10th Apr 2019 07:39
LONDON (Alliance News) - Stocks in London are set to open broadly flat on Wednesday, with sentiment dented by global growth downgrades from the International Monetary Fund and investors looking forward to the European Central Bank's latest policy decision.In early company news, Tesco reported a double-digit rise in annual profit, Rolls-Royce Holdings agreed to an accelerated Trent 1000 TEN inspection regime, Dunelm said it expects to beat annual market expectations and Stagecoach said it is "extremely concerned" after being disqualified from three UK rail franchise competitions.IG says futures indicate the FTSE 100 index of large-caps to open 4.13 points higher at 7,429.70 on Wednesday. The FTSE 100 index closed down 26.32 points, or 0.4%, at 7,425.57 on Tuesday.In the US on Tuesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.7%, the S&P 500 down 0.6% and Nasdaq Composite closing 0.6% lower."Wall Street closed lower; the S&P snapped an 8-day winning streak, whilst the Dow closed down for a second straight session weighed down by lingering growth concerns as investors brace themselves for the start of earnings season later this week," said Jasper Lawler at London Capital Group."Sentiment is clearly fragile, particularly following yet another global growth downgrade by the IMF; the third in just 6 months," said Lawler. "Trump opening up another front in the trade war, this time against the EU, also weighed on sentiment."In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite is up 0.2%, while the Hang Seng index in Hong Kong is down 0.3%."However European bourses were pointing to a cautiously higher start ahead of Super Wednesday's risk events - the ECB monetary policy announcement, EU Brexit Summit, US Federal Reserve minutes and US inflation," said Lawler. In Brussels, European leaders are poised to grant UK Prime Minister Theresa May a longer extension to Britain's membership of the EU than she will request at a crunch summit. The prime minister is set to repeat her call to delay Brexit until June 30, with the possibility of an earlier departure if the UK's withdrawal deal is ratified.But European Council president Donald Tusk suggested on the eve of the summit that EU leaders grant the UK a longer extension of up to one year.Tusk, in a letter to the heads of the 27 remaining member states, said there was "little reason to believe" that the ratification of May's beleaguered Brexit deal could be completed by the end of June.He called for the European Council to discuss an alternative, longer extension, such as a "flexible extension" lasting "as long as necessary and no longer than one year".Tusk wrote: "The UK would be free to leave whenever it is ready. And the EU27 would avoid repeated Brexit summits."The unanimous agreement of all 27 remaining EU states is needed to avoid a no-deal Brexit on the scheduled date of Friday, April 12.Sterling was quoted at USD1.3069 early Wednesday, up from USD1.3049 at the London equities close on Tuesday.In early company news, Tesco recorded a jump in annual profit, outperforming analysts' expectations, driven by a good sales performance in its core UK & Ireland market. The UK's biggest supermarket chain by market share also reiterated its confidence in reaching consensus profit expectations in the current financial year on the back of a "strong performance" to date despite challenges in the market.For the year ended February 24, Tesco generated a pretax profit of GBP1.67 billion, up from GBP1.30 billion a year ago. Revenue rose 11% year-on-year to GBP63.91 billion from GBP57.49 billion, slightly lagging consensus. Group sales excluding fuels were up 12% to GBP56.88 billion, while on a like-for-like basis sales rose 1.4%.According to company-compiled analyst consensus, pretax profit was expected to rise 22% to GBP1.58 billion, while revenue was forecast 12% higher year-on-year at GBP64.52 billion.Tesco proposed a final dividend of 4.10 pence per share, taking the total payout for the year to 5.77p compared with 3.0p a year ago.Rolls-Royce said it has agreed an accelerated Trent 1000 TEN inspection regime with the European Aviation Safety Agency.Following sampling of Trent 1000 TEN engines that have experienced a higher frequency of flights at the upper end of their operating range, a "small number" have needed to have their High Pressure Turbine blades replaced earlier than scheduled, Rolls-Royce said."This new accelerated inspection regime is designed to allow us to confirm the health of the Trent 1000 TEN fleet over the next few months," the firm said.Rolls-Royce added that it is developing and currently testing an enhanced version of blades for the engine which it hopes to incorporate into the Trent 1000 TEN fleet in early 2020.AstraZeneca said