(Alliance News) - Stock prices in London are set to open a touch higher on Tuesday, taking inspiration from gains in the US and Asia overnight.
In early UK company news, industrial products supplier RHI Magnesita warned on rising costs. Aerospace firm Meggitt noted its takeover by the US's Parker-Hannifin is set to be probed on national security grounds. Housebuilder Bellway lifted its dividend, as revenue approached pre-virus levels.
IG says futures indicate the FTSE 100 index of large-caps to open up 18.37 points, or 0.3%, at 7,222.20 on Tuesday. The FTSE 100 closed down 30.20 points, or 0.4%, at 7,203.83 on Monday.
The higher open in London follows a more upbeat performance in New York overnight. The Dow Jones Industrial Average ended down 0.1% on Monday, the S&P 500 up 0.3% and the Nasdaq Composite up 0.8%.
"While European stocks fell back yesterday, US stocks were slightly more resilient, with the S&P 500 and Nasdaq both finishing in positive territory, helped by oil prices slipping back from their peaks, and on optimism that last week's trend of earnings beats will continue later today, when Netflix announces its latest Q3 numbers, after the close of US markets tonight," said Michael Hewson, chief market analyst at CMC Markets.
Brent oil was trading at USD84.53 a barrel early Tuesday, softening from USD84.86 late Monday and off recent highs which saw crude prices trade just above USD86.00. A recent spike in energy prices has heightened investor fears over surging inflation.
Netflix on Tuesday becomes the first of the 'Faangs' - Facebook, Amazon, Apple, Netflix and Alphabet's Google - to report on the third quarter of 2021. Also due this week are earnings from electric car maker Tesla and credit card firm American Express.
In early UK company news, Meggitt noted that the UK government has referred its takeover by Parker-Hannifin to the competition regulator on national security grounds.
The defence firm said the UK Competition & Markets Authority has to report to the secretary of state for Business, Energy & Industrial Strategy by midnight at the end of March 18. Meggitt said it looks forward to "engaging constructively" with the CMA and still expects the deal to complete in the third quarter of 2022.
The CMA on Tuesday also revealed it has got its eye on GCP Student Living's takeover. GCP agreed to the GBP969 million takeover back in July from a consortium which includes student accommodation provider Scape Living and also iQSA Holdco. Scape is funded by funds managed by APG, an investor in GCP, and iQSA by funds advised by Blackstone.
The regulator said it is mulling whether the deal will lessen competition, and has until December 13 to decide whether to progress the probe or not.
In a busy morning for the UK competition watchdog, the CMA also launched a probe into the music streaming market. It said this is part of its effort to increase competition in digital markets, which also has included investigations of Google's 'privacy sandbox', Facebook's use of ad data and Apple's AppStore.
BHP left its full-year guidance unchanged despite seeing a fall in production in the first quarter of its financial year.
The Melbourne-based miner saw petroleum production in the three months to the end of September rise 3.0% year-on-year to 27.5 million barrels of oil equivalent from last year's 26.7 million. Copper production fell 8.9% to 376,500 tonnes in the quarter from 413,200 tonnes last year, while iron ore slipped 4.1% to 63.3 million tonnes from 66.0 million tonnes.
"BHP's operations delivered reliably during the first quarter, and we completed planned major maintenance activities across a number of our assets. We continue to skilfully navigate the ongoing challenges of Covid-19," asserted BHP Chief Executive Mike Henry.
BHP kept both its production and unit cost guidance for financial 2022.
RHI Magnesita warned on full-year profit as it flagged higher costs.
The refractory products supplier also unveiled the acquisition of an 85% stake in SORMAS Sogut Refrakter Malzemeleri Anonim Sirketi, a producer of refractories for the cement, steel, glass and other industries in Turkey, for EUR38.8 million in cash.
Turning to trade, RHI Magnesita said demand has continued to be strong for both the Steel and Industrial businesses, but profit has been constrained by further cost rises. Profitability in the third quarter of 2021 was in line with the first half, it said.
"The supply chain position remains challenging in all territories with the group seeing further increases in the cost of sea freight and demurrage, together with rising energy and consumables costs," RHI Magnesita warned.
It would now take a "strong" fourth quarter performance to hit its full-year earnings before interest, tax and amortisation guidance of EUR310 million. Given further price increases are currently being negotiated with customers, RHI Magnesita expects full-year earnings between EUR280 million and EUR310 million.
Chief Executive Stefan Borgas said: "Demand remains strong, and we have made good progress on our network optimization and capital projects in the year to date. During the current period of supply chain disruption, we are focused on delivering for our customers, who recognize that pricing needs to be increased to account for the higher costs affecting refractory producers worldwide."
Housebuilder Bellway saw profit double in its recent financial year and revenue back near pre-pandemic levels.
Revenue for the financial year that ended July 31 jumped 20% to GBP3.12 billion from GBP2.23 billion the year before. Bellway noted that this sales figure was only 2.8% below the record level achieved in the 2019 financial year.
The revenue rally led pretax profit to double to GBP479.0 million from GBP236.7 million. The home builder boosted its dividend to 117.5 pence from 50.0p.
Looking ahead, Bellway was confident as it highlighted a "substantial" order book and strengthened land bank, along with strong industry fundamentals. It expects to increase output by around 10% to over 11,100 new homes in the financial year ahead, after registering housing completions of 10,138, up 35%, in the recently ended year.
Gold was quoted at USD1,775.17 an ounce early Tuesday, higher than USD1,768.25 on Monday.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 0.7%. In China, the Shanghai Composite was up 0.7%, while the Hang Seng index in Hong Kong was up 1.4%. The S&P/ASX 200 in Sydney ended down 0.1%.
Against the yen, the dollar eased to JPY114.01 versus JPY114.28.
Sterling was quoted at USD1.3776 early Tuesday, higher than USD1.3711 at the London equities close on Monday despite warnings that the coming months in the UK will be "challenging" as coronavirus cases continue to rise.
Downing Street said an increase in coronavirus cases had been expected over the winter and the government would keep a "close watch" on the situation. Government data up to Sunday show more than 300,000 confirmed cases reported over the last seven days, a 15% increase on the previous week.
The euro traded at USD1.1657, up from USD1.1595 late Monday, ahead of eurozone construction output data at 1000 BST.
By Lucy Heming; lucyheming@alliancenews.com
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