5th Jul 2018 07:38
LONDON (Alliance News) - Stocks in London are called for a flat open on Thursday as investors continue to issue caution ahead of Friday, with the US and China set to proceed with reciprocal tariffs.In early UK company news, Associated British Foods backed its annual guidance though now expects a change in the profit mix, while Electrocomponents saw a strong start to the year and Superdry declared a special dividend despite a drop in full-year profit.IG says futures indicate the FTSE 100 index of large-caps to open 0.39 of a point lower at 7,572.70 on Thursday. The FTSE 100 index closed down 0.3%, or 20.20 points, at 7,573.09 on Wednesday.Markets are pointing to a "lower but uninspiring open" on Thursday, said Jasper Lawler, head of research at London Capital Group. Reciprocal tariffs from the US and China on the other's goods are due to come in on Friday."With the continued uncertainty as to what the actual next move will be, from either power, traders were opting to sit on the side lines," said Lawler.Chancellor Angela Merkel said she will make "every effort" to avoid a trade war with the US and repeated her pledge to increase defence spending, addressing two major points of contention in the US-German relationship.Speaking in the German parliament on Wednesday, Merkel said "it is worth making every effort to try to deescalate this conflict so that it does not become an all-out war ... Germany is definitely committed to it as is the entire EU."But, speaking at an economics event organized by the Munich-based Ifo institute, EU commissioner Guenther Oettinger predicted: "There will be a trade war."In the UK, Theresa May faced fresh warnings and pressure over the shape and content of the final Brexit deal as crunch cabinet talks at Chequers loom.With little more than a day to go before senior ministers meet in Buckinghamshire to thrash out a white paper, ministers are said to be sceptical about the so-called "third way" to solve the customs issue on the Irish border.The proposed "facilitated customs arrangement" would see technology used to determine where goods arriving into the UK will ultimately end up. This would allow the correct tariff to be paid - either at the UK or EU rate.According to the Financial Times, Brussels will express concern about the reliance of this plan on untested technology and will question how it is not "an open invitation to smugglers".Meanwhile, Jaguar Land Rover warned that a "bad" deal on Brexit could cost it GBP1.2 billion every year. It follows similar warnings in recent weeks from Airbus and BMW who have voiced concerns about the impact of a no-deal Brexit on UK jobs and investment.In UK company news on Thursday, Associated British Foods said revenue for the 40 weeks to June 23 was 3% higher on last year at constant currency, and 2% ahead at actual exchange rates. Excluding Sugar, sales growth was 6% ahead at constant currency and 5% ahead at actual rates.For the full-year, AB Foods said it expects good profit growth in Grocery, Agriculture and Ingredients. However, the company now expects a reduced profit from AB Sugar due to lower EU sugar prices, and increased profit from Primark driven by higher margins. Consequently, AB Foods said its outlook is unchanged with progress expected in adjusted operating profit and adjusted earnings per share. For the third quarter, AB Sugar revenue was down 17%, as expected. This was "entirely the result of significantly lower EU prices which adversely affected our UK and Spanish businesses", the company said.Sales at low-cost fashion chain Primark in the year to date were 6% ahead of last year at constant currencies and 7% ahead at actual rates, driven by increased retail selling space. Like-for-like sales in the third quarter improved on that recorded for the first half of the year, driven by better trading across the eurozone.Housebuilder Persimmon said total revenue in the first six months of 2018 was GBP1.84 billion, up 5% on last year, with housing revenue of GBP1.74 billion also 5% higher year-on-year. The average selling price increased by 1.2% to GBP215,800.The value of the company's total forward sales of new housing at June 30 stood at GBP1.68 billion, up 5% on last year.Meanwhile, mid-cap peer Bovis Homes said its total average selling price in the first half of 2018 was GBP261,000, down from GBP277,400 last year, reflecting a higher contribution from affordable housing in the period. Bovis Homes delivered a total of 1,580 completions in the half year, slightly ahead of board expectations and an increase of 4% on the prior year. "The housing market fundamentals remain robust, with good demand for new homes across all our regions and underlying pricing remaining firm. We are very pleased with the group's first half performance and are in a strong position to deliver upon our expectations for the full year," said Bovis.Electrical products distributor Electrocomponents said it has made a strong start to its financial year, with double digit revenue growth and improved profitability.First quarter like-for-like revenue rose 10%, with all five regions in which the company operates seeing good growth in the three months to June 30. The Americas was the fastest growing segment, with like-for-like sales growing 13%, driven by market share gains in a "strong underlying market". "The year has started well with our continued focus on the customer, digital leadership and sales effectiveness driving strong results across the business. We are making good progress on our initiatives to further simplify the way we operate in order to drive a more efficient and scalable operating model. All this means we are confident of delivering further strong progress in the current financial year," said Chief Executive Lindsley Ruth.Fashion retailer Superdry declared a special dividend as annual revenue climbed, though profit dipped following the impairment of the Berlin Kranzler store.Revenue rose 16% to GBP872.0 million in the year to April 28, though pretax profit fell 23% to GBP65.3 million. This reflected the fair value movement on forward exchange contracts as well as an impairment of the Berlin Kranzler store.Underlying pretax profit rose 12% to GBP97.0 million. The company declared an ordinary dividend of 31.2p per share, up 11% on last year and taking its full-year dividend to 31.2p, along with a special dividend of 25.0p.Elsewhere, the European Commission said it has opened an in-depth investigation to assess whether marketing agreements concluded between the Association for the Promotion of Touristic and Economic Flows and Ryanair at the airport of Montpellier in France are in line with EU State aid rules.Montpellier airport is a regional airport located in the French region of Occitanie. The airport is one of the twenty largest in France and served 1.9 million passengers in 2017.The Commission received a complaint concerning marketing agreements between the Association for the Promotion of Touristic and Economic Flows and Ryanair and its subsidiary AMS. The complainant alleged that the agreements amounted to illegal State aid in favour of Ryanair.In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.8%. In China, the Shanghai Composite is down 0.9%, while the Hang Seng index in Hong Kong is also 0.9% lower.Markets in the US were closed on Wednesday for the Independence Day holiday, and re-open on Thursday.In the economic calendar on Thursday, there is US ADP employment change at 1315 BST followed by initial and continuing jobless claims at 1330 BST. The Markit composite PMI is at 1445 BST, with the ISM non-manufacturing PMI at 1500 BST.In the central bank events calendar on Thursday, Bank of England Governor Mark Carney will speak at 1100 BST while in the US, the minutes from the latest Federal Open Market Committee will be released at 1900 BST."The June FOMC Minutes should shed some light on the Fed's level of conviction behind a fourth rate hike later this year. We will also watch for the Fed's assessment of various risks to the outlook, especially on the trade front, as well as officials' views on underlying inflation," said analysts at Societe Generale.Related Shares:
RYA.LECM.LBovis HomesPersimmonAB FoodsSDRY.L