20th Jan 2021 07:42
(Alliance News) - Stocks in London are set to open higher on Wednesday, following a strong finish in New York overnight after incoming US Treasury secretary Janet Yellen's hearing in Washington.
In early UK economic data, inflation beat expectations for December, figures from the Office for National Statistics showed on Wednesday, as the pace of price increases doubled from November.
UK consumer prices rose 0.6% year-on-year in December, double the 0.3% rate seen in November. On a monthly basis, prices rose 0.3% in December, rebounding from November's 0.1% decline.
"Clothing prices put upward pressure on inflation in December, despite come evidence of continued discounting," said Jonathan Athow, deputy national statistician for Economic Statistics at the ONS.
In company news, Burberry's third-quarter sales fell but the fashion house said it was "encouraged", Pearson said 2020 sales were in line with expectations, and WH Smith reported better-than-expected festive trading.
IG says futures indicate the FTSE 100 index of large-caps to open up 18.65 points, or 0.3%, at 6,736.10 on Wednesday. The FTSE 100 closed down 7.70 points, or 0.1%, at 6,712.95 on Tuesday.
In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.4%, S&P 500 up 0.8% and Nasdaq Composite up 1.5%.
"It is a very constructive backdrop for US equities after US Treasury secretary nominee Janet Yellen performed admirably in her Senate hearing, stressing the need to 'act big' on fiscal policy, at the same time acknowledging that over time the budget will have to be put 'on a path that's sustainable'," said Axi's Stephen Innes.
If confirmed by the Senate, Yellen, who would be the first woman to serve as Treasury secretary, would be tasked with getting US President-Elect Joe Biden's USD1.9 trillion stimulus bill through Congress. That will entail convincing lawmakers that the benefit of more spending outweighs concerns about the country's mounting debt pile.
"Neither the president-elect, nor I, propose this relief package without an appreciation for the country's debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big," Yellen told the Senate Finance Committee at her confirmation hearing on Tuesday.
Yellen, who also was the first woman to lead the Federal Reserve, would take office as the world's largest economy struggles to get back on its feet after Covid-19 caused tens of millions of worker layoffs and a sharp contraction in economic growth.
Axi's Innes said: "Senate Republicans are of course resisting Biden's USD1.9 trillion package. Still, Janet Yellen is perhaps the best and most skilled salesperson to drive the Democrats' plan."
Her testimony came ahead of Biden's inauguration as the 46th US president on Wednesday. Senate Republican leader Mitch McConnell vowed a "safe and successful" inauguration at the Capitol, which is under tight security after a deadly siege earlier in January.
McConnell said the mob that stormed the Capitol was "fed lies" by US President Donald Trump.
The dollar was weaker as Wall Street's higher close sparked risk-on moves.
Sterling was quoted at USD1.3668 early Wednesday, higher than USD1.3616 at the London equities close on Tuesday. The euro rose to USD1.2157 early Wednesday from USD1.2127 late Tuesday.
In early UK company news, Burberry reported a decline in third quarter revenue, though it did manage to score growth in Asia.
The luxury fashion house said retail revenue fell 4% to GBP688 million in the 13 weeks to December 26, and was down 5% at constant exchange rates.
Retail comparable store sales declined 9% as planned reductions in markdown and reduced tourist traffic offset high single-digit full-price sales growth. Positively, though, Asia Pacific comparable store sales grew 11%, helped by mainland China and Korea.
Europe, the Middle East, India & Africa comparable sales fell 37%, due to fewer tourists and Covid-19 store closures, while Americas sales fell 18%.
"We remain encouraged by the strong underlying outperformance of full-price sales in Q3 FY2021. Notwithstanding further Covid-19 disruption, we expect continued progress on our strategic objectives in Q4 FY2021. Gross margins will benefit from full price, regional, and channel mix changes as well as lower stock provisions," said Burberry.
Pearson said sales and profit were in line with expectations for the full-year, hit as Covid-19 shuttered schools and cancelled exams, but the company noted a helpful shift to online learning.
The educational publisher said sales declined by 10% in 2020, and it expects to report adjusted operating profit in the range of GBP310 million to GBP315 million.
Covid-19's hit has been felt "most acutely" across International and Global Assessment amid school closures and exam cancellations, Pearson said. However, it has accelerated demand for digital learning and performance in Global Online Learning has been strong.
"Uncertainty remains in the near term as a result of the ongoing pandemic, with further lockdowns, exam cancellations and reduced global mobility. However, I am excited about our future given the shift to online learning and the huge opportunity to help more people develop the skills they need," said Chief Executive Andy Bird.
WH Smith said its Christmas performance was better-than-expected even as sales fell.
The books and stationery retailer said High Street revenue in December approached 2019 levels, standing at 92% of sales a year ago. For the 20 weeks to January 16, total revenue was 59% of 2019 revenue for the same period.
WH Smith said it expects monthly cash burn for the January to March period to be around GBP15 million to GBP20 million per month, which, following the good performance in November and December, will leave the group in "approximately the same liquidity position" at the end of March 2021 as it had expected at its results in November.
"We are not anticipating any material change to the current situation in the UK prior to the end of March 2021," WH Smith noted.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.4%. Against the yen, the dollar was quoted at JPY103.73, down from JPY103.91.
In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong was up 1.0%. The S&P/ASX 200 in Sydney closed up 0.4%.Â
Gold was quoted at USD1,854.87 an ounce early Wednesday, higher than USD1,839.70 on Tuesday. Brent oil was trading at USD56.37 a barrel, up from USD55.93 late Tuesday.
The economic events calendar on Wednesday has inflation data from the eurozone at 1000 GMT.
Biden's inauguration ceremony will start at 1530 GMT with Biden and incoming vice president Kamala Harris sworn into office at 1700 GMT.
By Lucy Heming; [email protected]
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