LONDON MARKET PRE-OPEN: Higher Call; Vodafone To Sell Egypt Unit Stake

(Alliance News) - Stocks in London are set to continue their rebound on Wednesday despite the ...

Alliance News 29 January, 2020 | 7:43AM
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(Alliance News) - Stocks in London are set to continue their rebound on Wednesday despite the death toll from the new SARS-like virus, which has rattled markets, continuing to grow.

In early UK company news, Vodafone said it has agreed to sell its majority stake in Vodafone Egypt for USD2.39 billion, Brewin Dolphin said its chief executive will be stepping down, and Wizz Air raised its full-year profit guidance.

IG says futures indicate the FTSE 100 index of large-caps to open 13.34 points higher at 7,494.30 on Wednesday. The FTSE 100 index closed up 68.64 points, or 0.9%, at 7,480.69 on Tuesday.

"Yesterday there was a turnaround in sentiment despite a worsening of the coronavirus situation," observed David Madden at CMC Markets.

"European as well as US equity markets rebounded from the brutal declines of Monday," said Madden. "The positive moves took place despite a deepening of the health crisis."

The death toll in mainland China following the outbreak of coronavirus has continued to rise, now standing at 132, with nearly 6,000 people infected. There were 26 deaths recorded in the past 24 hours, with all but one recorded in Hubei province. Authorities added there had been an increase in the number of cases to 5,974, up by 1,459 from Tuesday's figure.

The coronavirus family is responsible for causing the common cold as well as more serious illnesses such as SARS.

Countries on Wednesday began evacuating their citizens from the Chinese city hardest-hit by the outbreak, Wuhan. The British government is warning against "all but essential travel" to mainland China amid the outbreak of the new type of coronavirus.

Meanwhile, Hong Kong will cut all rail links to the mainland and halve the number of flights to stop the spread of the virus.

In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 0.7%. The Hang Seng index in Hong Kong was trading 2.6% lower as it re-opened from the Lunar New Year holiday, while financial markets elsewhere in China remained closed.

"Apart from headlines regarding the spreading of the coronavirus, the main event today is the Federal Reserve's announcement of its monetary policy decision," said Danske Bank.

"We expect the Fed to keep its target range unchanged at 1.50-1.75% without making any major changes to the statement. It is too early for the Fed to react to the recent sell-off," Danske Bank added.

At 1900 GMT is the US Federal Reserve's interest rate decision. This will be followed by a press conference with Chair Jerome Powell.

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.7%, the S&P 500 up 1.0% and Nasdaq Composite up 1.4%.

In New York, Apple shares traded 1.5% higher after-hours after the iPhone maker beat analyst expectations for its first quarter.

Apple got off to a fast start to its 2020 financial year, with first-quarter profit of USD22.2 billion, or USD4.99 per share, on revenue of USD91.8 billion. Analysts polled by FactSet had predicted earnings of USD4.54 per share on revenue of USD88.5 billion.

Boosted by the release of the iPhone 11 heading into the Christmas season, the product generated sales of USD56 billion, an 8% increase from the previous year's disappointing showing.

In the UK early Wednesday, Vodafone said it has signed a memorandum of understanding with Saudi Telecom Co regarding a potential sale of Vodafone's majority stake in Vodafone Egypt.

Vodafone and Saudi Telecom have agreed a cash consideration of USD2.39 billion for the London-listed firm's 55% stake in Vodafone Egypt. Telecom Egypt holds the remaining 45% stake.

The two have agreed a long-term partner market agreement, which will include use of the Vodafone brand, preferential roaming arrangements, access to Vodafone's central procurement function, and a range of other services.

The transaction is expected to close by the end of June 2020, subject to regulatory approval.

Mexican miner Fresnillo reported a full-year decline in gold and silver production.

Quarterly silver production of 13.8 million ounces, up 3.7% on the previous three months, brought full-year production to 54.6 million ounces, down 12% on 2018.

Gold production in the fourth quarter of 233,700 ounces was up 11% on the third quarter. Full-year production, though, was down 5.1% at 875,900 ounces due to expected lower output from Noche Buena and a lower ore grade at San Julian Veins.

Looking to 2020, and the miner expects to produce 51.0 million to 56.0 million ounces of silver. Gold production is expected in a range of 815,000 ounces to 900,000 ounces.

Wizz Air raised its profit guidance as it confirmed "favourable" current trading conditions.

Revenue in the three months to December 31 totalled EUR637.3 million, up 25% on a year ago. Earnings before interest, tax, depreciation and amortisation also rose 25%, to EUR131.6 million.

Net profit for the quarter was EUR21.4 million, versus a loss of EUR21.0 million a year ago. Looking ahead, the company said it now sees net profit for the 2020 financial year between EUR350 million to EUR355 million, above previous guidance of EUR355 million to EUR350 million.

"As previously announced at our H1 results, Wizz Air has reinvested some of its outperformance of the first half in the third quarter, and will grow even faster in the fourth quarter," said Chief Executive Jozsef Varadi.

"Wizz Air also confirms that the current trading conditions continue to be favourable with a relatively benign competitive environment, stable fuel prices and a positive yield environment," Varadi continued. "Despite our additional investment in growth in the fourth quarter, the company is today raising its net profits guidance."

Brewin Dolphin said Chief Executive David Nicol is stepping down, as it separately reported an increase in total funds.

Nicol will be retiring after eight years with wealth manager. Robin Beer, currently responsible for Brewin Dolphin's intermediaries, charity, professional services and digital businesses, will be promoted to replace him.

Nichol will step down on June 14 and remain with the company until July 29.

Separately, Brewin Dolpin said total funds increased by 7.8% to GBP48.5 billion in the first quarter, including GBP2.7 billion of acquired funds from Investec Capital & Investments (Ireland) Ltd. Excluding acquired funds, total funds increased by 1.8%.

Discretionary funds increased by 4.2% to GBP41.8 billion, driven by strong investment performance and positive organic net inflows.

Among currencies early Wednesday, sterling was quoted at USD1.3009, up slightly from USD1.2993 at the London equities close on Tuesday.

The euro was quoted at USD1.1006 early Wednesday, firm compared to USD1.1008 late Tuesday. Against the yen, the dollar was trading at JPY109.07, soft versus JPY109.15.

Gold was quoted at USD1,568.38 an ounce early Wednesday, soft against USD1,569.90 on Tuesday.

Brent oil at USD60.08 a barrel early Wednesday, higher than USD59.92 late Tuesday.

"Oil has seen high volatility this week on account of the coronavirus. China is the largest importer of oil in the world so the commodity has suffered greatly on fears that demand will wane...Oil gained ground yesterday, but that was after a few days of losses," said CMC's Madden.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Brewin Dolphin Holdings PLC 266.50 GBX -1.30 -
Wizz Air Holdings PLC 2,998.00 GBX -0.60 -
Fresnillo PLC 794.00 GBX 2.72 -
Vodafone Group PLC 130.00 GBX 0.93

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