(Alliance News) - Stock prices in London are seen opening lower on Tuesday as investors monitor Brexit talks between the UK and European Union, which continue to show little progress as the clock ticks down to reach an agreement.
In early company news, Ashtead Group's interim earnings were dealt a blow by the coronavirus crisis, but the equipment rentals firm expressed confidence for the year ahead. Plumbing and heating products supplier Ferguson delivered a robust first-quarter performance. Business publishing and events firm Euromoney Institutional Investor made an acquisition in the wealth management space.
IG futures indicate the FTSE 100 index is to open 15.79 points lower at 6,539.60. The blue-chip index closed up 5.16 points, or 0.1%, at 6,555.39 Monday.
Ashtead Group kept its interim dividend unchanged as earnings took a hit from the coronavirus pandemic.
For the half-year ended October 31, revenue was down 3% to GBP2.29 billion from GBP2.45 billion last year and pretax profit was 22% lower to GBP506.2 million from GBP660.2 million.
Ashtead said the sudden fall in activity levels in March and April due to lockdown measures had a significant effect on profit in the first half as a large proportion of costs are fixed in the short term. It took early decisions not to make any workers redundant as a result of Covid-19 or seek assistance from any government support programmes, as it continued investment in the business.
The company generates a bulk of its revenue in the US from its Sunbelt business, where revenue was USD2.75 billion, down 4.9% from USD2.89 billion last year.
Ashtead said trading volumes were lower than last year as a result of the pandemic, but its performance has been mitigated, in part, by emergency response efforts throughout the business. Sunbelt Rentals is designated as an essential business in the US, UK and Canada and has supported government and private sector responses to the pandemic.
Ashtead maintained its interim dividend at 7.15 pence.
"Looking forward, the strength of our business model and balance sheet positions the group well in markets that are likely to remain uncertain. Based on our half-year performance and assuming no further significant adverse impact on our business resulting from the COVID-19 pandemic, we now expect full-year results ahead of our previous expectations, based on our updated guidance below. The benefit we derive from the diversity of our products, services and end markets, coupled with ongoing structural change, enables the board to look to the future with confidence," the company said.
Fellow US-focused London listing, Ferguson said it delivered a resilient performance in the first quarter and its expectations for the new financial year remain unchanged.
For the three months to October 31, revenue was USD5.37 billion, up 3.1% from USD5.21 billion in the first quarter in financial 2020 and trading profit was up 12% to USD504 million from USD451 million.
Ferguson posted first-quarter gross margins of 29.6%, down 0.1 of a percentage point from last year driven by product mix, but it said operating costs continued to be well controlled which led to a good overall trading performance.
"Since the start of the second quarter Ferguson has continued to generate low single-digit revenue growth in broadly flat markets although we remain cautious on the outlook for the year as a whole, considering current pandemic trends. Despite these potential headwinds the business is in very good shape and we are well prepared should there be any further market-related disruption and overall management's expectations for financial 2021 are unchanged," said Chief Executive Kevin Murphy.
Euromoney Institutional Investor said it has acquired predictive marketing analytics WealthEngine for USD14.5 million. The company said the acquisition is expected to enhance the operating profit margin of its People Intelligence business and deliver accelerated growth over the medium-term. As a result, the acquisition is expected to be earnings accretive for Euromoney, it noted.
"The acquisition of WealthEngine is a great addition to the group and supports our strategy by adding further scale to our 3.0 People Intelligence business. It brings leading technology, workflow solutions and must‐have data, which, when combined with Wealth-X and BoardEx, will enhance significantly the value we provide customers," James Lavell, CEO of People Intelligence said.
UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen look set to meet in person this week in a bid to break the stalemate in post-Brexit trade deal talks.
Johnson and von der Leyen spoke on the telephone on Monday evening, and agreed to ask their chief negotiators to prepare an overview of the "remaining differences".
The leaders will then discuss them in person in a physical meeting in Brussels "in the coming days". Their second call in a little over 48 hours came after Michel Barnier and his UK counterpart David Frost spent the day talking in Brussels.
The negotiators spent the last week talking in London, but failed to break the deadlock - with issues remaining on fishing, governance and the so-called level playing field.
In addition, London investors were keeping an eye on negotiations in Washington for additional US fiscal stimulus, while the US coronavirus caseload continues to rise.
The resurgence of the virus has already forced governments to reimpose lockdowns or strict containment measures, putting fresh pressure on the global economy. More than three-quarters of California's population are now living under the harshest lockdowns in the US, as Covid-19 cases hit record levels in the country's most populous state. Restrictions will remain in place for at least three weeks, covering the Christmas holiday.
The Japanese Nikkei 225 index ended down 0.3%. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong is down 0.6%.
"Markets in Asia have seen a fairly subdued session, as investors sit on the sidelines awaiting the next move in the latest round of US stimulus talks, an ever-increasing rise in US coronavirus cases, and the latest progress in EU/UK trade talks. This uncertainty is expected to translate into a slightly lower European open this morning," said CMC Market analyst Michael Hewson.
The pound was quoted at USD1.3340 early Tuesday, lower from USD1.3346 at the London equities close Monday.
The euro was priced at USD1.2110, down from USD1.2137. Against the yen, the dollar was trading at JPY104.14, up from JPY103.94.
Brent oil was trading at USD48.42 a barrel Tuesday morning, down from USD49.04 at the London equities close Monday. Gold was quoted at USD1,867.12 an ounce, up from USD1,865.82.
In Tuesday's economic calendar, there is eurozone gross domestic product at 1000 GMT and the ZEW survey due at the same time. In the UK, there are Kantar's latest grocery market share figures at 0800 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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