11th Jul 2022 07:53
(Alliance News) - Stock prices in London are seen opening lower on Monday amid growing concerns about a fresh spike of Covid-19 cases in China.
In early company news, veterinary products firm Dechra Pharmaceuticals said trading was in line with expectations. Budget airline Wizz Air posted an operating loss in the first quarter. Pizza delivery chain Domino's Pizza named its new finance head.
IG futures indicate the FTSE 100 index is to open 60.04 points lower at 7,136.20. The index closed up 7.16 points, or 0.1%, at 7,196.24 Friday.
Dechra Pharmaceuticals said its strong trading performance continued throughout the financial year, and remains in line with expectations.
For the year ended June 30, revenue increased by 14% at constant exchange rates and 12% at actual exchange rates.
European Pharmaceuticals revenue growth was 8% at constant currency and 5% at actual exchange rates, while North American Pharmaceuticals revenue growth was 24% at constant currency and 25% at actual exchange rates.
Chief Executive Officer Ian Page said: "We are delighted that the financial year just ended was another record year for Dechra and in line with expectations, with group revenue growth slowing to more normal levels as expected in H2 as the impact of the pandemic on our markets unwinds. Whilst we expect current macroeconomic uncertainties to continue, the veterinary pharmaceutical market remains resilient and in growth. Our global trading continues to be strong and we continue to outperform the market, particularly in North America.
"The complementary product acquisitions we made during the period strengthen our existing portfolio and are performing in line with initial expectations; there are a number of acquisition opportunities that we are assessing. We continue to believe in the ability of our people to execute our strategy and remain confident in our future prospects."
Wizz Air Holdings said it continued to ramp up its operations against a challenging macro and operational backdrop during the first quarter.
For the first quarter to June 30, Wizz Air said it registered a EUR285 million operating loss but expects a "material" operational profit in the second quarter on strong summer demand.
For the first quarter, available seat kilometres were 30% higher versus the same period in financial 2020, growing sequentially month-on-month as most Covid restrictions were lifted and as capacity reallocation related to the war in Ukraine started to take effect during the course of the quarter.
Revenue per available seat kilometre for the first quarter was down 10% from financial 2020, with net fares in line with financial 2020. However, the first-quarter load factor of 85%, down 9 percentage points, reflected the efforts of Wizz Air to "pass through higher input cost in its fares". In addition, ancillary revenue for the quarter was up 14% over financial 2020.
Looking ahead, Wizz Air expects revenue and pricing momentum to continue to improve in its second quarter. Load factors as of July have improved to above 90% and the fare environment remains strong, it added, with industry capacity reducing and consumer demand for the summer looking healthy.
However, it warned: "To be able to avoid cancellations and secure a more punctual operation to our customers, we have further improved the agility and resilience of our network including adjusting schedules where we have seen a higher occurrence of issues...In total for the peak summer period we expect to reduce utilization a further 5% versus the plan outlined at the full year results to reduce the impact of ongoing external disruptions. We now expect summer ASK growth to be around 35% versus F20."
Domino's Pizza Group appointed Edward Jamieson as its new chief financial officer, who is set to join the company and the board of directors in October.
Jamieson most recently served as UK & Ireland regional finance director at food delivery firm Just Eat Takeaway.com, and will replace current interim CFO David Surdeau, who joined Domino's in November 2021.
On Monday, the Japanese Nikkei 225 index closed up 1.1%. Japan's ruling party and partners won enough votes to form a supermajority in an upper house election held just days after the assassination of former prime minister Shinzo Abe, local media said Monday.
The yen was trading at 24-year lows against the dollar, however. Against the yen, the dollar was quoted at JPY137.02, higher against JPY135.88 late Friday.
In China, the Shanghai Composite was down 1.8%, while the Hang Seng index in Hong Kong was down 3.2%. The S&P/ASX 200 in Sydney ended down 1.1%.
Shanghai recorded more than 120 Covid cases over the weekend, having seen its first case of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.
With China fixated on its zero-Covid strategy of wiping out the disease, there is increasing concern that authorities will revert to another lockdown, with Shanghai residents having only emerged from a two-month confinement in June.
There have also been new infections uncovered in other parts of the country, including Beijing.
The news came after a forecast-busting US jobs report last week indicated the world's top economy was coping so far with the Federal Reserve interest rate hikes, giving it room for more as it battles soaring inflation.
"Equity markets were caught between two competing narratives last week, and could well face similar cross currents this week, as we look to a weaker open on the back of Friday's modest gains, as further US dollar gains, and uncertainty about the economy in China as worries about renewed Covid lockdowns weighed on sentiment," said CMC Markets analyst Michael Hewson.
"On the one hand we saw energy and metals prices slide back sharply on rising concerns over recession risk and demand destruction," added Hewson. "On the other hand, these concerns were offset by a decent US payrolls report which saw the US economy add 372k jobs in June."
China's consumer inflation climbed up in June to the highest point in two years, official data showed Saturday, following rising food prices as pork costs spiked due to tighter supplies.
The world's second-largest economy has largely been spared the impact of a global surge in food prices caused by Russia's war in Ukraine, but the relative stability could be upended by the rising cost of pork - a staple meat in the country.
In June, the consumer price index, a key gauge of retail inflation, rose 2.5% on-year in line with analyst expectations but stayed flat from May due to a price drop in most foods except pork.
The pound was quoted at USD1.1975 early Monday, down from USD1.2040 at the London equities close Friday.
The euro was priced at USD1.0135, down from USD1.0185.
Brent oil was trading at USD105.65 a barrel on Monday morning, down from USD106.00 late Friday. Gold stood at USD1,740.71 an ounce, lower against USD1,744.88.
By Arvind Bhunjun; [email protected]
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