(Alliance News) - Stocks in London are seen opening lower on Thursday after minutes from the US Federal Reserve's March meeting heightened expectations for aggressive central bank monetary policy tightening.
In early company news, oil major Shell said it would write down up to USD5 billion after its Russia exit. Gambling firm Entain saw a positive first quarter while smaller peer 888 Holdings launched a share placing to acquire some assets of former London listing William Hill.
IG futures indicate the FTSE 100 index is to open 22.30 points lower at 7,565.40. The index closed down 26.02 points, or 0.3%, at 7,587.70 on Wednesday.
Shell said it will write off between USD4 and USD5 billion in the first quarter after exiting its operations in Russia.
"For the first quarter 2022 results, the post-tax impact from impairment of non-current assets and additional charges (eg write-downs of receivable, expected credit losses, and onerous contracts) relating to Russia activities are expected to be USD4 to USD5 billion," the oil major said.
"These charges are expected to be identified and therefore will not impact Adjusted Earnings," it added.
In addition, Shell said operating cash flow is expected to be hurt by "very significant" working capital outflows, as price increases impacting inventory have led to a cash outflow of around USD7 billion.
Entain said it made a strong start year with a good performance across all areas of the business, and is confident in its financial performance for the year ahead.
For the three months to March 31, net gaming revenue was up 31% compared to the first quarter last year, supported by the easing of Covid-19 restrictions. Retail arm volumes were within 5% to 10% of pre-Covid levels.
However, first-quarter online net gaming revenue was down 8% on an annual basis, though it said this was in line with expectations.
Entain also said its BetMGM partnership with MGM Resorts International was on track to be Ebitda positive in 2023.
"We have started the year with a good performance across all areas of our business, driven as ever by the strength of our industry-leading platform. We have delivered strong performances in all of our major markets, and I am pleased to report that Retail is performing well with customers returning for our instore experience," said Chief Executive Officer Jette Nygaard-Andersen.
"As a growing business we continue to invest in and build our business around our customers to provide them with the best experiences whilst also capturing the many opportunities ahead. Given the strength and continuing momentum of our underlying business, coupled with our proven ability to grow both organically and through M&A, we remain confident in our financial performance for FY22 and beyond," added Nygaard-Andersen.
888 Holdings said it continues to believe the acquisition of the non-US business of William Hill represents a "transformational opportunity" to increase its scale, further diversify and strengthen its product offering.
888 said the enterprise value of the William Hill assets has been cut to between GBP2.0 billion and GBP2.1 billion from GBP2.2 billion previously.
In order to help fund the deal, 888 intends to conduct a placing of up to 70.8 million new shares, representing around 19% of its issued share capital. The placing will be conducted through an accelerated bookbuild process which will be launched immediately. The price at which the shares are to be placed will be determined following the close of the process, it explained.
888 said the bookbuild plan replaces previous expectations of a GBP500 million fundraise. Completion of the acquisition is expected in June 2022.
In addition, 888 said revenue for the first quarter of 2022 is currently expected to be in the range of USD222 million to USD226 million, an increase of 0% to 2% compared to the fourth quarter of 2021.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.4%, S&P 500 down 1.0% and tech-heavy Nasdaq Composite down 2.2%.
"US stocks hit their lows of the day before bouncing back, to close off their intraday lows, but still lower for the second day in a row. This weakness has translated into a weaker Asia session and as such looks set to see markets here in Europe also open lower later this morning," said CMC Markets analyst Michael Hewson.
Wall Street wobbled after meeting minutes showed the Federal Reserve strongly considered a 50 basis point rate hike in March.
At the March policy meeting, several Fed officials supported raising interest rates by half a percentage point in the future to combat inflation, the minutes highlighted.
"Many participants noted that - with inflation well above the Committee's objective, inflationary risks to the upside, and the federal funds rate well below participants' estimates of its longer-run level - they would have preferred a 50 basis point increase in the target range for the federal funds rate at this meeting" according to minutes from the Federal Open Market Committee's March gathering.
Hewson added: "This is quite the about turn for the Federal Reserve, having only just finished adding to its balance sheet in March, this change of course comes across as the monetary policy equivalent of a handbrake turn, especially if we see 50bps and the start of balance sheet reduction next month."
In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.7%. In China, the Shanghai Composite was down 0.8%, while the Hang Seng index in Hong Kong was down 0.8%. The S&P/ASX 200 ended down 0.6%.
The pound was quoted at USD1.3089 early Thursday, up from USD1.3073 at the London equities close Wednesday.
UK Prime Minister Boris Johnson has said the actions of Russian forces in Ukraine appeared close to "genocide" as Britain and other Western allies unveiled sweeping new sanctions against the regime in Moscow.
Foreign Secretary Liz Truss said the UK was freezing the assets of Sberbank, Russia's largest bank, and Credit Bank of Moscow, banning all new investment in Russia and targeting eight more oligarchs.
Ahead of the announcement of the government energy security strategy on Thursday, she said Britain would end all imports of Russian coal as well as oil by the end of the year.
Earlier the European Commission set out proposals for a fifth round of sanctions, including a ban on coal imports, for approval by EU ambassadors.
The UK government has promised to take back control of energy prices with its long-awaited energy strategy which aims to make 95% of electricity low carbon by 2030.
Ministers are promising "cleaner and more affordable energy" to be made in this country by boosting wind, new nuclear, solar and hydrogen.
The euro was priced at USD1.0922, higher against USD1.0906. Against the yen, the dollar was trading at JPY123.67 in London, down from JPY123.77.
Brent was quoted at USD102.88 a barrel Thursday morning, down from USD104.01 Wednesday evening. Gold stood at USD1,924.70 an ounce, lower against USD1,927.10.
In the international economics events calendar on Thursday, there are eurozone retail sales at 1000 BST and US jobless claims at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
