(Alliance News) - Stocks in London are set to continue treading water on Wednesday as markets brace for a US consumer price index reading later in the week.
In early UK company news, Rolls-Royce has hired Croda's current chair to take up the same role at the jet engine maker, SSP unveiled a slump in interim revenue and a wider loss, and the CMA is probing International Consolidated Airlines's British Airways and Ryanair over refunds during lockdown.
IG says futures indicate the FTSE 100 index of large-caps to open down 13.39 points, or 0.2%, at 7,081.70 on Wednesday. The FTSE 100 closed up 17.87 points, or 0.3%, at 7,095.09 on Tuesday.
"Hurry up and wait best sums up the overnight session," said Jeffery Halley, senior market analyst for Asia Pacific at Oanda, adding that markets remain "laser-focused" on Thursday's US inflation data.
Wall Street ended mixed on Wednesday, with the Dow Jones Industrial Average ending down 0.1%, the S&P 500 flat and the Nasdaq Composite 0.3% higher.
Stocks floundered ahead of Thursday's CPI data. The US price inflation measure is expected to show annual growth of 4.7% for May, according to FXStreet, which would mark another uptick after April's 4.2% increase.
Meanwhile, US President Joe Biden and Senate Republicans on Tuesday ended weeks of negotiations on an infrastructure package, with the two sides failing for now to reach agreement on the massive measure. With the talks over, Biden shifted strategy as he engaged a new, bipartisan Senate group in an effort to reach a compromise.
In early UK company news, jet engine maker Rolls-Royce said it has appointed Anita Frew as a non-executive director and chair designate.
Frew is currently chair of specialty chemicals firm Croda and a non-executive director at miner BHP Group. Until recently, she was deputy chair and senior independent director at lender Lloyds Banking Group.
She will join the Rolls-Royce board with effect from July 1, and succeed Ian Davis as chair at the start of October. Davis is departing after nearly nine years as chair.
The UK Competition & Markets Authority is probing whether IAG's British Airways and Ryanair have broken consumer law over refunds.
The CMA has opened enforcement cases into both firms over concerns that, during periods of lockdown across the UK, BA and Ryanair refused to give refunds to consumers that were lawfully unable to fly. The firms instead offered vouchers or the option to rebook.
"While we understand that airlines have had a tough time during the pandemic, people should not be left unfairly out of pocket for following the law. Customers booked these flights in good faith and were legally unable to take them due to circumstances entirely outside of their control. We believe these people should have been offered their money back," said CMA Chief Executive Andrea Coscelli.
SSP Group reported a slump in interim revenue as pandemic countermeasures continued to restrict movement. SSP is an operator of food and beverage outlets in travel locations.
Revenue slumped 79% to GBP256.7 million for the half-year ended March 31, with sales severely hit by the pandemic and ensuing reductions in passengers passing through airports and train stations. Like-for-like sales also tumbled 79%.
The firm's pretax loss widened to GBP299.7 million from GBP34.3 million a year ago.
Passenger numbers remained depressed during the first quarter of the financial year and, with infections picking up in key markets alongside the emergence of new variants, second quarter revenue continued at "similarly low levels".
Since the end of March, though, the firm has seen some improvement in trading, driven by the easing of lockdown restrictions in the UK as well as an uptick in passengers numbers in North America.
"Whilst the short-term outlook remains highly uncertain, we remain positive about a further upturn in both domestic and leisure travel across the remainder of the current financial year. We anticipate that the profit conversion on the lower sales, compared with pre-Covid levels, will continue to be in the region of 25% during the second half of the financial year," SSP said.
Pharmaceuticals and services provider Clinigen guided to a fall in earnings on pandemic disruption to trading.
Covid-19 has hit hospital-based oncology treatments and delayed clinical trials globally, and demand for the company's Proleukin within its current approved indications was "significantly weaker" than expected in recent months.
Proleukin is indicated for the treatment of metastatic melanoma and metastatic renal cell carcinoma.
As a result, net revenue is expected to be in-line with prior guidance and consensus forecasts, but adjusted earnings before interest, taxes, depreciation and amortisation is seen within a range of GBP114 million to GBP117 million. This would be down from the GBP131 million achieved for the 2020 financial year.
"The group believes it is prudent to expect this reduced level of demand for Proleukin to remain until revitalisation efforts into new indications alongside novel cell therapies are successful and normal Hospital and Cancer Centre Services have resumed," it said, adding that it is confident Proleukin demand will return and exceed pre-virus levels in the future.
Clinigen expects double-digit Ebitda growth in the 2022 financial year, it said, and is focused on its debt paydown.
In economic news out on Wednesday, China's factory gate inflation rose at the highest rate in over a decade last month, official data showed, as the world's second-largest economy worked to contain a surge in commodity prices.
Factories so far seem to be absorbing costs rather than passing them on to consumers, as domestic demand recovers from the strict coronavirus lockdowns imposed last year.
The producer price index, which measures the cost of goods at the factory gate, exceeded expectations to spike 9.0% year-on-year in May, said the National Bureau of Statistics. This marks its highest annual jump since September 2008.
However, consumer prices rose by less than expected, at 1.3% year-on-year, official data showed.
In China, the Shanghai Composite was up 0.2% on Wednesday, while the Hang Seng index in Hong Kong was down 0.3%.
The Japanese Nikkei 225 index ended down 0.4%. Against the yen, the dollar was stable at JPY109.47.
Sterling was quoted at USD1.4155 early Wednesday, a touch higher than USD1.4147 at the London equities close on Tuesday. The euro traded at USD1.2180, flat on USD1.2181 late Tuesday.
Gold was quoted at USD1,891.57 an ounce early Wednesday, down slightly from USD1,892.50 on Tuesday. Brent oil was trading at USD72.59 a barrel, up from USD71.52 late Tuesday.
The economic events calendar on Wednesday has the Bank of Canada's interest rate decision at 1500 BST.
By Lucy Heming; lucyheming@alliancenews.com
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