(Alliance News) - Stock prices in London are set to open lower on Thursday as fresh virus restrictions in New York undermined US equities overnight.
In early UK company news, Kingfisher reported a sales boost as virus restrictions led consumers to make home improvements. Johnson Matthey posted a fall in profit and said it expects a stronger second half versus the first. Royal Mail recorded a 90% slump in half-year profit.
IG says futures indicate the FTSE 100 index of large-caps to open 48.44 points lower, or 0.8%, at 6,336.80 on Thursday. The FTSE 100 closed up 19.91 points, or 0.3%, at 6,385.24 on Wednesday.
"While markets in Europe managed to eke out some modest gains close to their recent highs, US markets slipped back for the second day in a row, after New York mayor Bill de Blasio announced the closure of schools in response to the rise in cases," said Michael Hewson, chief market analyst at CMC Markets.
He added: "With mortality rates starting to rise again in Spain and Italy and infection rates rising to a record in Japan, this northern hemisphere winter looks like being a long and dark one."
De Blasio said the schools would shut from Thursday "out an abundance of caution" after the city recorded a seven-day average positivity rate of 3%. New York City is the largest school district in the US with 1.1 million students.
Wall Street on Wednesday ended in the red, with the Dow Jones Industrial Average down 1.2%, the S&P 500 down 1.2% and the Nasdaq Composite shedding 0.8%.
The decision in New York came as the Johns Hopkins University tally on Wednesday showed that more than a quarter million people have died from Covid-19 in the US.
The US, which has now registered 250,029 fatalities, has by far the highest national death toll, ahead of Brazil with 166,699 deaths, India with 130,993 deaths and Mexico with 99,026. The country now routinely records over 1,000 deaths and 150,000 new cases every day.
The novel coronavirus has killed more than 1.3 million people since the outbreak emerged in China last December, according to a tally from official sources compiled by AFP.
Outside of the US, Japan's prime minister said the country is on "maximum alert" after logging a record number of daily coronavirus infections. More than 2,000 cases were recorded nationwide on Wednesday, with nearly 500 in the capital Tokyo alone.
"We are now in a situation of maximum alert," Prime Minister Yoshihide Suga told reporters.
In Asia on Thursday, the Japanese Nikkei 225 index ended down 0.4%. Against the yen, the dollar was quoted at JPY103.86, higher versus JPY103.71.
In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong is down 0.5%.
In early UK company news, DIY retailer Kingfisher revealed a third-quarter boost as consumers bought the supplies to make home improvements.
Third quarter total sales were GBP3.46 billion, up 17% on both a reported and like-for-like basis. UK & Ireland sales rose 22% in the three months to October 31, at GBP1.58 billion. Sales in France increased 18%, in Poland by 8%, in Iberia by 19% and in Romania by 9.6%.
Group online sales more than doubled, with click & collect sales more than tripling to now account for 77% of e-commerce sales.
"We achieved strong sales growth in Q3 across all retail banners and categories, with higher footfall and average transaction value. Our growth was supported by strong market demand, as consumers spent more time in their homes and focused on improving them," said Chief Executive Thierry Garnier.
He added: "Overall, we believe that the renewed focus on homes is supportive for our markets. Furthermore, we are confident that the strategic and operational actions we have taken so far are helping us to build a strong foundation for long-term growth."
For the fourth quarter thus far, like-for-like sales are up 13%, the B&Q owner said, reflecting recent lockdown measures.
Speciality chemicals firm Johnson Matthey said it expects a stronger second half after posting a sharp fall in interim profit.
Revenue for the six months to September 30 rose 2% to GBP6.80 billion, but pretax profit slumped 88% to GBP26 million. The fall in profit was driven by lower demand in the Clean Air segment, which mostly serves car makers, and major impairment and restructuring charges of GBP78 million.
Underlying pretax profit still fell sharply, down 53% to GBP109 million.
Johnson Matthey declared an interim dividend of 20.0 pence, down from 24.5p a year ago.
"The board remains committed to a progressive dividend and anticipates restoring future dividend payments to levels seen prior to the Covid-19 pandemic when circumstances permit," the company said.
Looking ahead, Johnson Matthey noted that activity in autos and other key markets has improved since the pandemic began and it expects a "materially" stronger second half versus the first.
Postal operator Royal Mail saw interim profit reduce to just one-tenth of the year ago's level on a range of costs, though it said parcel growth is expected to remain robust in the third quarter.
Revenue for the half-year to September 27 amounted to GBP5.67 billion, up 9.8% on a year ago. However, pretax profit dived 90% to GBP17 million from GBP173 million, and the firm posted an operating loss of GBP20 million versus a profit of GBP61 million a year prior.
For the Royal Mail arm, its UK business, revenue was up 4.9%, with parcels revenue up 33% but letters revenue falling 21%.
However, the UK unit posted an adjusted operating loss of GBP129 million, swinging from a profit of GBP75 million a year ago, as it took GBP95 million in costs from mix change - from handling fewer letters and more parcels - GBP85 million in Covid-19 costs, GBP147 million for voluntary redundancies and GBP32 million for international conveyance, due to a virus-driven shortage in airline conveyance capacity.
For GLS - which offers parcel, logistics and express services, throughout Europe as well as in the US and in Canada - revenue rose 22% and adjusted operating profit jumped 84% to GBP166 million.
Keith Williams, interim executive chair, commented on outlook: "We have updated our scenario for the full year. As parcel volumes at both Royal Mail and GLS have continued to be robust year to date, revenue performance in the scenario has improved."
"It remains difficult to give precise guidance but parcel growth is expected to remain robust in Q3, with more uncertainty over trends in Q4 due to the development of the Covid-19 pandemic, further recessionary impacts and trends in international volumes."
Sterling was quoted at USD1.3241 early Thursday, lower than USD1.3300 at the London equities close on Wednesday. The euro softened to USD1.1850 from USD1.1870 late Wednesday.
Gold was quoted at USD1,863.36 an ounce early Thursday, down from USD1,879.79 on Wednesday. Brent oil was trading at USD44.32 a barrel, soft on USD44.44 late Wednesday.
The economic events calendar on Thursday has the latest US jobless claims figures at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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