response to Covid-19, building on the strengths of our estate of mainly freehold properties, our diversified and well-loved brands and our team's industry leading operational skills. These assets, coupled with our early experience of re-opening in Germany, give us a clear plan for re-opening," said Chief Executive Phil Urban.
Ryanair said June traffic was down 97% year-on-year to 400,000 passengers from 14.2 million a year ago. The low-cost airline operated just over 2,800 scheduled flights in June out of its budget of 79,600.
Austrian subsidiary Lauda flew no passengers at all in June.
Ryanair's figures do, though, mark an improvement on May. The Irish budget airline reported a 99.5% dive in May traffic to just 70,000 passengers.
Peer Wizz Air on Thursday had reported a 86% decrease in passengers in June, carrying 502,253 versus the year-ago figure of 3.6 million. Load factor slumped to 52.2% from 95.0%.
The economic events calendar on Thursday has eurozone unemployment and producer prices at 1000 BST. In the afternoon, there is the US jobs report for June at 1330 BST - brought forward from the usual release day of Friday due to this week's Independence Day holiday.
Consensus is for 3.0 million jobs to have been added in June, up from 2.5 million in May, according to FXStreet. The unemployment rate is expected to edge down to 12.3% from 13.3%.
The dollar was slightly lower ahead of the jobs print.
Sterling was quoted at USD1.2496 early Thursday, up from USD1.2459 at the London equities close on Wednesday. The euro traded at USD1.1268 early Thursday, firm on USD1.1260 late Wednesday.
Against the yen, the dollar was quoted at JPY107.48 versus JPY107.52.
The US notched more than 52,000 new Covid-19 cases in 24 hours Wednesday, a tally by Johns Hopkins University showed, a new one-day record as infections surge around the country.
The Baltimore-based university's tracker showed 52,898 more cases as of 2030 EDT, bringing the total number of cases since the pandemic reached the US to 2.68 million. The university also recorded a further 706 fatalities, bringing the total death toll to 128,028.
New daily case numbers have hovered around 40,000 in recent days, with Johns Hopkins recording 42,528 new infections one day earlier. Hospitalizations are also increasing in several cities, including Houston, Texas and Phoenix, Arizona.
On Wednesday Texas broke its daily record and reported 8,076 new cases of Covid-19, nearly 1,000 more than the day before.
The surge in cases has seen several states pause their re-openings. California on Wednesday banned indoor dining in Los Angeles as well as service in bars, cinemas and museums for at least three weeks.
Gold was quoted at USD1,766.82 an ounce early Thursday, up from USD1,764.23 on Wednesday. Brent oil was trading at USD42.24 a barrel early Thursday, higher than USD41.80 late Wednesday.
By Lucy Heming; [email protected]
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