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(Alliance News) - Stock prices in London are set to open higher after some mixed economic data out of China overnight, though trade overall is expected to be subdued on Monday with markets in the US closed.
In early UK company news, Associated British Foods said trading in the fourth quarter has exceeded expectations, while Future said its annual results are set to beat market forecasts and Dechra Pharmaceuticals posted a rise in full-year profit.
IG says futures indicate the FTSE 100 index of large-caps to open 34.22 points higher at 5,833.30 on Monday. The FTSE 100 closed down 51.78 points, or 0.9%, at 5,799.08 on Friday.
China's exports expanded by more than expected last month as key markets eased virus containment measures, official data showed Monday, but imports unexpectedly shrank despite a push to boost domestic demand.
Overseas shipments have been hit less than feared by the pandemic, thanks to global demand for medical supplies.
Exports spiked 9.5% on-year in August, the Customs Administration said, much better than the 7.5% predicted on a Bloomberg news poll of analysts.
Economists cautioned, however, that a resurgence in new infections in some regions meant the outlook remained uncertain.
Imports, which collapsed in May but have since improved, contracted 2.1% – much worse than the 0.5% growth tipped by analysts.
David Madden, market analyst at CMC Markets, said: "The high level of exports is likely down to a large amount of personal protective equipment being sold to various governments around the world. The decline in imports points to continued weak internal demand."
In China, the Shanghai Composite is down 1.3% on Monday, while the Hang Seng index in Hong Kong is down 0.4%. In Japan, the Tokyo's Nikkei 225 index closed down 0.5%.
"Stocks in Asia are mixed, and European indices are tipped to rebound. Equity markets in Europe are likely to be quiet today as the stock markets in the US and Canada will remain closed for public holidays," Madden added.
The US and Canada both celebrate labour day holidays on Monday.
In New York on Friday, Wall Street ended in the red despite a better-than-expected US jobs report for August, with the Dow Jones Industrial Average down 0.6%, the S&P 500 down 0.8% and Nasdaq Composite down 1.3%.
The US economy added 1.4 million jobs in August, slowing from a downwardly revised 1.7 million in July. The figure was in line with market forecasts.
The headline US unemployment rate was 8.4% in August, down from 10.2% in July. The reading beat market estimates, cited by FXStreet, of 9.8%.
In early UK company news on Monday, Associated British Foods said fourth-quarter trading in both its food businesses and low-cost fashion chain Primark has beaten expectations.
Increased demand for yeast and bakery ingredients, particularly across the Americas and China, delivered higher sales for the Ingredients business, and the Sugar unit, as expected, will deliver a "much improved" profit year-on-year.
"All Primark stores reopened during May, June and July and trading during the fourth quarter has been strong. In the latest four-week UK market data for sales in all channels, Primark achieved our highest ever value and volume shares for this time of year," AB Foods added.
Adjusted operating profit for Primark, excluding exceptional charges, is now expected to be "at least at the top end" of the GBP300 million to GBP350 million range previously advised for the financial year ending September 12, compared to GBP913 million the year before.
Future said it expects results for its soon-to-end financial year to be "materially ahead" of market expectations.
The magazine publisher said it continues to benefit from a shift to digital media, with organic unique visitors in the UK and US in August up 25% and 40% respectively compared to the prior year.
"Combined with a better-than-expected performance of TI Media in the second half, full-year adjusted operating profit is now expected to be materially ahead of current market expectations. In addition, as a result of continued strong cash conversion the business is de-levering quickly," Future added.
The firm noted that the current consensus range for adjusted operating profit for the year ending September 30 is GBP78.2 million to GBP83.2 million. This compares to GBP52.2 million in the 2019 financial year.
Future added that it now expects cost synergies from the TI Media merger of GBP20 million per year by the end of 2021 financial year, ahead of earlier forecasts of GBP15 million.
Dechra Pharmaceuticals posted full-year profit growth and said recent trading has been "encouraging".
Revenue for the year ended June 30 rose 6.9% to GBP515.1 million from GBP481.8 million the year before, with pretax profit increasing 47% to GBP40.9 million from GBP27.8 million.
Dechra proposed a final dividend of 24.00 pence per share, up from 22.10p a year ago. When added to the interim payout of 10.29p, the total dividend for the recently ended financial year was 34.29p, up 8.5% from 31.60p the year before.
Turning to the year ahead, Dechra said trading in the first few weeks of the new financial year has been "encouraging".
"However, the underlying Covid-19 affected longer-term trend cannot yet be ascertained as there is a degree of correction in current sales as markets, such as the UK, return to growth and wholesaler stocks return to more normalised levels. The indications at this stage, however, are positive," said Dechra.
The dollar was mixed against majors counterparts at the start of the week.
The euro traded at USD1.1828 early Monday, higher than USD1.1809 late Friday. Against the yen, the dollar was quoted at JPY106.29, slightly down from JPY106.36.
Sterling was quoted at USD1.3208 early Monday, down on USD1.3230 at the London equities close on Friday.
A "treacherous betrayal" enacted by a group of Tory "charlatans" is how various political figures have described the UK government's reported plan to rip-up the Brexit Withdrawal Agreement ahead of the next round of trade talks.
In reports a government spokesman appeared to confirm, the Financial Times said Boris Johnson was planning new legislation that would override key parts of the agreement – the treaty that sealed Britain's exit from the EU in January – in a move that could risk collapsing the UK-EU trade talks.
The prime minister is expected to say on Monday that collapsing the trade talks, should there be no agreement by the October 15 European Council, would still be a "good outcome for the UK".
The pre-briefed words from Johnson arrived as the FT reported sections of the Internal Market Bill, due to be published on Wednesday, are expected to "eliminate" the legal force of the Withdrawal Agreement in areas including state aid and Northern Ireland customs.
Gold was quoted at USD1,930.27 an ounce early Monday, higher than USD1,919.60 late Friday. Brent oil was trading at USD41.98 a barrel, lower than USD42.74.
In Monday's economic calendar, there is the UK Halifax house price index at 0830 BST, followed by eurozone investor confidence at 0930 BST.
By Lucy Heming; lucyheming@alliancenews.com
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