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(Alliance News) - Stocks in London are set to open higher on Thursday despite news of a delay in signing the phase one trade deal agreed between the US and China.
In early UK company news, Aston Martin said trading conditions have remained challenging as it swung to a quarterly loss, and Rolls-Royce Holdings expects annual profit towards the lower end of guidance on one-time Trent 1000 TEN engine costs.
IG says futures indicate the FTSE 100 index of large-caps to open 22.65 points lower at 7,419.30 on Thursday. The FTSE 100 index closed up 8.57 points, or 0.1%, at 7,396.65 on Wednesday.
"News that a potential trade deal between the US-China may be postponed to December weigh on the market sentiment. Investors were hoping to get an interim deal out of their way in November, but it is likely not happening. If stock traders are moody, it is because a lot could go wrong during that additional month," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
Reuters reported that the signing of the deal could be delayed as discussions continued over terms and venue.
A senior official of the Trump administration told Reuters it was still possible the 'phase one' agreement would not be reached, but a deal was more likely than not.
Trump had planned to sign the deal with Chinese leader Xi Jinping on the sidelines of a now-cancelled summit in Chile this month.
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average ending flat, the S&P 500 advancing 0.1% and Nasdaq Composite falling 0.3%.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong is down 0.4%.
In London, J Sainsbury saw sales trends improve over the first half of its financial year.
Revenue was broadly flat at GBP15.1 billion in the half-year to September 21, while the grocer's pretax profit dropped to GBP9 million from GBP107 million a year ago. Sainsbury's booked GBP229 million in one-off costs in the half, up from GBP172 million a year ago.
Like-for-like sales excluding fuel were down 1.0% year-on-year, falling 1.6% in the first quarter but just 0.2% in the second. Total retail sales were down 0.6% on a year before, again seeing trends improve over the period with a 1.2% fall in the first quarter and a 0.1% rise in the second.
Within retail, grocery sales were down 0.1% year-on-year, falling 0.5% in the first three months and rising 0.6% in the following quarter. General Merchandise sales were down 3.1% in the first quarter and 2.0% in the second, leading to a decline of 2.5% for the first half overall. Clothing sales slipped 4.5% in the first quarter, but recovered impressively to post growth of 3.3% in the second, and down 1.2% over the half as a whole.
Sainsbury's noted that UK retail markets remain "highly competitive" and the consumer outlook uncertain, but, as previously guided, the supermarket expects profit in the second half to benefit from a normalisation of marketing costs and weather comparatives.
Rolls-Royce Holdings said it has seen improved trading in recent months, though now expects annual profit towards the lower end of guidance.
A full financial analysis of Trent 1000 TEN jet engine issues has resulted in a likely exceptional charge of GBP1.4 billion. This represents the additional near-term costs of customer disruption and remediation shop, as well as provisions against future losses on a small number of contracts due to a new estimate of high pressure turbine durability.
"In Civil Aerospace, while the Trent 1000 costs remain a headwind, the vast majority of our installed fleet of widebody engines is performing well, with the Trent XWB surpassing our expectations. We have seen growth in ITP and steady sales in Defence. In Power Systems, while trading remains healthy, a small number of larger projects have been deferred and as a result we now expect sales growth for the Full Year in the low- to mid-single-digit range," said Chief Executive Warren East.
Flutter Entertainments, formerly known as Paddy Power Betfair, raised its US guidance, spurred on by "excellent" sports betting and casino momentum.
For the third quarter, group revenue was up 10% year-on-year to GBP533 million, with both sports and gaming seeing good growth. Australia continues to perform well, with Sportsbet net revenue growth of 19%, while US revenue surged 67%.
The betting firm said it now expects its US Ebitda loss to be around GBP40 million to GBP45 million, versus a previous expectation of GBP55 million.
"Q3 was an important quarter for the group with revenues up 10% and the announcement of our combination with The Stars Group. We believe that this deal will accelerate delivery of all of our core strategic objectives and we are very excited about the international growth prospects for the combined group," said Chief Executive Peter Jackson.
He added: "Notwithstanding the substantial investment we are making, our strong customer and revenue momentum means that we are raising our full-year guidance in the US."
Housebuilder Persimmon said it has made "good progress" thus far in the second half.
Trading over the summer weeks was in line with expectations, with the group seeing "the usual pick-up in customer activity" in the autumn season.
Trading has continued to be "resilient" through the second half of the year, with the group's average weekly private sales reservation rate per site of 0.67 being in line with last year.
"I am confident that the continued successful implementation of our detailed customer care improvement plans together with our strengthened forward build position, healthy forward sales, robust balance sheet and industry-leading land holdings provide a sound platform for the successful future development of the Group," said Chief Executive Dave Jenkinson.
Aston Martin Lagonda Global Holdings flagged that challenging trade conditions have persisted, putting sales under pressure.
The luxury car maker reported revenue of GBP250.1 million for the third quarter of 2019, down 11% on a year ago. The firm swung to a pretax loss of GBP13.5 million from a GBP3.1 million profit a year ago, and adjusted earnings before interest, tax, depreciation and amortisation fell 12% to GBP47.7 million.
Total wholesale volumes were down 16% in the quarter to 1,497. In the year-to-date, they dipped 3% to 3,939.
"Tough trading conditions, particularly in the UK and Europe, persist and whilst retail sales have grown 13% year-to-date, wholesale volumes remain under pressure," said Aston Martin President & Chief Executive Andy Palmer.
Aston Martin said it expects to meet market expectations for 2019, though continues to see pressure on volumes continuing into the end of the year, with wholesales to be lower than previously guided but "within the range of market expectations".
The car maker said it is taking actions to control costs through an efficiency programme and will continue to "plan prudently" for 2020.
Elsewhere, there will be focus on the Bank of England's latest policy decision on Thursday.
"The UK central bank are basically locked in the Brexit waiting room, whereby they are likely to keep their policy on hold until the UK leaves the EU. The BoE appears to be playing the wait and see game," said David Madden at CMC Markets.
"The fact the Fed have cut rates three times in four months, and the ECB are about to restart their quantitative easing scheme, would suggest the BoE’s next move could be a rate cut," he added.
Away from the BoE, the economic calendar has UK Halifax house prices at 0830 GMT and Irish CPI at 1100 GMT. In the US, there are initial jobless claims at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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