29th May 2020 07:53
(Alliance News) - Stock prices in London are set to open lower on Friday, following a negative close in New York overnight and ahead of a press conference about China to be held by US President Donald Trump amid rising tensions.
In early UK company news, miner Fresnillo said it is responding to operational challenges caused by Covid-19 after a tough 2019. Building materials firm SIG plans to bring in a substantial new investor as part of an equity fundraise to deliver a new growth strategy, after swinging to a loss in 2019.
IG futures indicate the FTSE 100 index is to open 40.79 points, or 0.7%, lower at 6,178.00. The blue-chip index closed up 74.54 points, or 1.2%, at 6,218.79 on Thursday.
In the US, the Dow Jones Industrial Average closed down 0.6% on Thursday. The S&P 500 lost 0.2% and the Nasdaq Composite finished 0.5% lower.
"Having spent most of this week ignoring the prospect of an escalation of US, China tension over Hong Kong, despite various smoke signals throughout the week suggesting a confrontation was brewing, US markets turned tail sharply late last night on reports that President Trump was going to be holding a press conference later today on China," said CMC Markets UK analyst Michael Hewson.
Trump said he will give a press conference Friday on China amid spiralling US-Chinese tensions over Hong Kong and the coronavirus fallout.
Trump told reporters of his plan at an Oval Office meeting Thursday, but gave no specific details of what he would be announcing.
Fears that China will use a new law to end Hong Kong's freedom as a semi-autonomous territory have prompted expectations that Trump plans to hit back, possibly signalling a wider confrontation between the two economic superpowers.
Washington and Beijing are already clashing over responsibility for the extent of the coronavirus pandemic, which originated in China but has caused devastation in the US.
The US recorded 1,297 coronavirus deaths on Thursday, bringing its total to 101,573 since the global pandemic began, according to a tally kept by Johns Hopkins University.
The country has officially logged 1.7 million cases of the virus, far more than any other nation, the tracker kept by the Baltimore-based university showed.
Trump blames that on China, although his domestic critics accuse him of mismanagement.
The Hang Seng index in Hong Kong is down 1.1% on Friday. Elsewhere in China, the Shanghai Composite is up 0.2% in late trade. In Japan, Tokyo's Nikkei 225 index closed down 0.2%.
Against the yen, the dollar was trading at JPY107.19 early Friday in London, down from JPY107.60 late Thursday.
The pound was quoted at USD1.2350 early Friday, firm from USD1.2323 at the London equities close Thursday. The euro was at USD1.1100 early Friday, up from USD1.1067 late Thursday.
On the London Stock Exchange, Mexican gold miner Fresnillo said it has focused on responding to the Covid-19 over the past three months, implementing a range of safety measures across the business.
"Up to this point, we have had no officially confirmed Covid-19 cases originating from inside our operations," said Chair Alberto Bailleres. However, he noted that three colleagues were officially diagnosed from exposure outside.
Fresnillo also confirmed that the board and senior management took voluntary and temporary pay cuts to help the company get through this "unprecedented" situation.
Fresnillo said its operations are critical to the economies in which it operate, with mining now confirmed as an essential activity in Mexico.
"Operationally, 2019 was a more challenging year, as expected," said Bailleres.
The company reported that both silver and gold production fell from 2018 levels, due to lower-than-anticipated grades in its key mines. This also hurt Fresnillo's financial performance.
In the face of these operational challenges, the company said its response has been to increase the pace and scale of investments in a series of projects and take corrective actions to bring production back to acceptable levels in the short-term, and to achieve steady growth in future years.
"We are investing in infrastructure, plant and machinery including a state-of-the-art tunnel boring machine which is now being ramped up at Fresnillo - one of the first of its kind. We have also begun to define a new programme to control costs and increase productivity," said Bailleres.
B&M European Value Retail reported a strong end to the fourth quarter - which ended on March 28 - driven by exceptionally strong March performance in Grocery, with the B&M UK fascia like-for-like revenue up 6.6%.
Going forward, B&M said it experienced strong revenue growth in the first 8 weeks to May 23, with B&M UK fascia like-for-like revenue up 23%, driven by exceptionally strong Do It Yourself and Gardening categories, and despite a significant fall in customer count.
If DIY and Gardening categories are excluded, the B&M UK fascia like-for-like revenue over that 8 week period was up 10%.
"We have encountered exceptionally strong demand in our UK business over recent weeks. Customers have been coming to our stores much less frequently through the lockdown but their average spend has been much higher than normal," said Chief Executive Simon Arora.
"Clearly, there is also considerable uncertainty in relation to both the progression of Covid-19 and the economic outlook, and it is therefore hard to predict future trading levels," added Arora.
Oil & gas producer Energean said its shareholder gave a green light for the name change from Energean Oil & Gas PLC to Energean PLC.
In terms of trading, the company noted that it retains its strong commitment to sustainable development regardless of the impact of the global Covid-19 pandemic.
Building products supplier SIG reported a 9.0% decline in revenue in 2019 to GBP2.08 billion. On a like-for-like basis, sales declined by 7.6%.
SIG said its performance was hurt by market share losses in UK and Germany due to poor execution of transformation initiatives which, it believes, disconnected the business from its customers, suppliers and its front-line colleagues.
As a result, the company swung to pretax loss of GBP112.7 million in 2019 compared to GBP10.3 million profit a year prior.
SIG cut its dividend to 1.25 pence, having paid a 3.75p per share payout in 2018.
"The 2019 results, albeit in line with January guidance, are disappointing. However, the board has taken decisive action to address this performance. A new chief executive has been appointed and, this morning, we announced the appointment of a new chief financial officer," said Chair Andrew Allner.
SIG named Ian Ashton as permanent CFO and Simon King as a non-executive director, both with effect from the start of July.
Ashton replaces Kath Kearney-Croft, who had taken on the role of interim CFO back in February.
Ashton will join SIG from Low & Bonar, where he has served as CFO. Prior to that, he was finance head of Labviva, a US-based technology company.
Going forward, SIG said it has explored its wider funding options and is intending to raise GBP150 million in new equity in the coming weeks to strengthen its capital structure and enable the management team to deliver its new growth strategy. The equity raise will be led by the firm of Clayton, Dubilier & Rice, which will contribute up to GBP85 million and take an about 25% stake in SIG as a result.
In commodities, gold was quoted at USD1,721.98 an ounce early Friday, soft from USD1,722.65 late Thursday. Brent oil was at USD35.08 a barrel, up from USD34.45.
The economic events calendar on Friday has eurozone inflation figures at 1000 BST. In the London afternoon, there are US personal consumption expenditure index numbers at 1330 BST - the core reading is the US Federal Reserve's preferred gauge of inflation.
By Evelina Grecenko; [email protected]
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