LONDON MARKET PRE-OPEN: Barclays Quarterly Profit Up But No Payout Yet

(Alliance News) - Stock prices in London are seen opening higher on Friday ahead of European ...

Alliance News 23 October, 2020 | 7:53AM
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(Alliance News) - Stock prices in London are seen opening higher on Friday ahead of European flash manufacturing data and following the final US presidential debate and promising news that US regulators have approved a drug to treat Covid-19 sufferers.

IG futures indicate the FTSE 100 index is to open 5.2 points higher at 5,790.9. The blue-chip index closed up 0.2%, or 9.15 points, at 5,785.65 on Thursday.

The pound was quoted at USD1.3056, down from USD1.3095 at the London equities close on Thursday.

The euro stood at USD1.1798, down from USD1.1825.

"European stocks look set for cautiously higher open with the idea that the presidential debate won't have diminished chances of a new US stimulus bill. The approval of Remdesivir by the FDA as the first drug to treat Covid-19 is a big positive for markets beset by second wave concerns," London Capital Group's Jasper Lawler said.

Gilead Sciences surged 7.1% after hours in New York in the wake of the approval by the US Food & Drug Administration.

On the London Stock Exchange, lender Barclays posted mixed third-quarter earnings but said credit impairment costs will be much lower in the second half of the year than in the first.

Elsewhere on the FTSE 100, Holiday Inn owner InterContinental Hotels Group said trading improved in its third-quarter, with the decline in revenue per available room, a crucial performance marker for hotel firms, easing quarter-on-quarter.

Stock exchange operator London Stock Exchange Group shook off "challenging market conditions" to post improved third-quarter earnings.

Barclays said pretax profit for the three months ended September came in at GBP1.1 billion, up sharply from GBP200 million a year earlier, bumping up its return on tangible equity to 5.1% from 2.4%. Third-quarter group income declined 6% to GBP5.2 billion, however.

Lower risk-weighted assets, however, meant its CET1 ratio improved to 14.6% from 13.8% at the end of December and 13.4% in September 2019.

Barclays booked a credit impairment charge of GBP600 million, up 32% annually but down 63% quarterly. It expects impairment charges to be "materially" lower in the second half of 2020 compared to the first and to be lower again in 2021 from 2020.

The lender did not declare a dividend, though Chief Executive Officer James Staley said he recognises "the importance of capital returns to shareholders and will provide an update on its policy and dividends at full year results".

InterContinental Hotels said its decline in RevPAR eased to 53% in the third quarter, compared to 75% in quarter two, leaving the year-to-date figure down 52%. Occupancy climbed to 44% from 25%.

"Trading improved in the third quarter, although progress continues to vary by region," Chief Executive Officer Keith Barr said.

"Domestic mainstream travel remains the most resilient, and our industry-leading Holiday Inn brand family positions us well to meet that demand as it slowly returns."

LSEG boss David Schwimmer hailed the firm's "resilient" third-quarter, which also saw it make "good progress on the highly attractive Refinitiv transaction".

In the three months ended September. revenue climbed 1% yearly to GBP524 million. Total income, including its CCP business, climbed 2% to GBP600 million. Gross profit was up 4% to GBP551 million.

"We continue to engage constructively with the European Commission and believe the potential divestment of the Borsa Italiana group will contribute significantly to addressing the EU's competition concerns," Schwimmer added.

LSEG agreed to sell the unit that owns the Milan stock exchange to rival Euronext for EUR4.33 billion earlier in October.

Friday also saw M&A action. Retirement homes developer McCarthy & Stone agreed to a GBP630 million takeover from Mastiff Bidco, a wholly-owned indirect subsidiary of Lone Star Real Estate Fund VI.

The offer values McCarthy & Stone shares at 115 pence each, a 39% premium to its Thursday closing price.

"The McCarthy & Stone directors, who have been so advised by Rothschild & Co and Deutsche Bank as to the financial terms of the acquisition, consider the terms of the acquisition to be fair and reasonable," the company said.

In the US on Thursday, the Dow Jones Industrial Average and S&P 500 gained 0.5%, while the Nasdaq Composite added 0.2%.

The Shanghai Composite was down 0.8% on Friday afternoon, though the Hang Seng was up 0.2%. Tokyo's Nikkei 225 closed 0.2% higher.

PMI readings from France, Germany and the eurozone are released at 0815, 0830 and 0900 BST. The UK print is at 0930 BST before the US counterpart at 1445 BST.

Already out, retail sales in the UK climbed in September, official data showed on Friday, topping consensus estimates.

Retail sales volumes were 1.5% higher monthly, according to the Office for National Statistics, following growth of 0.8% in August. Consensus compiled by FXStreet forecast growth of 0.4% monthly, so September sales outperformed expectations.

The ONS noted it was the fifth successive month of growth, "resulting in an increase of 5.5% when compared with February's pre-pandemic level".

Year-on-year, sales volumes were up 4.7%, topping market estimates of 3.7% growth and following a 2.8% rise in August.

Against the yen, the dollar was trading at JPY104.68 early Friday in London, down from JPY104.83 at the London market close on Thursday.

Brent oil was quoted at USD42.20 a barrel, down from USD42.70 at the London equities close Thursday.

Gold climbed above the USD1,900 mark again. The yellow metal fetched USD1,904.71 an ounce, up from USD1,898.00.

By Eric Cunha; ericcunha@alliancenews.com;

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
McCarthy & Stone PLC 116.00 GBX 0.52 -
Barclays PLC 143.40 GBX -4.53
InterContinental Hotels Group PLC 4,720.00 GBX 0.51
London Stock Exchange Group PLC 7,726.00 GBX 1.44

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