22nd Jul 2020 07:48
(Alliance News) - Stock prices in London are seen opening lower on Wednesday amid fears over the coronavirus and concerns about slow progress being made by US lawmakers in drafting a new stimulus package.
In early company news, UK and French DIY retailer Kingfisher said half-year pretax profit is set to come in above last year's figure after a strong second-quarter performance. Mexican silver and gold miner Fresnillo cut its annual gold production guidance, while Chilean copper miner Antofagasta left annual copper guidance unchanged.
IG futures indicate the FTSE 100 index is to open 17.33 points lower at 6,252.40. London's blue-chip index closed up 8.21 points, or 0.1%, at 6,269.73 on Tuesday.
Kingfisher reported strong second-quarter trading figures following a strong e-commerce performance and the phased reopening of stores France and the UK as lockdown measures eased.
For the second quarter to July 18, group like-for-like sales were up 22% but year-to-date, group like-for-like sales were down 3.7%.
Kingfisher said that based on the strong sales seen to date in the second quarter, combined with cost reductions, it anticipates its half-year adjusted pretax profit to be ahead of the prior year. The DIY retailer posted interim pretax profit of GBP245 million last year.
"While we are entering the second half with a favourable trading backdrop, second half visibility remains low given uncertainty around Covid-19 and the wider economic outlook. As such, no specific financial guidance is provided for financial 2021," the company said.
Fresnillo said first-half gold production decreased 12% to 381,319 ounces from 432,417 ounces last year due to a lower volume of ore processed at Herradura and Noche Buena mines. Second-quarter gold production was 184,400 ounces, down 6.4% from the first quarter of 2020. The company attributed the fall in production to coronavirus restrictions.
Fresnillo said first half silver production was 26.8 million ounces, down 2.7% from last year.
As such, Fresnillo said annual gold production is now expected to be in a range of 785,000 ounces to 815,000 ounces, from a previously guided range of 815,000 to 900,000 ounces, as a result of Covid-19 related disruption. Silver production guidance remains in the range of 51 million ounces to 56 million ounces.
"We are maintaining our silver guidance for the full year, though we have reduced our gold guidance due to COVID-19 related working restrictions mainly at our Herradura and Noche Buena mines which have impacted production volumes. Our development projects remain on track, with the Pyrites Plant and optimisation of the beneficiation plant, both at Fresnillo, due for completion in the second half of the year while Juanicipio also remains on schedule. In the face of an unprecedented health crisis, this has been a positive quarter for Fresnillo, a testament of the excellent commitment of our people and the strength of our operations," said Chief Executive Octavio AlvÃdrez.
Antofagasta said second-quarter copper production was 177,700 tonnes, down 8.4% from 194,000 tonnes in the first quarter. So far in 2020, copper production was 371,700 tonnes, up 4.0% from 387,300 last year.
Looking ahead, Antofagasta said group copper production guidance is unchanged at the lower end of the original 725,000 to 755,000 tonnes guidance range, on the basis that no Covid-19 related shutdowns are required during the rest of the year.
In addition, capital expenditure for the year is expected to be less than USD1.3 billion, assuming the work on the Los Pelambres Expansion and ZaldÃvar Chloride Leach projects ramps-up as expected, the miner added.
CEO Ivan Arriagada said: "During the quarter, we have been running our operations with approximately two-thirds of our workforce on-site, with the remainder either quarantining or working at home. As we have gained experience of working safely in this new environment we have managed to expand our activity in areas that we initially restricted such as mine development and maintenance. As a result, we believe we can continue to operate at current levels until the end of the year, assuming no further COVID-19 related restrictions are imposed.
"Antofagasta's operating resilience has meant that despite the challenges we have faced, our copper production for the half-year is close to our original guidance at 371,700 tonnes. Furthermore, net cash costs at USD1.12/lb are some 6% lower than last year as a result of the weaker Chilean peso, lower input costs and continued tight cost control."
In the US on Tuesday, lawmakers remained at odds over a new stimulus package. Democrats have drawn up a new USD3.5 trillion plan, while Republicans and officials in the White House are bogged down trying to draw up their own stimulus, which is said to be around USD1 trillion.
Among the sticking points are the extension of a supplement to unemployment benefits and President Donald Trump's desire for tax cuts. With Congress due to take a break in August there is a concern a deal will not be agreed, leaving millions without cash.
Still, Trump said he was optimistic, telling a White House briefing: "We're working very hard on it, we're making a lot of progress."
Meanwhile, Trump on Tuesday acknowledged the coronavirus pandemic will "get worse" and noted a recent surge in cases, marking a change of tone as he revived his regular press briefings on the outbreak.
"It will probably, unfortunately, get worse before it gets better - something I don't like saying about things, but that's the way it is," Trump said.
The president also noted the "concerning" rise in cases in southern and western US states, notably Florida, Texas and California.
In China on Wednesday, the Shanghai Composite is up 0.8%, while the Hang Seng index in Hong Kong is down 0.3%. The Nikkei 225 index in Tokyo ended down 0.6%.
The pound was quoted at USD1.2719 early Wednesday, lower from USD1.2736 at the London equities close Tuesday.
The euro stood at USD1.1540, up sharply from USD1.1491. The single currency extended gains against the dollar following the EU stimulus agreement and was sitting at its highest levels since early 2019.
CMC Markets analyst Michael Hewson commented: "The slide off the highs appears to have come about as a result of scepticism from Senate Republican leader Mitch McConnell that suggested another stimulus bill while being discussed, is unlikely to be passed by the end of next week, and this slide has manifested itself into some weakness in Asia markets this morning and looks set to see markets here in Europe also open lower."
Against the yen, the dollar was trading at JPY106.81, flat from JPY106.85.
Brent oil was quoted at USD43.48 a barrel early Wednesday, down from USD44.62 a barrel at the London equities close Tuesday.
Gold was trading at USD1,857.19 an ounce, up sharply from USD1,839.86. The precious metal hit a fresh nine-year high of USD1,866.28 overnight.
By Arvind Bhunjun; [email protected]
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