(Alliance News) - Stock prices in London on Tuesday are set to pull back a touch after the previous session's strong gains, which were driven by Moderna's promising Covid-19 vaccine results.
In early UK company news, Homeserve boosted its profit outlook, while easyJet swung to its first annual loss in its 25-year history.
IG says futures indicate the FTSE 100 index of large-caps to open 5.49 points, or 0.1%, lower at 6,415.80 on Tuesday. The FTSE 100 closed up 104.90 points, or 1.7%, at 6,421.29 on Monday.
"As we look to today's European open, and today's price action in Asia, which saw the Nikkei 225 post fresh 29-year highs, we could see a slightly softer open as some of the froth gets blow on off some of yesterday's gains," said Michael Hewson, chief market analyst at CMC Markets.
European stocks surged on Monday after US biotech firm Moderna released early results from a clinical trial with more than 30,000 participants, showing its vaccine was 94.5% effective. This came a week after fellow US pharmaceutical company Pfizer and its German partner BioNTech said their vaccine has proved 90% effective.
In Asia on Tuesday, the Japanese Nikkei 225 index ended up 0.4%. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong is up 0.1%.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 1.6%, the S&P 500 up 1.2%, and the Nasdaq Composite up 0.8%.
"Yesterday's move higher was slightly more restrained then the turbo charged move just over a week ago, largely down to the fact that the Moderna news wasn't as big a surprise as last weeks' Pfizer announcement, the results of which more or less came as a bolt from the blue," said CMC's Hewson.
"The fact remains that for all the optimism over multiple vaccine candidates, none of them will be available to offset the problems currently being faced right now, as we head into a long dark winter of trying to keep a lid on the problems being faced in keeping the virus under control, until the weather warms up next year."
UK Health Secretary Matt Hancock was unable to rule out an extension to the lockdown as a health chief warned the tiered system that ministers want England to return to may have to be strengthened.
Hancock said it was "too early for us to know" whether coronavirus cases will be brought down sufficiently to ease the second shutdown on December 2.
Boris Johnson hopes the nation will return to local restrictions, but Public Health England's Susan Hopkins – standing alongside Hancock at the Downing Street press conference on Monday – said the lowest tier of earlier measures had had "little effect".
Sterling was quoted at USD1.3217 early Tuesday, higher than USD1.3186 at the London equities close on Monday.
The UK prime minister has been urged to negotiate an adjustment period into any final trade agreement with the EU to provide "breathing space" of up to six months for businesses.
The post-Brexit trade talks have entered into a decisive week, with cabinet ministers among those signalling that the discussions have entered into last chance saloon territory.
With Thursday touted as the latest deadline for negotiations, the Liberal Democrats and a leading business figure have joined forces to press the UK prime minister to effectively extend the transition period to give businesses more time to adjust to any new regulations.
The euro traded at USD1.1853 early Tuesday in London, higher than USD1.1840 late Monday. Against the yen, the dollar softened to JPY104.53 versus JPY104.57.
In early UK company news, Homeserve said it now sees full-year profit ahead of prior expectations following a better-than-expected first half.
Revenue for the six months to September 30 grew 17% to GBP536.7 million, but pretax profit slumped 49% to GBP10.1 million.
The fall in profit was due to the absence of exceptional gains recorded in the prior period, of GBP7.4 million, and higher acquisition-related amortisation of GBP23.0 million versus GBP16.3 million a year ago. Adjusted pretax profit was up 16% to GBP33.1 million.
Homeserve lifted its dividend by 7% to 6.2p.
Homeserve said it exited the first half with the business "trading well", having recovered "earlier and more strongly" from the first global lockdown than originally anticipated.
With the firm performing better than expected in the first half, Homeserve said it expects to deliver adjusted pretax profit for the current financial year "slightly ahead" of current consensus.
"The latest wave of lockdowns has made no fundamental difference to our operations, and the good news for us and our customers is that engineers can continue to work in peoples' homes. Based on what we see today, we are confident of delivering a healthy mix of organic and acquired revenue growth at the full year, with profits ahead of our prior expectations," said Founder & Chief Executive Richard Harpin.
Imperial Brands said revenue in the financial year to September 30 rose 3.1% to GBP32.56 billion, and pretax profit increased 28% to GBP2.17 billion from GBP1.69 billion.
Revenue growth was supported by moderated tobacco volume declines, Imperial said, as well as share gains and a stronger second half price mix. Tobacco volumes were down 2.1% with "better market size trends" in several markets.
The performance from its Next Generation Products - which includes products such as vapes - was "disappointing", the firm said. It did note, however, a moderation in NGP net revenue decline over the year, with the first half down 43% and the second half down 9%, leaving the total down 27% for the year as a whole.
Imperial's dividend was chopped by a third to 137.7 pence from 206.6p, in line with a rebasing set out in May.
"Although this has been a difficult year, the resilience of our tobacco business and the measures we have taken to improve our NGP operations reinforce my confidence in the future potential of the business. With a more disciplined focus and better execution we can realise significant value for our stakeholders over time," said Chief Executive Stefan Bomhard.
Following a "difficult" year, Imperial expects to deliver a stronger financial performance in the 2021 financial year.
Consumer credit scoring firm Experian said its performance in its first half was "resilient".
Revenue for the half-year ended September 30 was USD2.49 billion, a slight dip on the USD2.50 billion a year prior. Organic revenue growth was 2% in the half and, the firm noted, 5% in the second quarter - at the top end of its guidance range.
"The drivers of growth stemmed largely from North America and Brazil which offset COVID-19 related declines in other territories. The stand out performance across the group was Consumer Services, where we now have nearly 100 million free consumer memberships. For Q3 we expect organic revenue growth in the range of 3% to 5%," said Chief Executive Brian Cassin.
Pretax profit in the period fell 5% to USD458 million.
"Once the crisis abates, we believe we will be strongly positioned to take advantage of the secular growth trends and we are excited by the opportunities we see ahead," said Cassin.
Experian's interim dividend was unchanged at 14.50 cents.
easyJet swung to a hefty annual loss in a financial year which saw passengers halve due to the pandemic.
Total revenue in the year to the end of September fell 53% to GBP3.01 billion, with passengers down 50% to 48.1 million. The low-cost airline swung to a pretax loss of GBP1.27 billion from a profit of GBP430 million the year before.
easyJet grounded its entire fleet for 11 weeks during the national lockdowns seen in the spring to early summer, as governments across the globe tried to halt the spread of Covid-19.
"Whilst there was some recovery in demand as travel restrictions eased during the summer, widespread quarantine measures introduced in September once again eroded demand and consumer confidence to travel," the firm noted.
Based on current travel restrictions, easyJet expects to fly no more than 20% of planned capacity for the first quarter of its new financial year.
"At this stage, given the continued level of short-term uncertainty, it would not be appropriate to provide any further financial guidance for the 2021 financial year," the FTSE 250 constituent said.
Gold was quoted at USD1,888.60 an ounce early Tuesday, lower than USD1,889.70 on Monday. Brent oil was trading at USD44.07 a barrel, soft on USD44.40 late Monday in London.
The economic events calendar on Tuesday has eurozone construction output at 1000 GMT and US retail sales at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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