(Alliance News) - Stock prices in London are seen opening lower on Wednesday, tracking declines in US and Asian equity markets overnight, while the European Central Bank-led forum in Portugal concludes with a policy panel featuring the world's top central bankers.
In early company news, US defence firm Parker-Hannifinp's takeover of Meggitt moved a step closer to completion. Variety retailer B&M European Value Retail left annual guidance unchanged. Online greeting cards seller Moonpig hailed its progress after a year as a publicly listed company.
IG futures indicate the FTSE 100 index is to open 47.81 points lower at 7,275.60. The index closed up 65.09 points, or 0.9%, at 7,323.41 Tuesday, completing a three-day winning streak.
However, New York ended sharply lower on Tuesday, with the Dow Jones Industrial Average down 1.6%, S&P 500 down 2.0%, and Nasdaq Composite down 3.0%.
All three key stock indices ended down following a US consumer confidence reading at its lowest level in more than a year on surging inflation.
The downbeat report was due in part to the feeling that higher prices will persist, suggesting US consumers are not confident the Federal Reserve's aggressive efforts to tame inflation will have the desired effect.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.9%. In China, the Shanghai Composite was down 0.9%, while the Hang Seng index in Hong Kong was down 1.8%. The S&P/ASX 200 in Sydney ended down 0.9%.
The hefty selling came after European equity markets rallied on Tuesday on hopes that any signs of contraction could give central banks room to ease up on their pace of monetary tightening.
"Recently, it seems markets have been caught in between positioning for a 'peak inflation' and fine-tuning expectations of the necessary magnitude of central bank tightening vs a 'stagflation scenario' where growth would slow down markedly but central banks would be forced to continue to hike aggressively as inflation remains high," commented analysts at Danske Bank.
B&M European Value Retail said revenue declined in its financial first-quarter as the variety goods retailer left guidance unchanged.
For the 13 weeks to this past Saturday, group revenue was down 2.2% to GBP1.16 billion from GBP1.19 billion in the first quarter last year. For B&M UK, revenue was down to GBP957 million from GBP1.02 billion.
Looking ahead, B&M said there is no change to the guidance issued at its annual results in May, with financial 2023 adjusted earnings before interest, tax, depreciation, and amortisation expected to be in the range of GBP550 million to GBP600 million. Adjusted Ebitda in financial 2022 came in at GBP619 million.
Parker-Hannifin said it welcomed that UK Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng was "minded to accept" its proposed undertakings on competition and national security matters, to allow its acquisition of UK defence contractor Meggitt.
Late Tuesday, the UK government said the US engineering and aerospace company has addressed competition and national security concerns over its GBP6.3 billion takeover of its UK rival.
"The business secretary is minded to accept undertakings offered by Parker-Hannifin to address the concerns. This decision follows advice from the Ministry of Defence and the Competition & Markets Authority," the UK government said.
The government said Secretary of State for Business, Energy & Industrial Strategy Kwasi Kwarteng proposes to accept Parker's undertakings but has launched public consultations and will wait until the consultation period concludes on July 13 before making a final decision.
Parker said it will continue to engage with the UK government, the Competition & Markets Authority and other relevant authorities to receive remaining regulatory and antitrust clearances. Parker continues to expect the transaction to close in the third quarter, it added.
"We are pleased that following very constructive engagement with the UK government, the secretary of state is minded to accept the national security and competition undertakings we have offered as part of our pending acquisition of Meggitt. The combination of Parker and Meggitt is an exciting opportunity for both companies and we look forward to welcoming Meggitt to the Parker team." said Parker Chair & Chief Executive Officer Tom Williams.
Moonpig hailed its "transformational first full year" as a listed company saying it "significantly outperformed" the targets set out at its IPO.
For the financial year that ended April 30, revenue was down 17% at GBP304.3 million from GBP368.2 million the year before, but pretax profit rose 21% to GBP40.0 million from GBP32.9 million. The retailer said it has seen "no material impact" on gross margin rate from cost inflation.
Moonpig said it does not intend to pay dividends as it invests in growth. "We intend to keep capital structure and dividend policy under review and may revise these from time to time," the company said.
Looking ahead, Moonpig said it was satisfied with the start made to the new financial year and remains confident in existing expectations for trading in financial 2023. Based on the anticipated completion of the acquisition of Buyagift by the end of July 2022, it expects annual revenue for the enlarged Moonpig group of GBP350 million.
"Our first full year as a listed company has been another transformational period for Moonpig Group - financially, operationally and strategically. We have significantly outperformed the targets set out at IPO, and recently announced the proposed acquisition of Buyagift, which will accelerate our journey to becoming the ultimate gifting companion," said Chief Executive Officer Nickyl Raithatha.
"We have further extended our market leadership in online cards, demonstrating the strength of our data-led business model and validating our significant investments in technology. Our gifting business has grown by over 100% in the past two years, and we are able to adapt with speed and agility to any changing consumer behaviours," Raithatha added.
The pound was quoted at USD1.2178 early Wednesday, down from USD1.2191 at the London equities close Tuesday.
The euro was priced at USD1.0490, down from USD1.0531. Against the yen, the dollar was trading at JPY135.88 in London, lower against JPY136.22.
Brent oil was quoted at USD117.96 a barrel Wednesday morning, up from USD117.21 late Tuesday. Gold stood at USD1,821.35 an ounce, slightly higher against USD1,820.14.
Oil prices dipped, though remain elevated, following a run-up in recent days on expectations that demand will continue to rise - despite recessionary talk - and that supplies remain tight due to the ban on imports from Russia.
Wednesday's economic calendar has eurozone consumer confidence at 1000 BST, German inflation at 1300 BST and US GDP at 1330 BST. In addition, market focus will lie on remarks from US Federal Reserve Chair Jerome Powell, Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde in Sintra, Portugal.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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