14th Oct 2020 07:52
(Alliance News) - Stock prices in London look set to rebound slightly on Wednesday following a lower close on Tuesday, as US earnings season continues with a slew of reports due from major banks.
In early UK company news, education publisher Pearson reported a decline in sales in the first nine months of the year. Faring considerably better, online food ordering platform Just Eat Takeaway saw a surge in orders during the third quarter, and fast-fashion retailer ASOS saw a surge in annual earnings as it adapted to challenges posed by the coronavirus pandemic.
IG futures indicate the FTSE 100 index is to open 14.89 points higher at 5,984.60. The blue-chip index closed down 31.67 points, or 0.5%, at 5,969.71 on Tuesday.
Pearson said it saw an improving trend in the third quarter with a strong performance in Global Online Learning. The company's North American Courseware and Global Assessment units were in line with expectations, while its International business was hurt further by the Covid-19 pandemic.
For the nine months to September 30, group sales were down 14% which Pearson attributed to the coronavirus crisis and test centre and school closures in Global Assessment and International, alongside expected declines in North American Courseware.
Global Assessment sales declined 19% following test centre closures in Professional Certification, cancellation of spring testing in US Student Assessment and school closures impacting Clinical Assessment.
The North American Courseware unit's sales declined 14% with a stronger adoption performance in the autumn in US Higher Education Courseware and good growth in digital and subscription take up, leading to the faster decline of higher-priced package and print sales.
The International unit's sales declined 24% due to Covid-19 and as the associated economic effects intensified in several key markets. Pearson said this affected public and private spending on courseware and assessments.
Looking ahead Pearson said: "After nine months Pearson is on track to deliver an outturn broadly in line with market expectations. However, because of the pandemic, larger than usual uncertainties surround the fourth quarter, particularly in International."
Just Eat Takeaway.com said order growth accelerated in the third quarter, leading to a widening gap to competition in key countries, including the UK and Canada.
The online takeaway platform said 46% more orders were placed in the third quarter than a year earlier, due to strong demand in online orders as a result of coronavirus social distancing measures in restaurants.
Order growth accelerated from an increase of 32% in the first half of 2020, with orders in the third quarter up 47% in Germany on a year before, 98% in Canada and 43% in the UK.
The company said it continued to enhance its restaurant selection, driven by several new partnerships, including the roll-out of approximately 800 McDonald's restaurants and 300 Greggs locations in the UK.
"Order growth at Just Eat Takeaway.com further accelerated, consequently widening the gap to competitors in our key markets. We have continued to generate strong adjusted [earnings before interest, tax, depreciation and amotisation], while investing aggressively, and are well-positioned for autumn and winter, our traditional growth season," said Chief Executive Jitse Groen.
Online clothing retailer ASOS said it delivered a strong annual performance despite the significant challenges presented by Covid-19.
For the financial year ended August 31, pretax profit was GBP142.1 million, quadrupling from GBP33.1 million in financial 2019, while revenue rose to GBP3.26 billion from GBP2.73 billion last year.
The retailer said it had an active customer base, up 3.1 million to 23.4 million customers which demonstrated momentum in customer acquisition and high levels of engagement.
In addition, ASOS said it made a solid start to the new financial year and expects to deliver continued improvement in underlying profit. However, ASOS was cautious on the outlook for consumer demand and noted economic prospects and lifestyles of 20-somethings "remain disrupted" due to the pandemic.
"It is clear that a normal pattern of social events is not going to resume in the short term, so whilst we have confidence in our ability to continue growing our market share globally, we are cognisant of the economic impact this crisis is having on our 20-something customers and the pressure on their disposable incomes," said Chief Executive Officer Nick Beighton.
The Japanese Nikkei 225 index closed up 0.1% on Wednesday. In mainland China, the Shanghai Composite is down 0.7%, while the Hang Seng index in Hong Kong is down 0.3% - resuming trading after being closed because of a typhoon on Tuesday.
In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.6%, S&P 500 down 0.6% and Nasdaq Composite down 0.1%.
Wall Street stocks ended down following mixed earnings and after two coronavirus medical trials were paused over potential safety concerns.
US pharmaceutical giant Johnson & Johnson announced it had temporarily halted its Covid-19 vaccine trial because one of its participants had become sick.
J&J's announcement was followed on Tuesday afternoon in the US by news that Eli Lilly had also paused a trial of a coronavirus antibody treatment because of safety concerns.
"A combination of concern over setbacks in two vaccine trials, one from Johnson & Johnson, and another from Eli Lilly, as well as increasing concerns about the economic effects of tighter lockdown restrictions being implemented across Europe, saw equity markets stumble yesterday, though we have seen some stabilisation in Asia trade. As a result, we could well see a more positive start for Europe this morning," said CMC Markets analyst Michael Hewson.
The pound was quoted at USD1.2917 early Wednesday, down from USD1.2978 at the London equities close Tuesday.
UK Prime Minister Boris Johnson will talk to EU chief Ursula von der Leyen on Wednesday, as both sides blame each other for blocking progress in post-Brexit trade talks ahead of a key EU summit.
The pair's call comes on the eve of Johnson's self-imposed deadline for signs of a breakthrough in the talks and was announced after European ministers warned that time was running out for a deal.
"The PM will speak with Ursula von der Leyen tomorrow afternoon. As you'll recall, they agreed to stay in touch on the progress in the negotiations when they spoke earlier this month," Downing Street said. An EU official confirmed the call.
The 27 EU leaders are to meet in Brussels on Thursday, the same day that Johnson has cited as the deadline for a breakthrough.
The euro was priced at USD1.1743 early Wednesday, flat from USD1.1741 late Tuesday. Against the yen, the dollar was trading at JPY105.43, lower from JPY105.53.
Brent oil was quoted at USD42.31 a barrel Wednesday morning, flat from USD42.30 late Tuesday. Gold was trading at USD1,894.02 an ounce, up from USD1,890.88.
The global economic calendar for Wednesday has US producer prices at 1330 BST.
In the US earnings calendar on Wednesday, third-quarter earnings continue with results from Goldman Sachs, Wells Fargo and Bank of America.
By Arvind Bhunjun; [email protected]
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