14th Jul 2020 07:46
(Alliance News) - Stock prices in London are seen opening lower on Tuesday amid concerns over new coronavirus outbreaks around the world, as investors look ahead to earnings from major US banks later in the day.
In early UK company news, online grocer Ocado Group reported a narrowed pretax loss for the first half of 2020 amid an accelerated shift towards online grocery shopping globally. Hazard detection firm Halma raised its dividend after strong annual results.
IG futures indicate the FTSE 100 index is to open 66.09 points lower at 6,110.10. The blue-chip index closed up 80.78 points, or 1.3%, at 6,176.19 on Monday.
Ocado Group said it delivered a strong performance considering the challenging times created by the Covid-19 pandemic.
For the half year ended May 31, Ocado's pretax loss narrowed to GBP40.6 million from GBP147.4 million a year before, as revenue increased to GBP1.09 billion from GBP882.3 million.
Ocado said the coronavirus crisis has significantly accelerated the ongoing shift by consumers to online grocery. The company pointed to industry data that showed this is a global trend. UK online penetration has nearly doubled in the past few months.
In the US, by late June, monthly online grocery sales had reached a level six times what they were in August last year, Ocado noted, and in China the major online grocery platforms saw triple-digit year-on-year sales growth during the Covid-19 outbreak.
Looking ahead, Ocado said there is a positive outlook for online grocery, but it has suspended its Retail revenue growth forecast given uncertainties over the scale and duration of social distancing restrictions in the UK.
Halma said it delivered record revenue and profit for the 17th consecutive year despite the effects of the coronavirus pandemic.
For the financial year that ended March 31, Halma's revenue was up 11% to GBP1.34 billion from GBP1.21 billion in financial 2019. Pretax profit rose 8% to GBP224.1 million from GBP206.7 million the year prior. Adjusted pretax profit rose by 9% to GBP267.0 million from GBP245.7 million.
Halma raised its total annual dividend 5% to 16.50 pence from 15.71p, which it said was the 41st consecutive year of dividend per share growth.
Looking ahead, Halma expects financial 2021 adjusted pretax profit to be 5% to 10% below 2020
"We have previously announced that the Covid-19 pandemic was expected to have a net adverse impact on our markets and our full-year financial results to 31 March 2021, and for those results to have a significant second-half weighting. This remains our view, with the increased second-half weighting in part due to the costs of our employee support programmes in the second quarter," Chief Executive Andrew Williams said.
The Nikkei 225 index in Tokyo ended down 0.9%. In China, the Shanghai Composite is down 1.3%, while the Hang Seng index in Hong Kong is down 1.5%.
In the US, California Governor Gavin Newsom on Monday ordered all indoor restaurants, bars and movie theaters to close again as coronavirus cases soar across the state. Churches as well as businesses including gyms, shopping malls, hair salons and non-essential offices must also close indoor operations in 30 of the state's worst-hit counties including Los Angeles, he said.
Meanwhile, Hong Kong on Monday announced sweeping new measures as the city suffers a relapse. In Australia, Melbourne is already under a new lockdown and there are signs of new outbreaks in Sydney.
The US on Monday confirmed 59,222 new coronavirus cases in the previous 24 hours, Johns Hopkins University reported in its real-time tally. The country has seen a resurgence of cases in the so-called Sun Belt states, stretching across the south from Florida to California.
In the US earnings calendar this week, starting on Tuesday, lenders JPMorgan Chase, Wells Fargo and Citigroup report second-quarter earnings. Goldman Sachs reports Wednesday. Johnson & Johnson, Netflix, Morgan Stanley and Bank of America are on Thursday, with asset manager BlackRock on Friday.
"The timing is particularly bad as investors are readying themselves for US earnings getting properly underway for indications of the harm the pandemic has wrought on the most prominent companies and the economy. Indeed, earnings volatility is higher than usual; the uncertainty is also at all-time highs," said AxiTrader's Stephen Innes.
The pound was quoted at USD1.2553 early Tuesday, down from USD1.2615 at the London equities close Monday.
On the economic front, the UK economy rose 1.8% in May, staging a slight rebound after the deep fall caused by the shutdown from the coronavirus pandemic.
The Office for National Statistics said on a monthly basis, UK gross domestic product in May rose 1.8% after a 20% drop in April and a 6.9% contraction in March.
The euro was quoted at USD1.1343, lower from USD1.1359. Against the yen, the dollar was at JPY107.23, flat from JPY107.28 late Monday.
Brent quoted at USD42.00 a barrel early Tuesday, down from USD42.92 late Monday. Gold was priced at USD1,797.30 an ounce, down from USD1,806.50.
Oil was lower as the Joint Ministerial Monitoring Committee of the Organization of the Petroleum Exporting Countries prepares to meet on Tuesday and Wednesday to recommend levels for future supply cuts.
In the economics event calendar, there are eurozone industrial production at 1000 BST and the US consumer price index at 1330 BST.
By Arvind Bhunjun; [email protected]
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