25th Sep 2019 07:43
(Alliance News) - Stock prices in London are set to open lower on Wednesday following news US Democrats are to launch an impeachment inquiry into President Donald Trump.
In early UK company news, grocer J Sainsbury reported improving sales trends and confirmed it will cease new mortgage sales. Water works United Utilities expects interim profit to grow. Online fashion retailer boohoo reported a "fantastic" first half.
IG says futures indicate the FTSE 100 index of large-caps to open 39.73 points lower at 7,251.70 on Wednesday. The FTSE 100 index closed down 34.65 points, or 0.5%, at 7,291.43 on Tuesday.
"European stocks slipped back again yesterday, as did US stocks in the wake of a rather political speech by President Trump at the United Nations where he tore into China, Iran and the World Trade Organisation, while also saying that the future belongs, not to globalists, but to patriots," commented Michael Hewson at CMC Markets.
"The losses in the US gained further traction after Europe had closed on reports that House Speaker Nancy Pelosi was weighing the prospect of announcing impeachment proceedings against President Trump," he added.
As a result, said Hewson, stocks in Europe are likely to open lower on Wednesday.
In the US on Tuesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.5%, the S&P 500 down 0.8% and Nasdaq Composite shedding 1.5%.
House Speaker Nancy Pelosi launched a formal impeachment inquiry against US President Donald Trump on Tuesday, yielding to mounting pressure from fellow Democrats and plunging a deeply divided nation into an election-year clash between Congress and the commander in chief.
The probe focuses partly on whether Trump abused his presidential powers and sought help from a foreign government to undermine Democratic foe Joe Biden and help his own re-election.
In a summer phone call with Ukrainian President Volodymyr Zelenskiy, he is said to have asked for help investigating former vice president Biden and his son Hunter. In the days before the call, Trump ordered advisers to freeze USD400 million in military aid for Ukraine - prompting speculation that he was holding out the money as leverage for information on the Bidens.
Trump has authorised the release of a transcript of the call, which is to be made public on Wednesday.
In response to news of the impeachment inquiry, Trump tweeted: "Such an important day at the United Nations, so much work and so much success, and the Democrats purposely had to ruin and demean it with more breaking news Witch Hunt garbage."
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite is down 0.8%, while the Hang Seng index in Hong Kong is down 1.3%.
In early UK company news, J Sainsbury said it plans to stop new mortgage sales while reporting an improvement in sales trends in the second quarter.
Like-for-like sales excluding fuel in the 12 weeks to September 21 fell 0.2%, compared to a steeper 1.6% fall seen in the first quarter of the year. Total retail sales were up 0.1%, in contrast to a 1.2% fall in the first quarter.
"Sales momentum was stronger in all areas, and we further improved our performance relative to our competitors, particularly in Grocery," said Chief Executive Mike Coupe.
For the first half, Sainsbury's expects underlying pretax profit to be GBP50 million lower than a year ago due to the phasing of cost savings, unseasonal weather and higher marketing costs. However, the firm is on track to deliver annual profit in line with consensus.
As the grocer hosts its capital markets day on Wednesday, it laid out some new strategic aims.
In its financial services business, Sainsbury's is to "immediately" stop new mortgage sales, and there will be no more group capital injections after GBP35 million in the current financial year.
Elsewhere, the grocer will review its store estate, which will result in 10 new supermarkets and 10 to 15 closures, and 110 new convenience stores with 30 to 40 closures. The closures should deliver an ongoing net operating profit benefit of GBP20 million per year, the company said.
United Utilities said first half revenue is expected to be higher than a year ago. This is largely due to allowed regulatory revenue changes, the firm explained.
Underlying operating profit is also expected to grow, due to higher revenue and lower infrastructure renewals expenditure.
Net debt is expected to increase by around GBP250 million at September 30 versus the firm's position at the end of March, largely reflecting a prepayment of around GBP100 million of agreed deficit recovery contributions in relation to United Utilities' defined-benefit pension schemes.
Hazard detection firm Halma said it has made good progress in its first half.
The company's performance was in line with board expectations and saw further organic constant currency revenue growth, even against a strong comparative period a year ago.
All sectors delivered organic constant currency revenue growth, with Environmental & Analysis particularly strong while the rate of growth in the Medical and Infrastructure Safety segments was more modest.
Car maker Aston Martin Lagonda Global Holdings said it has completed the pricing of USD150 million in 12% senior secured notes due April 15, 2022.
In addition, Aston Martin has an option to draw up to USD100 million of additional notes, subject to 1,400 orders of its new DBX model being received within nine months of the initial note issue.
"The conditions on the delayed draw notes are well within our order expectations. Aston Martin's first SUV, the DBX, remains operationally on track and we are very pleased with the reception the car received at Monterey Car week during August," said Chief Financial Officer Mark Wilson.
Aston Martin said it had 806 orders in production in total as of July 1 and expects to meet current analyst consensus for its key financial metrics in 2019. It said 2020 capital expenditure is not expected to exceed GBP350 million.
Defence firm Babcock confirmed its annual expectations after reporting in-line trade.
The Marine sector is performing well, Babcock said, while in Nuclear the civil nuclear market remains challenging but activity levels have increased across defence. While the firm said it has seen some delays in the award of new contracts in Aviation, overall bidding activity across the sector has increased.
Online fashion retailer boohoo said it delivered a "fantastic" first half with strong revenue and profit growth.
Revenue in the six months to the end of August was up 43% to GBP564.9 million, with pretax profit jumping 83% to GBP45.2 million.
boohoo brand revenue was up 34% to GBP281.0 million while PrettyLittleThing continues to catch up, with sales 41% higher at GBP237.6 million. Nasty Gal sales more than doubled to GBP43.9 million.
On more recent acquisitions, boohoo said revenue from Miss Pap - bought in March - is starting to grow "rapidly" since go-live in April. Karen Millen and Coast, both purchased in August, will commence trading online in October.
"It has been a fantastic first half of the year for the group. We have delivered significant market share gains across all of our key markets, and for the first time in our history, revenue has exceeded GBP1 billion in the last 12 months," said Chief Executive John Lyttle.
In UK political news, parliament will reconvene at 1130 BST following the Supreme Court's ruling on Tuesday that Boris Johnson's prorogation was unlawful.
Prime Minister Johnson - who was at the UN in New York at the time of the ruling - will fly back into a political storm with demands for his resignation from furious opposition parties, determined to hold him to account over his Brexit plans.
Johnson is expected to land in the UK around midday on Wednesday, and it is thought likely that he will address the Commons in the afternoon. He updated Cabinet ministers on the ruling in a conference call on Tuesday from New York, in which Commons Leader Jacob Rees-Mogg reportedly said the Supreme Court judgment amounted to a "constitutional coup".
Although there will be no Prime Minister's Questions, House of Commons Speaker Bercow said there would be "full scope" for urgent questions, ministerial statements and applications for emergency debates which MPs have used to seize control of the Commons timetable from the government.
Sterling was quoted at USD1.2466 early Wednesday, flat compared to USD1.2469 at the London equities close on Tuesday.
In Wednesday's economic calendar, the Confederation of British Industry's Distributive Trades survey is out at 1100 BST.
By Lucy Heming; [email protected]
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