15th Oct 2018 07:42
LONDON (Alliance News) - Share prices in London are set to resume last week's slide, while the pound lost ground over the weekend with the Brexit clock ticking ahead of an EU summit later this week."Concerns over higher US borrowing costs were the catalyst for last week's heavy sell off. However, there were plenty of other risk factors which were also dampening sentiment. Those risk factors, including US-Sino trade tensions, Brexit, Italy's budget proposal and now increased political tensions between the US and Saudi Arabia, are set to keep pressure on risk appetite this week," said Jasper Lawler, head of research at London Capital Group.In early company news, there were profit warnings from Superdry and ConvaTec, with the latter also announcing the departure of its chief executive, while Greencore looks to return proceeds from the proposed sale of its US business to shareholders.IG says futures indicate the FTSE 100 index of large-caps to open 9.61 points lower 6,986.30 on Monday. The FTSE 100 index closed down 0.2%, or 11.02 points, at 6,995.91 on Friday, ending the week a steep 4.4% lower.Sterling was quoted at USD1.3126 early Monday, lower than USD1.3156 at the London equities close on Friday."Rising optimism that some form of Brexit deal might well be concluded in the next few days had helped push the pound to its highest level against the euro since June last week, and these gains are likely to face significant tests in the coming days, given the lack of progress over the weekend," said CMC Markets chief market analyst Michael Hewson.Brexit talks stalled over the weekend after a hastily-arranged meeting between Brexit Secretary Dominic Raab and EU negotiator Michel Barnier failed to produce a breakthrough ahead of Wednesday's summit in Brussels.Following the meeting in Brussels, Barnier said that "despite intense efforts" there had been a failure to reach agreement on one of the trickiest aspects of the negotiations.The surprise announcement of the meeting fuelled rumours a deal was set to be done ahead of this week's summit of EU leaders. But after talks which lasted a little over an hour, it was clear that major obstacles remained including the so-called backstop measure to prevent a hard border between Ireland and Northern Ireland after Brexit.In company news, Superdry warned that "unseasonably" hot weather, as well as currency headwinds, are expected to hit annual profit.The summer and autumn in the UK, mainland Europe and east coast of the US have been "unseasonably" hot, the high street retailer said."Critically, these conditions have continued through into September and the first half of October and have significantly affected demand for autumn/winter product, particularly sweats and jackets, which account for around 45% of Superdry's annual sales," said Superdry.Weather conditions are expected to hit profit for the current financial year by around GBP10 million. What's more, historic foreign exchange hedging mechanisms "have not provided the same degree of protection as expected", and this is expected to lead to around GBP8 million in additional costs.More positively, the retailer noted it has seen a "strong" performance in the "small number of cooler days" experienced in September.ConvaTec on Monday also issued a profit warning, as well as announcing Chief Executive Paul Moraviec is to retire from the medical technology firm, effective immediately.Rick Anderson, currently a non-executive director of ConvaTec and formerly chairman of US personal care products giant Johnson & Johnson, is to assume the position of interim CEO until a permanent hire is found. In a trading update, ConvaTec said it now expects full-year organic revenue growth to be between flat to 1.0%, compared to an expectation of 2.5% to 3.0% previously. The company's adjusted earnings before interest and tax margin for 2018 is expected to be between 23% to 24%, narrowed from 24% to 25% previously.The revised guidance is driven primarily by a change in inventory policy by the biggest customer in the company's Infusion Devices franchise, which is expected to have a "material negative impact on revenue in the fourth quarter" of between USD18 million to USD23 millionConvaTec added that, "to a lesser extent", guidance was also hit by "challenging market dynamics in specific markets" in Advanced Wound Care.Greencore Group said it has agreed to sell its US business for USD1.08 billion - or GBP817 million - to an affiliate of Hearthside Food Solutions."We believe that the proposed sale of our US operation represents a compelling and immediate realisation of value for Greencore's shareholders. We have always had a firm conviction on the underlying value and growth prospects of our US business and believe that this offer fully reflects that," said Chief Executive Patrick Coveney.The net proceeds, of around GBP802 million, will allow the convenience foods maker to declare a special dividend of 72 pence per share. Back in March, Coveney had stepped in to take direct control of the US operations to improve performance in the region after the company said it is to restructure its network due to continued low capacity utilisation related to its takeover of the US's Peacock Foods in December 2016.Completion of the sale is expected by late November 2018, conditional on approval of Greencore shareholders and clearance in the US.On London's junior AIM market, online estate agent Purplebricks confirmed it has entered into a joint venture with German shareholder Axel Springer to move into the German market and jointly take a stake in Homeday.The joint venture will take a 25.9% holding in Homeday - including a 4% stake already owned by Axel Springer - with the option to acquire up to a further 28.5% stake in August 2019. Purplebricks will contribute GBP11.1 million to the initial investment.Axel Springer holds just below a 12.5% stake in Purplebricks.Additionally, Purplebricks said it is trading in line with expectations with the UK showing double-digit growth year-on-year in monthly instructions, "with further market share gains, in what continues to be a challenging market".In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average adding 1.2%, the S&P 500 up 1.4%, and Nasdaq Composite gaining 2.3%.In Asia on Monday, the Japanese Nikkei 225 index closed down 1.9%. In China, the Shanghai Composite is down 1.2%, while the Hang Seng index in Hong Kong is down 1.4%.In the economic calendar on Monday are US retail sales at 1330 BST.In UK retail data, released early Monday, the latest BRC/Springboard Retail Footfall Monitor showed footfall fell at an accelerated rate in September.September footfall fell 1.7% year-on-year, after August's figure had slipped 1.6%. On the High Street, footfall fell 2.2% year-on-year in September, meaning there has now been two consecutive months of decline.Springboard Marketing & Insights Director Diane Wehrle said: "A drop in footfall provides further evidence of the current challenges facing bricks and mortar retail.However, she continued: "All indicators point to the fact footfall is simply reflecting the underlying constraints on consumer spend generally."Related Shares:
ConvaTecPURP.LGreencoreSDRY.L