9th Aug 2022 07:52
(Alliance News) - Stocks in London were set to open weaker on Tuesday, with a timid session in New York on Monday sapping the positive momentum that had gathered in Europe at the start of the week.
Also darkening the mood on Tuesday morning was a Taiwan diplomat accusing China of preparing to invade the island.
In early corporate news in London, RPS agreed to a GBP591 million takeover by a Canadian firm. abrdn warned its revenue is lagging, but InterContinental Hotels is enjoying increased demand.
IG futures indicate the FTSE 100 will open down 5.37 points, or 0.1%, at 7,477.00. The blue-chip index closed up 42.63 points, or 0.6%, at 7,482.37 on Monday.
"Having finished the end of last week lower after a strong US payrolls report, European markets managed to start the week strongly, after a better-than-expected performance in Chinese exports for July which prompted optimism over a pickup in global economic activity," CMC Markets analyst Michael Hewson said.
"This reasoning always felt a little tenuous given the weakness in the corresponding import data, which suggested weak domestic demand. Nonetheless US markets took their cues from the same early optimism from European markets, as the S&P 500 hit a three-month high. This optimism quickly evaporated after US chipmaker Nvidia issued a profit warning in respect of its second-quarter numbers, which are due on August 24."
The Dow Jones Industrial Average closed up 0.1%, but the S&P 500 index and the Nasdaq Composite both slipped by 0.1%. In New York, all eyes are on Wednesday's inflation reading, following the blowout jobs report last week.
Turning back to Taiwan, China launched its largest-ever air and sea exercises around the island last week in a furious response to a visit by US House Speaker Nancy Pelosi, the highest-ranking American official to visit the self-ruled island in decades.
"China has used the drills and its military playbook to prepare for the invasion of Taiwan," Joseph Wu told a press conference in Taipei on Tuesday, accusing Beijing of using Pelosi's visit as a pretext for military action.
"China's real intention is to alter the status quo in the Taiwan Strait and entire region," he said.
In retaliation, Taiwan held an artillery drill Tuesday simulating a defence against an attack.
Taipei's drill started in the southern county of Pingtung shortly after 0040 GMT with the firing of target flares and artillery, ending just under an hour later at 0130 GMT, said Lou Woei-jye, spokesman for Taiwan's Eighth Army Corps.
Beijing on Monday defended its behaviour as "firm, forceful and appropriate" to American provocation.
In Asia on Tuesday, Tokyo's Nikkei 225 index closed down 0.9%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was 0.1% lower. The S&P/ASX 200 in Sydney ended up 0.1%.
In London, Legal & General reported a rise in operating profit in the first half of 2022, in line with internal expectations, as its Retirement and Retail businesses led the charge.
"All four of our divisions are well positioned to execute on compelling structural market opportunities to deliver further profitable growth over the medium and long-term, notwithstanding market volatility," L&G explained.
In the first six months of 2022, L&G's attributable pretax profit rose 4% to GBP1.37 billion from GBP1.32 billion a year before.
Operating profit improved 8% to GBP1.16 billion from GBP1.08 billion, led by strong performances from its Retirement Institutional and Retail businesses.
L&G upped its interim dividend by 5% to 5.44 pence from 5.18p.
It also noted its Solvency II coverage ratio improved to 212% from 182%.
Chief Executive Nigel Wilson said L&G has made a "good" start to 2022.
"We have delivered for our institutional clients and retail customers, while generating good volumes and margins in a buoyant PRT market and continuing to scale LGC at pace - both in the UK and now also in the US - originating assets for our own business and for third parties, whilst also delivering a positive outcome for the economies where we invest," he said.
Holiday Inn- and Crowne Plaza-owner InterContinental Hotels Group reported a strong rise in profit in the first half as it continues to see travel demand increase.
In the six months to June 30, Pretax profit multiplied to USD299 million from USD67 million a year prior. Operating profit more than doubled to USD361 million from USD138 million.
Total revenue was up 52% to USD1.79 billion from USD1.18 billion. Comparable revenue per available room improved 61% in the first quarter, then grew 44% in the second quarter, the firm noted, meaning it saw 51% growth in the first half as a whole. When compared to the pre-pandemic levels of 2019, however, comparable RevPAR was still down 11% in recent half-year.
The hotel operator reinstated its interim dividend, offering 43.9 US cents to shareholders for the first half.
"Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG's brands, loyalty programme and technology platform," Chief Executive Keith Barr said.
FTSE 100-listed asset manager abrdn offered a grim outlook, as it feels the current market volatility will see it take longer to hit its revenue growth and cost-to- income ratio targets.
Its Investment unit ended the first half with assets under administration of GBP386 billion, sinking 17% from GBP464 billion at the same point a year prior. It recorded GBP37.3 billion in net outflows.
abrdn booked a GBP320 million loss in the six months to June 30 versus the GBP113 million profit achieved a year prior. Fee-based revenue fell 8% to GBP696 million from GBP755 million, and its cost-to-income ratio worsened to 83% from 79%.
abrdn left its interim dividend unchanged at 7.3p.
RPS Group agreed to a cash takeover by Canadian engineering services firm WSP Global Inc, as its interim revenue rose by double digits.
Toronto-listed WSP has offered 206p in cash per RPS share. RPS closed at 117p in London on Monday, giving the takeover offer a 76% premium.
RPS said its board unanimously backs the deal and shareholders representing 18% of its shares have offered their support.
Chair Ken Lever said the deal was a "compelling" offer.
"It represents a highly attractive premium to recent trading levels and provides certain value in cash today for RPS shareholders. The RPS directors also believe that the acquisition will provide career opportunities for our employees within the enlarged WSP group as well as access to a comprehensive and expanded service offering for our clients," he added.
In the six months to June 30, pretax profit rose to GBP11.1 million from GBP7.1 million, as revenue was up 18% to GBP319.5 million from GBP271.8 million.
Its interim dividend increased to 0.45p from 0.26p.
The dollar was higher early Tuesday in London.
The pound was quoted at USD1.2082, slipping from USD1.2114 at the London equities close Monday. The euro was priced at USD1.0208, down from USD1.0217. Against the yen, the dollar was trading at JPY134.99, up from JPY134.61.
Brent oil was quoted at USD95.78 a barrel Tuesday morning, down from USD96.22 late Monday. Gold stood at USD1,785.70 an ounce, down against USD1,789.50.
Tuesday's economic calendar is quiet, with no significant data due.
By Paul McGowan; [email protected]
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