(Alliance News) - Stocks in London are set to start the week on a bright note, after the strong US jobs data out late last week and the Senate approval over the weekend of a USD1.9 trillion fiscal stimulus package.
In early UK company news, Pearson maintained its dividend as 2020 profit fell but was in line with market forecasts. Micro Focus intends to appeal any patent litigation judgement in favour of Wapp Tech. Direct Line Insurance raised its final dividend and announced a share buyback programme of up to GBP100 million.
IG says futures indicate the FTSE 100 index of large-caps to open 41.18 points, or 0.6%, higher at 6,671.70 on Monday. The FTSE 100 closed down 20.36 points, or 0.3, at 6,630.52 on Friday.
"The bright finish in US equities on Friday may set the broader tone today. Despite the debate on inflation, tactically, everyone should feel reassured if higher yields are driven by growth expectations improving rather than market-based inflation repricing," said Stephen Innes at Axi.
"With interest volatility as the centre of everyone's concern, thankfully, the beat on US payrolls provided welcome relief for equities and points to an inflexion in the labour market," said Innes. "The stronger-than-expected print demonstrates once again that the economy is poised to accelerate as the risk from Covid recedes."
Figures on Friday showed US hiring picked up sharply in February as Covid-19 cases fell and vaccines fuelled hopes for more growth ahead. The US economy added 379,000 jobs in February, following an upwardly revised 166,000 rise in January. The latest figure was more than double market expectations, cited by FXStreet, of 182,000 jobs.
Adding to hopes for economic recovery, the US Senate on Saturday voted to approve a USD1.9 trillion relief package.
Passed by 50 votes to 49 in a strict party-line vote, the sweeping legislation now heads back to the Democratic-majority House of Representatives, where it is expected to be adopted, barring a last-minute setback.
"I promised the American people help was on the way," said President Joe Biden in an address from the White House.
Even without the progressive priority of a minimum wage increase to USD15 an hour, the stimulus bill marks a victory for Biden's Democrats as they put their stamp on the recovery from a pandemic that has killed more than 500,000 people in the US and hobbled its economy. The legislation would send out USD1,400 stimulus checks to most Americans and allocates USD350 billion to state and local governments and USD130 billion to schools.
In the US on Friday, Wall Street ended in the green, with the Dow Jones Industrial Average ending up 1.9%, the S&P 500 up 2.0% and the Nasdaq Composite up 1.6%.
In early UK company news, Pearson maintained its dividend even as 2020 profit fell.
Pearson's revenue for 2020 fell by 12% to GBP3.40 billion from GBP3.87 billion, though pretax profit rose to GBP354 million from GBP232 million.
On the profit rise, Pearson said: "The increase is due to the gain on sale of our stake in Penguin Random House and lower restructuring costs which more than offset the impact of COVID-19 and portfolio changes on adjusted operating profit."
Underlying revenue declined 10%, the education publisher said, with adjusted operating profit dropping 46% to GBP313 million from GBP581 million. The profit figure was broadly in line with consensus, which lay at GBP309 million.
For the year ahead, Pearson expects revenue growth, with adjusted operating profit to be in line with current market expectations.
"Pearson's strategy is now geared around three key demand-led global market opportunities which play to all our strengths: the rise in online and digital learning; addressing the workforce skills gap; and meeting the growing demand for dependable accreditation and certification," said Chief Executive Andy Bird.
"Following significant investments in technology and comprehensive restructuring, Pearson is moving at pace and ready to enter a new era as a digital-first company, focused on delivering sustainable revenue and profit growth for the benefit of all company stakeholders."
Pearson proposed a stable final dividend of 13.5p to bring the full-year payout to 19.5p, also flat on 2019.
BT noted a Sky News article and said the suggestion that outgoing Chair Jan du Plessis impeded the transformation of the telecommunications firm is "without foundation".
The FTSE 100 constituent a week ago said du Plessis intends to retire as chair this year once a successor has been found. He joined as a non-executive director in June 2017 and was appointed chair in November 2017.
Sky on Friday, citing people close to the company, reported that BT Chief Executive Philip Jansen indicated he was prepare to resign unless du Plessis was replaced by a chair who could accelerate change at the company.
BT on Monday said du Plessis "demonstrated strong leadership of the company" throughout his tenure, as well as being "extremely supportive of management".
"Any suggestion that he has impeded the transformation of BT is without foundation," said BT, adding that there has been no "misalignment" between the board and executive management over the company's strategy.
Micro Focus said it intends to appeal any patent litigation judgement in favour of Wapp Tech Ltd Partnership and Wapp Tech Corp.
In 2018, Wapp brought a claim against Micro Focus in the Eastern District of Texas, accusing the company of infringing claims of three patents in connection with the manufacture and sale of some products in the ADM product line, including LoadRunner and Performance Center.
The jury on Friday delivered a verdict in favour of Wapp and awarded damages of USD172.5 million. The matter is awaiting the judge to hand down his judgement, Micro Focus noted, and the total damages awarded could increase.
"Micro Focus has received comprehensive and clear advice from its external counsel that it has a very strong case to appeal both the infringement verdict and the amount of the damages. Accordingly, Micro Focus intends to appeal any judgement resulting from the verdict. Micro Focus continues to contend that there has been no infringement of any intellectual property and its advice from external counsel continues to support this," said Micro Focus.
Direct Line Insurance edged up its final dividend and unveiled a GBP100 million share buyback.
Gross written premiums fell just 0.7% to GBP3.18 billion, though pretax profit fell 11% to GBP451.4 million. The motor and home insurer noted increased major weather costs of GBP43.0 million, versus just GBP6.0 million in 2019, contributed to the lower profit result, as well as GBP39.4 million of restructuring and one-off costs as the group invested in cost saving initiatives.
The combined operating ratio improved to 91.0% from 92.2%. With any result below 100% indicating underwriting profitability, the lower the better.
Direct Line proposed a final dividend of 14.7p, up 2.1% on 14.4p in 2019, and announced a GBP100 million share buyback.
"Turning to the year ahead, we feel confident that we can build on the momentum we've created and become a tech and data driven insurance company of the future with our customers at its heart," said Chief Executive Penny James.
London's oil shares may get a boost at the start of the week as Brent prices topped USD70 a barrel for the first time since the start of 2020.
Brent oil was trading at USD70.60 a barrel early Monday, jumping from USD68.74 late Friday after a missile and drone attack targeted the heart of Saudi Arabia's oil industry on Sunday in an assault claimed by Yemen's Huthi rebels. Brent prices hit an overnight high of USD71.38.
The attack on energy giant Saudi Arabian Oil Co's facilities came as the Saudi-led military coalition bombed Yemen's Huthi-controlled capital Sanaa after intercepting a separate flurry of cross-border Huthi drones and missiles.
Gold was quoted at USD1,699.64 an ounce early Monday, a touch higher than USD1,697.43 on Friday.
Sterling was quoted at USD1.3811 early Monday, easing from USD1.3813 at the London equities close on Friday.
The euro traded at USD1.1882 early Monday, lower versus USD1.1912 late Friday. Against the yen, the dollar rose to JPY108.46 versus JPY108.21.
In Asia on Monday, the Japanese Nikkei 225 index ended down 0.4%. In China, the Shanghai Composite closed down 2.3%, while the Hang Seng index in Hong Kong was down 2.1%.
Monday's economic calendar has Bank of England Governor Andrew Bailey speaking on the UK's economic outlook at 1000 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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