26th Aug 2020 07:42
(Alliance News) - Stock prices in London are seen opening higher on Wednesday as investors look ahead to the start of the US Federal Reserve's economic symposium, starting on Thursday.
In early company news, Russian gold miner Polymetal International doubled its interim dividend after reporting strong results. Subprime lender Provident Financial scrapped its interim dividend after swinging to a loss. Transport company Go-Ahead Group announced a Singapore bus contract extension.
IG futures indicate the FTSE 100 index is to open 10.99 points higher at 6,048.00. The blue-chip index closed down 67.72 points, or 1.1%, at 6,037.01 on Tuesday.
Polymetal International reported a strong financial performance in the first half of the year amid a challenging global backdrop.
Gold miners have benefitted from a sharp rise in the gold price which is up 27% so far in 2020.
For the six months to June 30, revenue was up 21% to USD1.14 billion from USD941 million last year and net earnings more than doubled to USD381 million from USD153 million.
Polymetal declared an interim dividend of USD0.40, twice as high as USD0.20 paid out last year.
Looking ahead, Polymetal said it remains on track to meet 2020 production guidance of 1.5 million ounces of gold equivalent and kept its full-year all-in-sustaining cash cost guidance in a range between USD850 to USD900 per ounce.
"We are pleased to report a strong financial performance in the first half of the year amidst a challenging global backdrop. Favourable commodity prices and our tight cost control, as well as the impact of foreign exchange and improved grades, drove a significant increase in the group's earnings, cash flow and dividends. Importantly, we've been able to minimise the impact of the Covid-19 pandemic on our people, communities, and operations. Our key development projects continue to progress on schedule," said Chief Executive Vitaly Nesis.
Provident Financial skipped its dividend after the subprime lender swung to an interim loss.
For the half-year ended June 30, the company swung to a pretax loss of GBP28 million from a profit of GBP43.1 million last year as revenue fell 11% to GBP445.6 million from GBP501.5 million.
Provident said it is not proposing an interim dividend having paid out 9.0 pence last year, as it seeks to preserve capital and provide financial stability. However, it said it intends to resume dividend payments to shareholders as soon as financial conditions normalise.
The doorstep lender said it had strong capital and liquidity positions built during the period with regulatory capital of GBP705 million at the end of June. This equates to a CET1 ratio of 35.4% and a surplus of GBP215 million above the minimum regulatory requirement.
"The group's response to challenges brought on by the early stages of Covid-19 was swift, putting us in a stronger position heading into the second half of 2020. Since the end of June, some encouraging signs of increased activity levels in our markets can be seen, with improving customer demand and spending trends evident. Indeed, Moneybarn posted record levels of new business in July despite tighter underwriting," said Chief Executive Malcolm Le May.
"However, the potential economic shock and uncertainty that Covid-19 will bring to the UK economy over the coming months must not be underestimated. Looking to the full year results, the group continues to trade in line with internal plans," he added.
Go-Ahead Group said that the Land Transport Authority of Singapore has granted a two-year contract extension to Go-Ahead Singapore to continue operating around 450 buses in the Loyang region of the island.
The extension will begin in September 2021 and run until September 2023. This follows the initial five-year contract which saw the company's entry into the Singapore bus market in September 2016, Go-Ahead said.
Investor sentiment remains upbeat after China and the US said top representatives had held a phone call on the "phase one" trade agreement they signed in January. There had been concerns about the future of the deal as Washington and Beijing's relationship grows increasingly fraught over Hong Kong, the coronavirus, Huawei and TikTok.
The Jackson Hole Economic Policy Symposium gets underway virtually on Thursday, with investors awaiting a key speech by Fed Chair Jerome Powell.
"Today's European market open is expected to be a positive one; however, given the choppiness seen so far this week we're not expecting to see significant moves one way or the other. The main drivers remain on US-China trade relations and on tomorrow's central bank symposium, and central bank speakers," said CMC Markets analyst Michael Hewson.
The pound was quoted at USD1.3133 early Wednesday, firm from USD1.3123 at the London equities close Tuesday.
UK Prime Minister Boris Johnson has dismissed as "absolute nonsense" a suggestion that he will quit early next year.
Speculation about the prime minister's future was fuelled after the father-in-law of his senior aide Dominic Cummings reportedly said Johnson was struggling with his health and would leave Number 10 in six months time.
But during a visit to Devon, Johnson, who spent time in intensive care with Covid-19 in April, said he was feeling "far better", partly due to losing weight.
The euro stood at USD1.1813 Wednesday morning, flat from USD1.1818 at the European equities close Tuesday. Against the yen, the dollar was trading at JPY106.37, lower than JPY106.50.
Brent oil was quoted at USD46.02 a barrel Wednesday morning, up from USD45.83 at the London equities close Tuesday. Gold was trading at USD1,921.28 an ounce, slightly higher from USD1,918.27.
The Japanese Nikkei 225 index ended flat. In China, the Shanghai Composite is down 0.8%, while the Hang Seng index in Hong Kong is flat.
By Arvind Bhunjun; [email protected]
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