11th Jan 2022 07:55
(Alliance News) - Stock prices in London are seen opening higher on Tuesday as investors prepare for Congressional testimony from the US Fed chair, seeking hints about the timing and pace of interest rate hikes.
In early company news, fantasy wargames maker and retailer Games Workshop raised its interim dividend. Electronics products distributor Electrocomponents said it expects annual profit ahead of expectations. Veterinary products company Dechra Pharmaceuticals acquired the rights to a canine treatment.
IG futures indicate the FTSE 100 index is to open 36.35 points higher at 7,481.60. The blue-chip index closed down 40.03 points, or 0.5%, at 7,445.25 on Monday.
Games Workshop Group said it was on the "front foot" following its half-year performance as it hailed the resilience of the Warhammer hobby.
For the six months to November 28, revenue was GBP191.5 million, up 2.5% from GBP186.8 million the year before, though pretax profit was GBP88.2 million, down 3.7% from GBP91.6 million.
"Our profit before tax is down GBP3.4 million; however, excluding foreign exchange movements and increased carriage costs and paying our staff more, our net core business profits are broadly in line with last year's record performance," explained Chief Executive Officer Kevin Roundtree.
Games Workshop declared a dividend of 65 pence, taking the total payout so far to 165p, up from 140p paid in financial 2021.
"I'm mindful of the uncertainty caused by Covid-19 and the expectation of more growth given our recent performance. To help inform shareholders and followers of Games Workshop as best we can, we will continue to provide regular updates to the market. We are pleased to confirm that we continue to trade in line with expectations and look forward to providing a further update to the market in due course," said Roundtree.
Electrocomponents said its strong trading momentum continued into the third quarter, with its product offering delivering further market share gains.
For the nine months to December 31, like-for-like revenue growth was up 28% from the same time a year ago. For the third quarter alone, sales rose 21%.
Looking ahead, Electrocomponents said it was mindful that external challenges look likely to intensify in the fourth quarter as the Covid-19 Omicron variant hits labour availability across suppliers, customers and its own operations.
Still, in light of the better than expected third quarter trading, Electrocomponents expects full year profit to be slightly ahead of consensus estimates.
CEO Lindsley Ruth said: "Our product availability and breadth, service and solutions offer and omni-channel capabilities have driven further market share gains. As we enter the fourth quarter we are mindful of external pressures, including the Omicron variant and supply chain constraints, although our better than expected third quarter trading means we expect full year profit to be slightly ahead of consensus estimate. We continue to take advantage of significant market share opportunities to drive further profitable growth."
Dechra Pharmaceuticals said it has agreed terms with Anivive Lifesciences to acquire the worldwide rights to verdinexor, used to treat of all forms and stages of canine lymphoma in dogs.
Under the terms of the agreement, Dechra will acquire the global product rights and a first right of refusal for other species along with the trademark Laverdia.
"We are delighted to acquire the worldwide rights to Laverdia. Its addition to our portfolio will expand Dechra into a new, niche therapy area, while also offering veterinarians and dog owners a simple to use, effective medication for lymphoma that extends the time a family has with their pet," said CEO Ian Page.
In the US on Monday, Wall Street ended mostly lower, with the Dow Jones Industrial Average down 0.5% and S&P 500 down 0.1%, though the Nasdaq Composite closed fractionally higher.
In Asia on Tuesday, the Japanese Nikkei 225 index closed down 0.9% - Tokyo reopening after being closed Monday for a holiday. In China, the Shanghai Composite ended down 0.7%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney closed down 0.8%.
In the economic events calendar Tuesday, US Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee.
Powell will highlight the central bank's efforts to fight inflation and stabilize the US economy at his confirmation hearing, according to testimony released Monday.
However, the Republican will likely also face questions about his ethics from a Democratic senator, after a media report raised further questions over whether a Fed official had traded securities to benefit from the upheaval caused by the Covid-19 pandemic in 2020.
Fed Vice Chair Richard Clarida announced Monday he will exit the US central bank early following questions over his equity trading activity early in the Covid-19 pandemic.
Clarida, whose term on the Fed board was set to expire on January 31, will instead resign on January 14. He gave no explanation for the accelerated departure, but said in a resignation letter he was "proud" to have helped steer "the economy away from depression".
Powell's testimony Tuesday comes after President Joe Biden nominated him for a second term leading the central bank as the US economy deals with a wave of record-high inflation that has prompted critics to accuse the Fed of complacency.
"Of the six trading days so far of 2022 the Nasdaq 100 has declined for four of them, falling to a 10-week low yesterday and into correction territory in the process, although it was able to finish slightly higher on the day, as buying interest started to come back in," said CMC Markets analyst Michael Hewson.
"In the wake of yesterday's recovery in US markets, where all three major indices closed well off their lows, today's European open looks set to be a positive one, as we look ahead to today's testimony from Fed chairman Jay Powell at his renomination hearing in Washington DC to the Senate Banking Committee."
The pound was quoted at USD1.3593 early Tuesday, up from USD1.3567 at the London equities close Monday.
UK Prime Minister Boris Johnson and senior officials in his Downing Street office faced renewed anger Monday after an email emerged inviting staff to bring drinks to a gathering during lockdown.
Martin Reynolds, the senior civil servant in Johnson's office, sent the email to over a hundred Downing Street employees in Number 10, according to an email obtained by British media.
The email read: "After what has been an incredibly busy period it would be nice to make the most of the lovely weather and have some socially distanced drinks in the No10 garden this evening. "Please join us from 6pm and bring your own booze!"
The email was sent on May 20 last year, when Britain was in the throws of its first lockdown, and when outdoor social gatherings were banned. Sue Gray, the civil servant appointed to investigate several parties allegedly held at Downing Street during the pandemic, is expected to expand her probe to cover the new claims.
The euro was priced at USD1.1340, higher against USD1.1327 late Monday. Against the Japanese yen, the dollar was trading at JPY115.23, up from JPY115.14.
Brent oil was quoted at USD81.33 a barrel Tuesday morning, firm on USD81.26 at the London equities close on Monday. Gold stood at USD1,809.50 an ounce, rising from USD1,795.34.
By Arvind Bhunjun; [email protected]
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