the European Commission has approved Lynparza as a monotherapy for the treatment of adults with germline BRCA-mutated HER2-negative advanced breast cancer. The approval was based on data from the randomised, open-label, phase three OlympiAD trial. This is the third indication for Astra and Merck & Co's Lynparza in the EU. Dunelm Group posted growth in third quarter sales and said it expects to beat market profit expectations for the full-year. For the third quarter, or 13 weeks to March 30, Dunelm's total sales were up 6.1% to GBP284.5 million, with like-for-like store sales up 9.8% and comparable online sales 32% higher. Political and economy uncertainty remains "heightened" as the company entered the final quarter of its financial year, Dunelm noted, but if there are no significant changes to current consumer trends it expects to report an annual pretax profit "slightly ahead of the top of the range" of current analyst forecasts.Dunelm noted that analyst estimates range between GBP115.6 million to GBP118.5 million. "The strong growth in the third quarter reflects our ongoing focus on attracting more customers to the brand and giving them more reasons to shop with us through great product and service. Our performance was also buoyed by a positive homewares market," commented Chief Executive Nick Wilkinson.Stagecoach said it is "extremely concerned" after being disqualified from three UK rail franchise competitions for submitting non-compliant bids in respect of pensions risk.Stagecoach has been excluded from the East Midlands, South Eastern and West Coast Partnership competitions. Stagecoach Chief Executive Martin Griffiths said: "We are extremely concerned at both the DfT's decision and its timing. The Department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns.The Pensions Regulator has indicated that an additional GBP5 billion to GBP6 billion would be needed to "plug the gap" in train company pensions, Stagecoach said.The rail industry proposed solution would have delivered an additional GBP500 million to GBP600 million into the scheme, which Stagecoach believes would have provided "better stability and security". "We are shocked that the government has rejected this for a higher risk approach. We would urge that a full independent value for money review is undertaken into this issue without delay," said Stagecoach.Indivior said a US grand jury has issued an indictment of 28 felony counts against the company. The felonies, issued in connection with a federal criminal investigation initiated by the Department of Justice in 2013, include one count of conspiracy to commit mail, wire and health care fraud; one count of health care fraud; four counts of mail fraud; and twenty-two counts of wire fraud.The allegations are based on actions that occurred "almost exclusively" prior to Indivior becoming an independent company following its demerger from Reckitt Benckiser at the end of 2014. Indivior said it believes the claims are "unsupported by the facts and the law", and it will contest the allegations. "While the company believes that it will successfully defend itself against the government's allegations, an adverse verdict may have a material adverse effect on the company and its financial position and outlook," Indivior said.Online retailer ASOS reported a "disappointing" set of interim results as profit plunged, though the firm retained its annual guidance.Total revenue for the six months to February 28 rose 14% to GBP1.31 billion, but pretax profit dropped 87% to GBP4.0 million. The firm's retail gross margin decreased by 60 basis points to 47.4%, in an overall first half performance the firm deemed "disappointing". On the sales growth, Chief Executive Nick Beighton commented that ASOS is "capable of a lot more". "We have identified a number of things we can do better and are taking action accordingly. We are confident of an improved performance in the second half and are not changing our guidance for the year," the ASOS boss said.In the economic calendar on Wednesday is UK manufacturing production, the trade balance and February's gross domestic product reading at 0930 BST.At 1245 BST is the European Central Bank's latest interest rate decision, followed by a press conference with President Mario Draghi at 1330 BST.In the US, consumer price inflation is out at 1330 BST and minutes from the Federal Reserve's last meeting are released at 1900 BST."On the monetary policy front, the ECB meeting will focus on the conditions of TLTRO3 and the possible need for tiering at some later stage while the Fed minutes should provide some clues on the balance of risks within the FOMC," commented Societe Generale.
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AstrazenecaTescoSGC.LDunelmIndiviorASOSRolls-Royce