10th Feb 2021 07:58
(Alliance News) - Stock prices in London are seen opening higher on Wednesday, despite a surging pound and after Chinese inflation data came in slightly below market forecasts.
IG futures indicate the FTSE 100 index is to open 38.5 points higher at 6,570.06. The blue-chip index ended up 8.03 points, or 0.1%, at 6,531.56 on Tuesday.
"Stock futures are trading higher as traders are ready to back riskier assets once again. Investors are considering yesterday's pullback as an opportunity to buy stocks at a lower price," AvaTrade analyst Naeem Aslam said.
In early corporate news in London, packaging firm Smurfit Kappa posted an annual revenue fall amid "the adverse impact of currency and the fall in box prices". Profit rose, however.
Housebuilder Persimmon said it has set aside GBP75 million to address "legacy cladding issues", while smaller peer Redrow posted a double-digit first-half profit rise. Homewares retailer Dunelm shrugged off physical store closures to post a 23% interim revenue hike.
Smurfit Kappa's revenue in the year ended December 31 fell 5.8% to EUR8.53 billion from EUR9.05 billion. However, profit rose as finance costs were reduced. Smurfit posted pretax profit of EUR748 million, up 10% from EUR677 million. Finance costs fell 28% to EUR179 million from EUR247 million.
Earnings before interest, tax, depreciation and amortisation fell 8.5% to EUR1.51 billion from EUR1.65 billion, though Chief Executive Officer Tony Smurfit noted earnings came in ahead of guidance.
"Driven by strong secular trends such as e-commerce and sustainability, the outlook for our industry is increasingly positive," CEO Smurfit said.
The company recommended an 87.4 cents final payout, to go with the 80.9 cents interim payout and a 27.9 cents dividend it paid in December.
Smurfit had pulled its final dividend for 2019 in the wake of the Covid-19 crisis. Its interim dividend in 2020 was more than double the 27.9 cents from the prior year and equal to the final 2019 dividend it had pulled due to the virus crisis. It then paid the same 27.9 cents as a second interim dividend to catch up.
FTSE 250 housebuilder Redrow said revenue in the six months ended December 27 soared 20% to GBP1.04 billion from GBP870 million. Pretax profit rose 11% to GBP174 million from GBP157 million.
The company confirmed the reinstatement of its interim payout, with a 6.0 pence dividend per share. Redrow back in November said it would pay an interim dividend, after putting payouts on hold back in March of last year, in the wake of the Covid-19 crisis.
Since then, the UK housing market as bounced back. It was one of the first sectors to re-emerge from the initial lockdown in the spring of last year, and it has been spared from the most stringent measures imposed since then.
Blue-chip housebuilder Persimmon on Wednesday said its 2020 results will include a GBP75 million provision to address cladding issues.
"As first and foremost a builder of traditional family homes, the group has not been a major developer of high-rise buildings. We believe we account for less than one percent of all high-rise developments. However, in the past we have built multi-storey buildings which met all the fire safety rules and regulations in place at the time, but which used cladding materials which may now be considered unsafe and require removal," the company explained.
"The group believes strongly that it has a responsibility to step forward and tackle this issue head-on. Persimmon has therefore made a provision of GBP75 million in its 2020 results to pay for our contribution to any necessary work on 26 buildings that may be affected by the cladding issue."
Flammable building cladding came into focus following the fire that engulfed Grenfell tower, a residential tower block in London. The fire killed 72 people. The UK government is expected to announce billions of pounds in funding to help tackle the cladding crisis.
Housing Secretary Robert Jenrick is due to address the Commons on Wednesday, and he is expected to set out a package of measures.
Retailer Dunelm said sales in the six months to December 26 soared 23% year-on-year to GBP719.4 million from GBP585.0 million. Pretax profit rose 34% to GBP112.4 million from GBP83.6 million.
Dunelm posted "very strong sales growth of 23%, despite the impact of store closures in the second quarter".
"Sales were particularly strong in the first quarter, before we had to navigate the various restrictions which impacted the remainder of the period. These restrictions have become more severe in the second half of our financial year, with all but one of our stores currently closed, although we continue to serve customers through our digital channels, which have significantly advanced during the last year, CEO Nick Wilkinson said.
Dunelm declared a 12.0p interim payout, after no dividends were paid in financial 2020.
The pound was quoted at USD1.3822, up from USD1.3790 at the London market close on Tuesday.
The euro stood at USD1.2132 on Wednesday morning London, up from USD1.2100 at the European equities close Tuesday. Against the yen, the dollar was trading at JPY104.51, down from JPY104.62 at the London equities close on Tuesday.
Inflation data is also in focus on Wednesday.
According to numbers from Destatis, Germany's annual inflation rate was 1.0% in January, in line with consensus cited by FXStreet.
Monthly, consumer prices rose 0.8%, also in line with market forecasts.
Numbers from Destatis also showed a 1.6% annual rise and a 1.4% monthly hike in the harmonised index. Both figures met market forecasts.
China's consumer price index, however, edged down a worse-than-expected 0.3% as a spike in infections that led to new tough restrictions in the north of the country combined with a high base from January last year.
The Shanghai Composite closed up 1.4% in late trade and the Hang Seng Index in Hong Kong was 1.8% higher.
Tokyo's Nikkei 225 closed up 0.2%, extending its win streak to four days and keeping the Japanese benchmark at a 30-year high.
Still to come on Wednesday is CPI data from the US at 1330 GMT.
Brent oil fetched USD61.06 a barrel early on Wednesday morning London time, up from USD60.70 a barrel at the London equity market close on Tuesday. Gold was quoted at USD1,846.76 an ounce, up from USD1,837.66.
By Eric Cunha; [email protected];
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