3rd Jun 2020 07:52
(Alliance News) - Stock prices in London are set to open higher on Wednesday, following positive trading in Asia overnight, boosted by a big improvement in the latest services PMI reading from China, the best since October 2010.
In early company news, budget airline Ryanair reported practically no passenger traffic in May amid travel restrictions caused by Covid-19, saying it expects little to change in June. Smaller peer Wizz Air reported double-digit profit growth in its financial year ended March 31.
IG says futures indicate the FTSE 100 index of large-caps to open 64.76 points higher at 6,284.90 on Wednesday. The FTSE 100 index closed up 53.72 points, or 0.9%, at 6,220.14 on Tuesday.
In New York on Tuesday, the Dow Jones Industrial Average ended up 1.1%, the S&P 500 up 0.8%, and the Nasdaq Composite up 0.6%.
The novel coronavirus killed another 1,081 people in the US in the 24 hours leading up to 0030 GMT Tuesday, according to a tally by Johns Hopkins University. That means 106,180 people have so far officially died from the virus out of 1.8 million official cases, according to the Baltimore-based school.
The virus has killed at least 379,585 people worldwide since it appeared in China late last year, according to a count by AFP.
Every American state has to some degree begun relaxing containment measures to stop the spread of the virus. But dozens of major cities have instituted night-time curfews in recent days to deal with the unrest that has swept the country following the death of George Floyd, a black man who was asphyxiated by a white police officer last week in Minneapolis.
"US stocks appear to be putting to one side the night-time curfews as well as the prospect that the US military might have to take to the streets of US cities, if US governors can't deal with the unrest currently sweeping across their states," said CMC Markets UK analyst Michael Hewson.
"None of these concerns prevented US markets closing at their best levels in three months, following from similarly positive Asia and European sessions, and this looks set to continue this morning, in the wake of another strong Asia session," added Hewson.
In Asia on Wednesday, Nikkei 225 index in Tokyo closed up 1.3%. In China, the Shanghai Composite is up 0.1%, while the Hang Seng index in Hong Kong is up 1.3%.
China's services sector moved into expansion in May for the first time since the start of 2020, data from Caixin showed, as business activity and new work rose at the quickest rate since late 2010.
The seasonally adjusted headline business activity index jumped to 55.0 in May from 44.4 in April, reflecting expansion since January, when the index read 51.1 before falling to a record low of 26.5 in February.
Due to the easing of lockdown restrictions related to the Covid-19 outbreak, business operations in China were allowed to resume and client demand improved, with business activity and new orders expanding at the fastest rate since September 2010, supported by firmer domestic demand.
Against the yen, the dollar was quoted at JPY108.55, unchanged from Tuesday. The euro traded at USD1.1202 early Wednesday, down from USD1.1210.
Sterling was quoted at USD1.2584 early Wednesday, firm than USD1.2535 at the London equities close on Tuesday.
Ryanair Holdings said its traffic in May dropped by 99.5% to 70,000 passengers versus the 14.1 million passengers it carried a year earlier, as Covid-19 airspace closures continue to hurt its operations.
Ryanair said it operated just 701 scheduled flights in May, including a number of rescue and medical flights on behalf of various EU governments, versus its budgeted schedule of 70,000 flights.
Going forward, Ryanair said it expects minimal traffic in June, due to multiple EU government flight bans and restrictions.
Eastern Europe-focused Wizz Air reported record underlying profit of EUR344.8 million for the financial year to the end of March, up 30% on the prior year. Pretax profit also jumped, to EUR294.1 million from EUR128.9 million.
The Budapest, Hungary-based company said it carried 40.0 million passengers in the recent financial year, a 16% increase from 34.6 million the year before. Revenue grew 19% to EUR2.76 billion.
Ticket revenue per passenger fell by 4.6% to EUR37.7, Wizz Air noted, but it said ancillary revenue per passenger increased by 14% to EUR31.3 per passenger.
The company said it expanded its fleet by 9 aircraft during the year to 121 aircraft, with over 47% of seats now served by the more cost-effective A321 type aircraft. The current average aircraft age of Wizz Air is 5.4 years.
"We have taken various initiatives during the Covid-19 pandemic to safeguard the company's cost position and excellent balance sheet with EUR1.5 billion of cash, one of the strongest in the airline industry," said Chief Executive Jozsef Varadi.
"It is too early to provide a detailed outlook for financial 2021 due to the ongoing uncertainty caused by Covid-19. However, Wizz Air's market positioning and our ever-disciplined attitude to cost mean that we will emerge from this crisis as an even more formidable business and will continue to deliver significant shareholder value, environmental benefits and employment opportunities for years to come," added Varadi.
SSP Group - which operates catering and retail units at airports - reported a 3.7% fall in revenue to GBP1.22 billion in the six months to the end of March. On a constant currency basis, revenue declined by 2.7%.
SSP said like-for-like sales were down 8.4%, heavily hurt by Covid-19 and the closure of most of the global travel markets during March.
As a result, the company said it swung to a pretax loss of GBP34.3 million compared with a GBP51.4 million profit a year prior.
SSP declared no interim 2020 dividend and suspended its share buyback programme.
"Covid-19 has had an unprecedented impact on the travel sector. Our response has been to take quick and decisive action to protect our people and our business, whilst around the world our colleagues have helped and supported their local communities," explained Chief Executive Simon Smith.
In addition, SSP said it intends to conduct a non‑pre‑emptive placing of new shares to allow shareholders entitled to the 2019 final dividend to re-invest it back in to the company.
SSP's final dividend of 6.0 pence per share - which was approved by SSP's shareholders at the company's AGM on February 26 - with a record date of March 6, will be paid on Thursday.
Together, the total proceeds from the fundraising will not exceed GBP26.8 million, SSP said, being the total value of the 2019 final dividend. SSP said the share issue will allow it to retain within the company some of the cash due to be paid out.
Defence technology firm Chemring reported 37% revenue growth in the six months to the end of April to GBP191.0 million, taking pretax profit up to GBP19.0 million from GBP4.3 million a year ago.
Chemring increased its interim payout by 8% to 1.3 pence a share.
The company said its performance in the first half of its current financial year was ahead of expectations, reflecting strong performance in both segments and some positive timing differences.
Chemring reported good progress in securing new business in the UK, US and Australia for the supply of global countermeasures.
Looking forward, Chemring said all of its businesses have remained open despite the challenges presented by Covid-19. Its full-year expectations are unchanged, despite the challenging environment, with about 95% of expected second-half revenue in the order book or has been delivered to date.
Gold was priced at USD1,723.94 an ounce early Wednesday, lower than USD1,738.21 on Tuesday. Brent oil was trading at USD40.1 a barrel, higher than USD39.20.
The economic events calendar on Wednesday has services PMI readings from Germany, the eurozone, UK and the US at 0855 BST, 0900 BST, 0930 BST and 1445 BST respectively.
By Evelina Grecenko; [email protected]
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