28th Apr 2022 07:51
(Alliance News) - Stock prices in London are seen opening higher on Thursday, with traders digesting a raft of UK corporate earnings and trading updates, as well as a dovish Bank of Japan monetary policy decision.
Still to come on Thursday is some US economic data and more tech earnings after the closing bell on Wall Street. An inflation report from Germany also is due.
IG futures indicate the FTSE 100 index is to open 48.3 points, 0.7%, higher at 7,473.91 on Thursday. The blue-chip index closed up 39.42 points, or 0.5%, at 7,425.61 on Wednesday.
In early UK corporate news, lender Barclays reported a first-quarter profit fall amid chunkier impairment costs as well as "conduct" charges. Grocer Sainsbury's posted annual profit in line with market consensus. Unilever lifted its cost forecast for the second half of 2022 and said "unprecedented inflation" means it will need to take "pricing action".
Barclays posted pretax profit of GBP2.23 billion for the first quarter of 2022, down 6.9% annually from GBP2.40 billion. Credit impairment charges increased to GBP141 million from GBP55 million.
Profit also was hurt by "litigation and conduct charges". These amounted to GBP500 million. The costs relate to "customer remediation costs" from a legacy loan portfolio, as well as a previously announced GBP450 million hit after Barclays sold more financial products to investors in the US than it was allowed to.
The bank's total income increased 10% year-on-year to USD6.50 billion from GBP5.90 billion.
Barclays said it remains "committed" to a share buyback of GBP1 billion. The programme was delayed back in March, after it announced it had over-issued structured notes and exchange traded notes to US investors.
"Due to the ongoing discussions with the SEC regarding the potential restatement of the 2021 financial statements included in Barclays PLC's Form 20-F filed with the SEC, Barclays believes that it is prudent to delay the commencement of the buyback programme until those discussions have been concluded," the company said on Thursday.
Earlier on Thursday, banking peer Standard Chartered upped its annual income growth outlook.
In the three months to March 31, Asia-focused StanChart recorded pretax profit of USD1.49 billion, up 6% from USD1.41 billion reported in the same period a year prior.
Operating income rose 9% to USD4.29 billion from USD3.94 billion. Net interest income rose 8% to USD1.79 billion from USD1.66 billion, while 'other' income was 10% higher at USD2.50 billion from USD2.28 billion.
StanChart now expects income growth "slightly" ahead of its previously guided 5% to 7% range.
Unilever on Thursday said second-half costs will be higher than initially expected, at around EUR2.7 billion.
The consumer goods firm explained: "We continue to expect input cost inflation of around EUR2.1 billion in the first half, but the outbreak of war in Ukraine and the related increase in raw material inflation have raised our cost forecast for the second half of 2022."
For the first-quarter of 2022, revenue increased 12% year-on-year to EUR13.78 billion from EUR12.33 billion. Underlying sales growth was 7.3%, with prices rising 8.3% but volumes falling 1.0%.
Grocer Sainsbury's posted underlying pretax profit of GBP730 million for the financial year that ended March 5, more than doubled from GBP357 million in financial 2021 and up 25% from GBP586 million in financial 2020. Profit in financial 2021 was hurt by GBP485 million in incremental costs related to Covid-19.
The underlying profit figure topped company-compiled consensus of GBP727 million, as well as the company's own guidance of GBP720 million.
Sainsbury's swung to a statutory pretax profit of GBP854 million from a GBP164 million loss. Revenue, excluding VAT but including fuel, was 2.9% higher at GBP29.90 billion from GBP29.05 billion.
The supermarket change hikes its dividend by 24% to 13.1 pence per share from 10.6p.
Results were largely promising. Though market focus was also on the company's outlook.
Sainsbury's expects underlying pretax profit to fall as much as 14% in the new financial year. It forecasts underlying pretax profit between GBP630 million and GBP690 million.
"The year ahead will be impacted by significant external pressures and uncertainties," Sainsbury's cautioned.
Elsewhere in London, Glencore became the latest miner to report a hit from Covid-19-related absenteeism.
The company said its first quarter went as planned, "for the most part". It lowered guidance for copper, cobalt and zinc output but lifted expectations for nickel and ferrochrome after a mixed start to 2022.
Automotive retailer and distributor Inchcape said revenue climbed 13% organically year-on-year in the first quarter of 2022.
It expects pretax profit of GBP300 million for 2022, up 25% from GBP240 million in 2021, on a Russia-adjusted basis. The forecast treats Russia as a discontinued operation.
In its annual results in February, Inchcape reported GBP194.8 million in pretax profit for 2021.
"Following our decision to exit the market we have now agreed to sell the Russian business to local management," the company said on Thursday.
Among AIM listings, womenswear brand In The Style said it achieved "strong year-on-year revenue growth" in its first full year as a listed company.
Revenue in the year ended March 31 rose 28% to GBP57.3 million. Compared to financial 2020, revenue climbed almost three-fold.
Margins came under pressure, however.
"Industry-wide challenges in the global supply chain are well documented and, as previously indicated by the group, resulted in pressure on gross margin through FY22," In The Style said.
"Whilst macroeconomic pressures are expected to persist over the coming months, the group's strong brand proposition and resulting pricing power has partially mitigated the impact of cost inflation on gross margin. Management was also encouraged that for a period in January and February 2022, prior to Russia's invasion of Ukraine, freight costs somewhat normalised."
Equities in Asia were higher on Thursday. The Nikkei 225 in Tokyo rose 1.8%, while the S&P/ASX 200 in Sydney added 1.3%. The Shanghai Composite was up 0.3% in late trade. The Hang Seng in Hong Kong was 0.9% higher.
The Bank of Japan on Thursday kept interest rates unchanged and believes the Japanese economy is on the mend, but warned of "downward pressure" stemming from Russia's invasion of Ukraine.
At the April meeting, the BoJ decided by an 8-1 majority vote to keep a negative interest rate of 0.1% - recording the same result from its March meeting - with the lone dissenter being Kataoka Goushi.
Against the yen, the dollar climbed to JPY130.13 early Thursday UK time from JPY128.45 at the time of the London equities close on Wednesday. Thursday marked the first time since 2002 that the dollar has traded above JPY130.
The pound rose to USD1.2518 from USD1.2509. The euro stood at USD1.0514, down from USD1.0525.
Brent oil was quoted at USD103.98 a barrel early Thursday in London, down from USD105.34 late Wednesday. Gold stood at USD1,875.39 an ounce, down from USD1,885.50.
The economic events calendar on Thursday has Germany inflation data at 1300 BST and US GDP at 1330 BST.
By Eric Cunha; [email protected]
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