(Alliance News) - Stock market participants in London are looking on Friday to end a mixed week on a more upbeat note, following the renewed possibility of a US economic stimulus package.
In early UK company news, Sage lifted its dividend as annual profit nudged up, Smurfit Kappa raised EUR660 million in a share placing, and Hochschild Mining approved a dividend and guided to an increase in output in 2021
IG says futures indicate the FTSE 100 index of large-caps to open just 1.75 points higher at 6,336.10. The FTSE 100 closed down 50.89 points, or 0.8%, at 6,334.35 on Thursday.
"US stimulus hopes are likely to be enough to keep equities in the green in Asia this afternoon and lift Europe modestly on its arrival. The follow-through is cautious though and lacks strong momentum," said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda.
Aides to top US lawmakers met on Thursday for yet another restart to talks on a new stimulus spending package to aid the economic recovery from the coronavirus downturn.
The discussions, confirmed to AFP by a senior Democratic aide, come as Covid-19 cases surge nationwide and as the president of a regional Federal Reserve bank warned the US could see growth contract again in the fourth quarter.
The talks between the staffs of House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, both Democrats, and Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy, both Republicans, would address another pandemic relief package, the aide said.
Lawmakers have negotiated for months on passing such a bill, but haven't come to terms on how much to spend and what to spend it on.
"As the week ends, renewed hopes from the US fiscal stimulus talks will dictate direction. Having priced in two years of recovery in two hours after the Pfizer vaccine news last week, Moderna and AstraZeneca's announcements seem to have had a declining marginal effect. For sure, there is life still in that trade, but stimulus hopes in the US will take precedence in the short-term," said Oanda's Halley.
In the latest vaccine news, the US government and BioNTech's co-founder said an emergency use authorization request for the Covid-19 vaccine developed by Pfizer and BioNTech was expected to be filed with the US Food & Drug Administration on Friday.
This type of authorization is temporary or conditional and is granted in response to an emergency situation such as a pandemic – and may be revoked or modified if new efficacy or safety data emerge later.
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.8%.
In early UK company news, accounting software firm Sage Group said its recently ended financial year was "strong" with recurring revenue growth in line with forecasts.
Revenue for the financial year ended September 30 was GBP1.90 billion, down 1.7% on GBP1.94 billion the year before. Revenue was up 3.7% on an organic basis and organic recurring revenue rose 8.5%.
Pretax profit increased 3.3% to GBP373 million from GBP361 million.
Looking to the new financial year, Sage said it expects organic recurring revenue growth to be around 3% to 5%, weighted towards the second half.
"We also expect other revenue (SSRS and processing) to continue to decline, in line with our strategy. Organic operating margin is expected to be up to three percentage points below FY20, depending on the level of additional investment we make during the year," the firm added.
The company said Sage Business Cloud adoption and growth will remain its "key objective" this coming financial year and beyond, and it intends to increase its investment in sales and marketing and product development. This is expects to result in a planned reduction in organic operating margin of up to three percentage points.
Beyond the 2021 financial year, though, Sage expects margins to trend upwards "over time".
Chief Executive Steve Hare said: "We've delivered a strong performance in FY20, achieving recurring revenue growth in line with the guidance we gave at the beginning of the year, despite the Covid-19 pandemic...I am confident that our additional investment in Sage Business Cloud, and in particular cloud native solutions, will deliver stronger growth and drive the future success of the group."
Sage lifted its dividend for the year by 2.0% to 17.25p.
Paper and packaging firm Smurfit Kappa said it has raised EUR660 million in a share placing. Smurfit placed 1.4 million shares at a price of EUR34.00 each, the price being a discount of 5.8% to its Dublin closing price on Thursday.
The Irish company said it was pleased by the "strong support" received from existing and new shareholders.
Hochschild Mining declared a dividend and gave production guidance for 2021.
The gold miner said it has approved the payment of an interim dividend of 4.0 cents per share.
"This decision was taken following the withdrawal of the recommendation to pay the 2019 final dividend and the postponement of the 2020 interim dividend due to the uncertainties caused by Covid-19 and the risk to the company's operations," Hochschild said
While the Covid-19 crisis continues to affect both Peru and Argentina, Hochschild said its balance sheet remains strong with its mines delivering a period of "steady operation", supported by robust commodity prices.
The board will consider the payment of a final dividend in respect of 2020 and at next scheduled meeting in February, 2021.
Turning to guidance, Hochschild said it is on track to meet revised production guidance for 2020 of 280,000 to 290,000 gold equivalent ounces and 24.0 million to 25.0 million silver equivalent ounces. The all-in sustaining cost from operations in 2020 is now expected to be lower than revised guidance, at between USD1,200 and USD1,250 per gold equivalent ounce.
For 2021, Hochschild said its overall attributable production target is 360,000 to 372,000 gold equivalent ounces and 31.0 million to 32.0 million silver equivalent ounces.
"The all-in sustaining cost from operations in 2021 is expected to be between USD1,210 and USD1,250 per gold equivalent ounce (or USD14.1 and USD14.5 per silver equivalent ounce). This includes a rise in mine development costs at San Jose in order to increase reserves and an increase in development at Inmaculada. Grades at Inmaculada are expected to be lower due to the delay in mine development resulting from the Covid-19 crisis," said Hochschild.
In Asia on Friday, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite closed up 0.4%, while the Hang Seng index in Hong Kong is up 0.3%.
Consumer prices in Japan fell 0.7% year-on-year in October, marking the biggest decline since March 2011 due mainly to a domestic travel subsidy program.
The core consumer price index, which excludes fresh food, stood at 101.3 against a base of 100 for 2015, according to the Ministry of Internal Affairs & Communications. Accommodation fees plunged 37% from a year earlier after the government launched the travel promotion campaign in July to reinvigorate the tourism industry and local economies hit hard by the coronavirus pandemic.
Meanwhile, the Japanese private sector economy continued to struggle in November, estimates from IHS Markit showed on Friday, amid weakening demand conditions.
The headline au Jibun Bank Japan manufacturing purchasing managers' index stood at 48.3 in November compared to 48.7 in October, signalling a deterioration in the health of the manufacturing sector for the nineteenth straight month.
Against the yen following the data, the dollar was a touch lower at JPY103.85 versus JPY103.88 late Thursday.
The buck also was lower against the pound and euro amid Friday's more optimistic mood.
The euro traded at USD1.1871 early Friday, up from USD1.1840 late Thursday. Sterling was quoted at USD1.3281 early Friday, higher than USD1.3225 at the London equities close on Thursday.
UK retail sales growth slowed month-on-month in October, but still managed to beat forecasts as consumers started Christmas shopping early, data showed.
Separately, the Office for National Statistics said the UK's debt-to-gross domestic product ratio has reached 100.8% - levels not seen since the early 1960s.
Retail sales rose 1.2% month-on-month in October, marking the the sixth consecutive month of growth in the industry. While this was slower than the 1.4% posted for September, it beat expectations, according to FXStreet, of stagnation in the month.
In a separate release, the ONS said public sector net debt, excluding public sector banks, rose by GBP276.3 billion in the first seven months of the financial year to reach GBP2.076 trillion at the end of October, or around 100.8% of GDP.
"Debt to GDP ratios in recent months have reached levels last seen in the early 1960s," the ONS commented.
Gold was quoted at USD1,865.14 an ounce early Friday, a touch higher than USD1,861.42 on Thursday. Brent oil was trading at USD44.24 a barrel, flat on USD44.22 late Thursday.
By Lucy Heming; lucyheming@alliancenews.com
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