(Alliance News) - Stocks in London are set to open lower on Wednesday as markets refocus on coronavirus concerns with countries in Europe mulling further restrictions to contain the virus.
In early UK company news, Fresnillo reported a year-on-year decline in fourth quarter gold and silver production, Brewin Dolphin's total funds hit a record level, and HomeServe said it is hiring a former DCC chief executive as its new chair.
IG says futures indicate the FTSE 100 index of large-caps to open 16.91 points lower, or 0.3%, at 6,637.10 on Wednesday. The FTSE 100 closed up 15.16 points, or 0.2%, at 6,654.01 on Tuesday.
"Markets in Europe look set to continue to be driven by the prospect of further restrictions being imposed by governments concerned about seeing further increases in coronavirus cases, from speculation about a third lockdown in France, which could come by the weekend, to the prospect of further restrictions here in the UK," said Michael Hewson at CMC Markets.
In another day of grim milestones, Britain surged past 100,000 Covid-19 deaths on Tuesday, and other European nations looked to tighten their borders, hoping to keep out new, more transmissible virus strains.
UK Prime Minister Boris Johnson said it was "hard to compute" the loss felt by British families after his country became the first European country to surpass 100,000 Covid-19 deaths.
According to the The Times, the UK government will announce Wednesday that British travellers must quarantine in hotels near airports for 10 days after returning from 30 high-risk countries, mostly in South America and southern Africa.
Among other European nations looking to strengthen border controls was Germany, which said it is considering almost completely halting flights into the country.
Sterling was quoted at USD1.3749 early Wednesday, firming on USD1.3737 at the London equities close on Tuesday.
The euro traded at USD1.2160 early Wednesday, flat on USD1.2162 late Tuesday. Against the yen, the dollar was quoted at JPY103.68 versus JPY103.65.
In the US on Tuesday, Wall Street ended with modest losses, with the Dow Jones Industrial Average ending down 0.1%, the S&P 500 down 0.2% and Nasdaq Composite closing 0.1% lower.
Late Tuesday, Microsoft reported a strong second quarter, buoyed by remote working during the coronavirus pandemic.
The Redmond, Washington-based firm saw increased demand for its services as companies rely on cloud computing from Azure and cloud-software offerings like Teams to keep employees connected while they work from home.
For the second quarter ended December 31, revenue was up 17% to USD43.08 billion from USD36.91 billion in the second quarter of 2019. Second quarter net income was up 33% to USD15.46 billion from USD11.65 billion the year before, with diluted earnings per share coming in at USD2.03, up 34% from USD1.51.
Shares in Microsoft climbed 3.7% after-hours and lifted the shares of other tech firms, with Apple up 1.3% post-market and Facebook up 1.5%. Both iPhone maker Apple and social network giant Facebook report earnings on Wednesday.
"This stellar [Microsoft] performance raises the bar for Apple, as well as Facebook later today, and despite setting the tone for today's Asia session lifting the mood there, European markets look set to be much less impressed with the potential for a slightly negative open here in Europe," said CMC's Hewson.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong is flat.
The S&P/ASX 200 in Sydney closed down 0.7% as it reopened from Tuesday's Australia Day holiday.
Gold was quoted at USD1,849.08 an ounce early Wednesday, lower than USD1,854.00 on Tuesday. Brent oil was trading at USD56.28 a barrel, up from USD55.87 late Tuesday.
In early UK company news, Fresnillo said fourth-quarter production was in line with expectations, with silver and gold output both falling on a year ago.
Quarterly attributable silver production was 13.0 million ounces, down 6.0% on a year ago and 2.5% lower than the third quarter of 2020. This was driven by a lower ore grade and volume of ore processed at the Saucito mine, mitigated by a higher ore grade at the San Julian disseminated ore body.
Quarterly attributable gold output was 215,600 ounces, down 7.8% on a year ago but up 25% on the third quarter of 2020.
"This followed a weaker 3Q20 due to Covid-19 operational restrictions earlier in the year which resulted in lower volumes of ore deposited at our open pits during 2Q20 and subsequently affected the recovery cycle at the leaching pads in 3Q20," Frensillo explained.
Full year attributable silver production was 53.1 million ounces, down 2.9% on 2019, while full-year gold production was down 12% at 769,600 ounces.
For the year ahead, Fresnillo expects silver production in the range of 53.5 million to 59.5 million ounces and gold output for 2021 around 675,000 to 725,000 ounces.
FDM Group said it delivered a "solid" performance in the second half of 2020, with its full-year results seen in line with its expectations.
The IT recruitment, training and consultant deployment provider said revenue for 2020 is expected to be GBP268 million, down from GBP272 million in 2019, and adjusted pretax profit is forecast at GBP42.0 million, lower than GBP54.5 million the year before.
Given the "continued solid performance, strong cash position and encouraging prospects," FDM declared a second interim dividend of 13.0 pence, which follows a 18.5p interim dividend paid in September.
"The board confirms that going forward it plans to resume the group's normal dividend policy and timetable, commencing with the final dividend for the year to 31 December 2020, which the board intends to recommend at the time of the publication of the full year results on 10 March 2021 for approval by shareholders at the 2021 AGM," said FDM.
The company added that the current year has started "promisingly" with "encouraging" demand levels.
Brewin Dolphin said total funds hit a record level in its first quarter.
Total funds increased by 8.0% to a record GBP51.4 billion in the quarter ended December 31 from GBP47.6 billion at the end of September, with total discretionary funds up 8.3% to GBP44.6 billion.
Total quarterly income increased by 7.0% to GBP95.9 million, driven by strong market performance in the quarter and continued high levels of commissions.
"We had a strong start to our financial year and saw growth across both our direct and indirect business. We are consistently delivering positive inflows, even with the tightened social distancing restrictions imposed in November and December 2020," said Chief Executive Robin Beer.
HomeServe said it has appointed former DCC chief executive Tommy Breen as a non-executive director and chair-designate, to succeed Barry Gibson.
Gibson has been chair of HomeServe since 2010 and was appointed for one final term in April 2019. Breen was CEO of sales, marketing and support services group DCC until 2017, and will join the HomeServe board with immediate effect. Breen will become chair on May 19, after HomeServe publishes its full-year results.
Breen also is senior independent director of FTSE 250 plastics and fibre products manufacturer Essentra.
The economic events calendar on Wednesday has US durable goods orders at 1330 GMT and the Federal Reserve's interest rate decision at 1900 GMT. The World Economic Forum's Davos Agenda continues.
By Lucy Heming; lucyheming@alliancenews.com
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