31st Jan 2020 07:41
(Alliance News) - Stock prices in London were expected to open higher on Friday, rebounding from sharp losses on Thursday, following a higher close in the US.
In company news, Aston Martin Lagonda Holdings said Canadian billionaire Lawrence Stroll will invest in the troubled luxury carmaker in a bid to reverse its fortunes following a dire 2019. Fund supermarket Hargreaves Lansdown raised its dividend after strong interim results. Soft drinks maker Britvic said it has made a robust start to financial 2020.
IG futures indicate the FTSE 100 index is to open 33.94 points higher at 7,415.90. The London blue-chip index closed down 101.61 points, or 1.4% at 7,381.96 on Thursday.
Aston Martin announced a strategic equity investment of GBP182 million by a consortium led by Stroll and proposed rights issue supported by the major shareholders of GBP318 million to raise combined proceeds of GBP500 million.
Aston Martin is placing of 45.6 million new ordinary shares at a price of 400 pence per share to raise the GBP182 million.
The financial rescue package hands the company a lifeline following a string of profit warnings last year.
Aston Martin Lagonda said it is to conduct an operational and financial review to strengthen its balance sheet to "necessarily and immediately" improve liquidity and reduce leverage.
Stroll is father of Formula 1 race car driver Lance Stroll and owner of F1 team Racing Point. In December, Autocar magazine reported that billionaire Stroll was preparing a bid to buy a major stake in the British luxury carmaker.
The Racing Point Formula 1 racing team will become the Aston Martin Formula 1 racing team with effect from the 2021 season, the company added.
Further, Yew Tree Overseas - a vehicle controlled by Stroll - has agreed to provide GBP55.5 million of short-term working capital support.
Aston Martin said Stroll is to join the board and become executive chair upon completion of the placing and will replace Penny Hughes.
"Today's fundraising is necessary and provides a platform to support the long-term future of the company. Stroll brings strong and proven expertise in both automotive and luxury brands more widely which we believe will be of significant benefit to Aston Martin Lagonda. Following a comprehensive review, today we announce a series of immediate actions to reset, stabilise and de-risk the business, positioning it for controlled, long-term profitable growth. These include rebalancing supply-demand dynamics, reducing capital expenditure and the re-phasing of some future product launches, together with cost-efficiency initiatives," said Aston Chief Executive Officer Andy Palmer.
Wealth manager Hargreaves Lansdown said the first half of its financial year was another period of growth despite facing market challenges, which included the demise of the Neil Woodford-led investment funds that Hargreaves had championed.
For the six months to December 31, revenue was up 9% to GBP257.9 million from GBP236.4 million last year and pretax profit rose 12% to GBP171.1 million from GBP153.4 million.
In addition, Hargreaves Lansdown reported a 22% increase in assets under administration to GBP105.2 billion from GBP85.9 billion the year before.
The company raised its interim dividend 9% to 11.2 pence from 10.3p.
"We remain excited by the structural growth opportunity in the UK savings and investments market and remain confident in our ability to deliver sustainable growth through the cycle. The secular transfer of long term financial provision from businesses to individuals, an increase in life expectancy, ongoing low asset yields, and a complex saving and investment environment all present immense challenges for our clients. We believe Hargreaves Lansdown is well placed to support them with these challenges through our client focused business model, broad investment and savings proposition and leading client service," said CEO Chris Hill.
Britvic said it made a robust start to the financial year and is confident of achieving full year expectations.
For the first quarter to December 31, Britvic posted revenue of GBP369.8 million, up 4.9% from the first quarter last year.
Britvic added that it remains in discussions with Refresco over the potential sale of assets in France and was confident that the transaction will complete later in 2020.
"I am pleased to report that we have delivered a robust start to the year. While we anticipate conditions will remain challenging, we are confident of achieving market expectations for the year, underpinned by the strength of our brand portfolio and exciting marketing and innovation plans," said CEO Simon Litherland.
After saying last week it needed more information, the World Health Organisation on Thursday declared a global health emergency that many hope will lead to better international co-ordination to combat the coronavirus that has killed 200 people, and sickened thousands more.
The Geneva-based body stopped short of recommending trade and travel restrictions that could have had a detrimental effect on China - a key growth engine for the world economy.
In the US on Thursday, Wall Street managed to end higher having spent most of the session lower. The Dow Jones Industrial Average closed up 0.4%, while the S&P 500 and Nasdaq Composite both added 0.3%.
Stocks pushed higher in New York following the WHO announcement, a sign "the worst-case scenario was off the table" as far as what the international body might recommend, said Patrick O'Hare of Briefing.com.
The Japanese Nikkei 225 index closed up 1.0%, while the Hang Seng index in Hong Kong is down 0.3%. The Shanghai market remained closed for the Lunar New Year holiday.
China's manufacturing activity slipped in January, official data showed, as the country grapples with the coronavirus outbreak.
Official figures released showed that the purchasing managers' index for manufacturing, an early gauge of factory activity, came in at 50.0, down slightly from 50.2 in the month before. A reading above 50 indicates the sector is expanding while below 50 shows a contraction.
Japan's industrial production rose for the first time in three months in December, while the unemployment rate was unchanged, the government said. Industrial production climbed 1.3% from the previous month, beating the median forecast of a 0.7% increase by analysts surveyed by the Nikkei Business Daily newspaper.
The government also reported that Japan's unemployment rate was flat at 2.2% in December.
The pound was quoted at USD1.3097 early Friday, soft from USD1.3102 at the London equities close Thursday.
After a tumultuous period since the European Union referendum in June 2016, both politically and economically, the UK on Friday will formally leave the EU at 2300 GMT and immediately enter an 11-month transition period.
The euro was quoted at USD1.1021 early Friday, flat from USD1.1028 late Thursday. Against the yen, the dollar was trading at JPY109.03, up from JPY108.75 late Thursday.
Gold was quoted at USD1.573.78 an ounce early Friday, lower than USD1,582.85 late Thursday. Brent oil was at USD59.14 a barrel, up from USD58.60.
The economic events calendar on Friday has UK mortgage approvals at 0930 GMT and eurozone GDP and inflation figures at 1000 GMT. In the afternoon, there are US personal consumption expenditure index readings at 1330 GMT - the core reading is the US Federal Reserve's preferred gauge of inflation.
By Arvind Bhunjun; [email protected]
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