11th Aug 2020 07:40
(Alliance News) - Stock prices in London are seen opening higher on Tuesday following strong gains in Asian equity markets, amid hopes a new stimulus deal in the US can be agreed, while earnings season in London continues.
In early company news, hotel operator InterContinental Hotels Group swung to a pretax loss in the first half and halted dividend payments. Contract-for-difference provider Plus500 announced a big dividend hike and a new share buyback after reporting stellar interim results.
IG futures indicate the FTSE 100 index is to open 46.21 points higher at 6,096.80. The blue-chip index closed up 18.41 points, or 0.3%, at 6,050.59 on Monday.
InterContinental Hotels Group scrapped its dividend as the hotel operator said the damage caused by the coronavirus crisis to trading has been substantial.
For the half-year ended June 30, revenue almost halved to USD1.25 billion from GBP2.28 billion last year as the company swung to a pretax loss of USD275 million from a profit of USD375 million last year.
Global revenue per available room - a key metric in the hotel industry - declined by 52% in the first half and was down 75% in the second quarter, as occupancy at comparable hotels fell to 25%.
IHG said an interim dividend in respect of 2020 will not be paid, having paid a dividend of 39 US cents last year. The company said it will continue to defer consideration of further dividends until "visibility of the pace and scale of market recovery has improved".
Looking ahead, IHG said "small but steady" improvements in occupancy and RevPAR through the second quarter continued into July, with an expected RevPAR decline of 58%, and occupancy rising to around 45%.
"The impact of this crisis on our industry cannot be underestimated, but we are seeing some very early signs of improvement as restrictions ease and traveller confidence returns. Whilst the near-term outlook remains uncertain and the time period for market recovery is unknown, we are well-positioned with preferred brands in the largest markets and segments, a leading loyalty platform and one of the most resilient business models in the industry. This gives us confidence in our ability to meet the needs of our guests and owners, and to emerge strongly when markets recover," said Chief Executive Keith Barr.
Contracts-for-difference trading provider Plus500 said it delivered an "outstanding performance" in the first half across all metrics, resulting in significant shareholder returns.
For the half-year ended June 30, revenue multiplied to USD564.2 million, from USD148.0 million last year and pretax profit to USD363.2 million from USD63.9 million the year before.
Plus500 said customer deposits more than doubled to USD1.65 billion from USD467.1 million last year.
The online trading company declared a dividend of USD0.9531, up substantially from USD0.2734 last year.
In light of the strong performance, Plus500 approved a new programme to buy back up to an additional USD67.3 million of the company's shares, having completed the purchase of USD38.9 million in the first half.
The Japanese Nikkei 225 index closed up 1.9%. In China, the Shanghai Composite is up 0.6%, while the Hang Seng index in Hong Kong is up 2.5%. Financial markets in Japan reopened after being closed on Monday for a holiday.
"In quiet holiday markets, today's European open is expected to see a similarly cautious, but positive start, following on from a similarly positive Asia session, with the latest unemployment numbers from the UK the main focus of attention, ahead of this week's preliminary second-quarter GDP. It's become readily apparent that the ILO unemployment numbers bear no relation to the actual number of people out of work, or who are likely to lose their jobs in the weeks and months ahead," said CMC Markets analyst Michael Hewson.
In the US on Monday, Wall Street ended mostly higher, with the Dow Jones Industrial Average up 1.3%, S&P 500 up 0.3% and Nasdaq Composite down 0.4%, as talks in Washington on additional virus relief spending remained at a stalemate.
President Donald Trump signed four executive orders over the weekend including one to defer payroll taxes, and another to provide USD400 in weekly unemployment benefits, USD100 of which will be paid by already cash-strapped states, to replace the USD600 weekly payments that expired at the end of July.
"The clouds of uncertainly are starting to part, and a ray of optimism is breaking through that additions to the US stimulus package are looking more promising as both sides are set to rejoin the negotiating table," said AxiCorp's Stephen Innes.
The pound was quoted at USD1.3088 early Tuesday, flat from USD1.3083 at the London equities close Monday.
The UK unemployment rate in the three months to June was 3.9%, unchanged from the three months to May, the Office for National Statistics said. The market consensus forecast, cited by FXStreet, was for a rise to 4.2%.
Around 730,000 UK workers have been removed from the payrolls of UK companies since March when the coronavirus lockdown began, according to the ONS. Employment rates have continued to decline in the last month, as another 81,000 jobs fell off payrolls across the country.
Yet the official unemployment rate is not rising. To be counted among the unemployed, workers need to be actively looking for a new job, which many have decided not to do yet, the ONS said.
The Bank of England could expand its quantitative easing programme if needed, Monetary Policy Committee member and deputy governor for markets and banking Dave Ramsden told The Times in an interview published on Tuesday.
The pace of purchases under the QE programme would accelerate if "we saw signs of [market] dysfunction", he told the newspaper, adding the central bank has "significant headroom to do more QE".
Elsewhere, retail sales in the UK grew in July, according to data on Tuesday, but despite demand picking up, shops still face a low level of footfall. Total sales climbed 3.2% annually in July, according to the British Retail Consortium-KPMG sales monitor.
This compares to a 0.5% rise a year prior. Like-for-like sales were 4.3% higher in July, improved from 0.3% annual growth a year earlier.
The euro was priced at USD1.1753, soft from USD1.1761. Against the yen, the dollar was trading at JPY106.10 in London, up from JPY105.81.
Brent oil was trading at USD45.20 a barrel Tuesday morning, up from USD44.84 at the London equities close Monday. Gold was priced at USD2,013.55 an ounce, down from USD2,033.00.
By Arvind Bhunjun; [email protected]
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