11th Jan 2021 07:55
(Alliance News) - Stock prices in London are seen opening in the red on Monday, following Asian counterparts lower, as coronavirus cases around the world remain worryingly high.
In early company news, sportswear retailer JD Sports Fashion said demand has held up well against a backdrop of store closures due to Covid-19 restrictions. Medical devices maker Smith & Nephew expects revenue to take a hit to due to the pandemic. Gambling firm Entain announced the resignation of its chief executive, while Royal Mail also confirmed changes at the top.
IG futures indicate the FTSE 100 index will open 17.66 points lower at 6,855.60. The blue-chip index closed up 16.30 points, or 0.2%, at 6,873.26 Friday.
JD Sports Fashion said despite lockdown restrictions being put in place for much of the financial year, demand has remained robust throughout the second half.
The retailer said total revenue for the twenty two week period to January 2, was more than 5% ahead of the prior year as consumers switched between physical stores and online channels.
JD Sports said for the year ending January 30, pretax profit is expected to be significantly ahead of the current market expectations, which average approximately GBP295 million. It is now anticipated that profit for the full year will be at least GBP400 million, it said.
The company posted pretax profit of GBP348.5 million in financial 2020.
"Looking ahead, it is clear that operational restrictions from the Covid-19 pandemic will also be a material factor through at least the first quarter of the year to 29 January 2022. Whilst we are confident that we have the proposition to continue to attract consumers throughout this period, the process to scale down activity in stores and scale up the digital channels, often at extremely short notice, presents significant challenges," the company said.
Smith & Nephew said it expects to post a fourth-quarter underlying revenue decline of approximately 7.0%.
The medical devices maker said sales were hurt by increased rates of Covid-19 infection from mid-October onwards, particularly in the US and Europe, as surgical procedures unconnected to the pandemic were postponed following the reintroduction of restrictions.
Smith & Nephew said annual underlying revenue is expected to have declined by around 12%. The company also reiterated that trading profit margin will be substantially lower year-on-year, with negative operating leverage due to lower volumes partially offset by cost control measures. It posted a trading profit margin of 22.8% in 2019.
Entain said Chief Executive Officer Shay Segev has given notice of his intention to leave the company to become Co-CEO of sports streaming platform DAZN.
Entain said Segev has a notice period of six months and will remain in his current role for that period or until a successor is in place and the process is "well under way to find his successor".
"We are sorry that Shay has decided to leave us but recognise that we cannot match the rewards that he has been promised," said Chair Barry Gibson.
Entain is a takeover target for US casino operator MGM Resorts International and reiterated its stance that the bid "significantly undervalues the company and its prospects".
Segev said: "Entain is in great shape after the successful launch of our new strategy. I also want to emphasise that the recent interest from MGM Resorts has had absolutely no bearing on my decision, and I fully support the board's decision to reject their proposal. Entain has a great team of leaders and an exciting future ahead through its growth and sustainability strategy, and I will do all I can to continue to support the company."
Royal Mail named Non-Executive Director Simon Thompson as CEO of its UK business, while Martin Seidenberg, the head of international arm GLS will join the board. Executive Chair Keith Williams will step back to non-executive chair, while Interim CEO Stuart Simpson will leave at the end of January.
Stock prices are seen lower Monday amid a rise in global Covid-19 cases. The US logged a record new daily virus caseload as Joe Biden, the incoming president, slammed the Trump administration's vaccine roll-out as a "travesty" and millions in Asia woke up to new lockdowns.
Almost 1.9 million people have now died from the virus, with new variants sending cases soaring and prompting the re-introduction of curbs on movement, even as some countries begin mass inoculation campaigns.
Almost 290,000 new cases were reported in the US within 24 hours on Friday according to Johns Hopkins University, a day after the world's worst-hit country recorded a daily record of nearly 4,000 deaths.
Despite nearly a year of intermittent restrictions across the globe, many countries are still recording record coronavirus numbers, including the UK which on Friday announced new highs of 1,325 deaths and 68,053 cases over 24 hours.
"Covid concerns continue to hang like a nasty cloud over the market, and given a great deal of optimism in stocks and oil is linked to the rollout of vaccines, investors are sitting with fingers and legs crossed that there won't be any negative news flows on this front [which] would prompt a sharp negative market reaction," said Axi analyst Stephen Innes.
In China, where the novel coronavirus first emerged in late 2019, authorities also tightened restrictions on two cities near Beijing to stamp out a growing cluster.
In China, the Shanghai Composite is down 1.4%, while the Hang Seng index in Hong Kong is down 0.2%. Financial markets in Japan were closed on Monday for the Coming of Age day holiday.
China's consumer prices rebounded in December, official data showed, as food prices picked up due to weather difficulties and rising demand ahead of the Lunar New Year festival.
In December, the consumer price index rose more than expected at 0.2% on-year, said the National Bureau of Statistics, with prices increasing for fresh produce and meats such as pork, beef and mutton ahead of next month's nationwide holiday. The index is a key gauge of retail inflation, and the rebound follows the first negative reading in over a decade the month before as food costs fell.
In the US on Friday, Wall Street ended at fresh record highs, with the Dow Jones Industrial Average up 0.2%, S&P 500 up 0.6% and Nasdaq Composite up 1.0%.
The US House of Representatives will proceed Monday with steps to impeach President Donald Trump, Speaker Nancy Pelosi confirmed Sunday in a letter to Democratic lawmakers.
On Monday morning, Pelosi wrote, a resolution is to be tabled calling on Vice President Mike Pence "to convene and mobilize the Cabinet to activate the 25th Amendment to declare the president incapable of executing the duties of his office."
"We are calling on the vice president to respond within 24 hours," the speaker said further. "Next, we will proceed with bringing impeachment legislation to the floor."
The pound was quoted at USD1.3507 Monday morning, down from USD1.3585 at the London equities close Friday.
The euro was priced at USD1.2185, down from USD1.2250. Against the yen, the dollar was trading at JPY104.14, up from JPY103.86.
Brent oil was trading at USD55.24 a barrel Monday morning, down from USD55.50 late Friday. Gold was quoted at USD1,845.27 an ounce, lower against USD1,856.00.
By Arvind Bhunjun; [email protected]
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