29th Sep 2020 07:45
(Alliance News) - Stock prices in London are seen opening higher on Tuesday following a strong finish in the US overnight, as investors await the first US presidential debate which could set the tone for November's election.
In early company news, plumbing and heating products supplier Ferguson restarted dividend payments despite annual earnings being held back by the coronavirus outbreak. Discount retailer B&M European Value Retail said it performed well in the first half of the year. Bakery chain Greggs said it was experiencing a recovery in sales in September.
IG futures indicate the FTSE 100 index is to open 20.17 points higher at 5,948.10. The blue-chip index closed up 85.26 points, or 1.5%, at 5,927.93 Monday.
Ferguson said it delivered a strong performance in financial 2020, which in light of the coronavirus outbreak, highlighted the "resilience of its business model".
For the financial year ended July 31, revenue slipped 0.9% to USD21.82 billion from USD22.01 billion in financial 2019; however, the figure was higher than the company-compiled consensus forecast of USD21.76 billion.
Pretax profit was down 4.8% to USD1.26 billion from USD1.32 billion, while trading profit, which excludes exceptional items and amortisation of acquired intangible assets, was USD1.67 billion, up 8.6% from USD1.54 billion. The trading profit figure beat the consensus forecast of USD1.59 billion.
Ferguson proposed a final dividend for the year of 208.2 cents which it said "effectively reinstates" the previously withdrawn interim dividend, and was in line with last year's payout. However, its USD500 million share buyback program remains suspended.
In addition, the company formerly known as Wolseley said it promoted Bill Brundage to chief financial officer to replace Mike Powell. Brundage has been CFO of Ferguson Enterprises for the past 3 years and will assume the role on November 1. Powell is moving to paper and packaging firm Mondi to be CFO, with Mondi on Tuesday confirming his start date as November 1.
"It is impossible to predict the future progress of the virus, or its economic impact and we expect the current levels of uncertainty to continue for the foreseeable future. However, the fundamental aspects of our business model remain attractive and since the start of the new financial year Ferguson has generated low single-digit revenue growth in the US in flat markets overall. While we remain cautious on the outlook for the year as a whole, the business is in good shape and well prepared to address any further market-related disruption," Ferguson said.
B&M European Value Retail said it has seen strong momentum for the period March 29 to September 26, with its easily accessible out-of-town locations continuing to prove attractive to customers during the pandemic.
B&M reported revenue growth in the first half of 25%, with B&M UK stores generating revenue growth of 30% including like-for-like growth of 23%.
The retailer, which earlier this month was promoted to the FTSE 100, expects to open new stores in this financial year as a result of a pick-up in leasing activity, in a range of 40 to 45 B&M UK gross openings, most of which scheduled to open in the fourth quarter.
"Our group has performed well in the first half. Our business model is proving well-attuned to the evolving needs of customers, given our combination of everyday value across a broad range of product categories being sold at convenient out-of-town locations," said Chief Executive Simon Arora.
Baked goods retailer Greggs said it was experiencing a recovery in sales in September as coronavirus lockdown measures eased and customers returned to stores.
Greggs said September company-managed shop like-for-like sales improved to 76% of the same time in 2019 in the four weeks to September 26, with higher levels of activity following a slower August.
The Newcastle-based firm said that due to its seating option being closed, it was not in a position to participate in the UK government's 'Eat Out to Help Out' scheme and this, along with high temperatures made August a "difficult month" for baked goods.
"The outlook for trading remains uncertain, with rising Covid-19 infection rates leading to increasing risks of supply chain interruption and further restrictions on customer activities out of the home. In these challenging conditions our teams continue to work hard and have proven our ability to operate with social distancing and adapt to new digital channels," the company said.
In New York on Monday, Wall Street ended sharply higher, with the Dow Jones Industrial Average up 1.5%, S&P 500 up 1.6%, and Nasdaq Composite up 1.9%.
"The buy-everything trade returned with gusto overnight. Equities rose strongly in Europe and the US, the US dollar fell, and precious metals and energy rallied. Looks may flatter to deceive though, with the rallies in precious metals and oil likely propelled by the knock-on effects of the rise in equities, rather than a sudden structural change in their outlooks, especially oil," said Oanda Markets analyst Jeffery Halley.
Brent oil was trading at USD42.20 a barrel Tuesday morning, flat from USD42.10 a barrel at the London equities close Monday. Gold was quoted at USD1,876.50 an ounce, firm from USD1,871.99.
The pound was priced at USD1.2850 early Tuesday, flat from USD1.2855 at the London equities close Monday.
The ninth round of trade talks between London and Brussels is set to get underway as the two sides continue to clash over the controversial UK Internal Market Bill.
At talks in Brussels on Monday, European Commission Vice President Maros Sefcovic reiterated calls for British ministers to scrap provisions in the legislation which could see the UK unilaterally tear up elements of the Brexit divorce deal.
At a news conference following the meeting of the joint committee on the implementation of the agreement, Sefcovic said the EU "will not be shy" in taking legal action if the UK does not withdraw measures from the draft Bill by the end of the month.
However, cabinet office minister Michael Gove, who co-chairs the committee with Sefcovic, said the UK government intended to continue with passage of the bill, which is due to go through its report stage in the Commons on Tuesday.
The euro was priced at USD1.1671, up from USD1.1653. Against the yen, the dollar was quoted at JPY105.57, flat from JPY105.58.
In Asia, the Japanese Nikkei 225 index ended flat. In China, the Shanghai Composite is down 1.5%, while the Hang Seng index in Hong Kong is down 0.5%.
In the economic calendar for Tuesday, there are UK mortgage approvals at 0930 BST and eurozone consumer confidence at 1000 BST. German inflation is due at 1300 BST and US consumer confidence at 1500 BST. In addition, the first televised US presidential election debate takes place at 9pm local time in Cleveland, Ohio between President Donald Trump and Democratic challenger Joe Biden.
"With over a month to election day in the US, political uncertainty is expected to remain high despite the still wide margin evident in the opinion polls. The TV debate could help shape market expectations about whether President Trump can narrow that gap," commented AxiCorp's Stephen Innes.
By Arvind Bhunjun; [email protected]
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