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(Alliance News) - Stocks in London are on course for another downbeat session on Thursday as new virus cases in the US creep back up towards daily record levels, while a US-EU trade dispute gave traders another thing to worry about.
In early UK company news, Johnson Matthey's chief financial officer will join London Stock Exchange Group later in the year, BAE Systems expects a 15% fall in interim profit, and Royal Mail said it is unlikely to pay a dividend until the 2022 financial year.
IG says futures indicate the FTSE 100 index of large-caps to open 23.49 points lower at 6,100.20 on Thursday. The FTSE 100 closed down 196.43 points, or 3.1%, at 6,123.69 on Wednesday.
The lower open in Europe comes as markets continue to eye the escalating virus situation in the US.
The number of new coronavirus infections in the US is approaching record daily levels, with more than 35,900 cases recorded in the past 24 hours, according to a tally by Johns Hopkins University.
That brings the number of cases in the country to nearly 2.4 million, the tracker from the Baltimore-based university showed at 8:30 pm local time Wednesday, after several days in which the number of cases has surged.
Nearly half of the 50 US states have seen an increase in infections over the past two weeks, with some - such as Texas and Florida - posting daily records.
The Hopkins tracker also showed Wednesday that 756 people had died of Covid-19 in the past 24 hours. That brings the death toll to 121,932 in the world's leading economic power, by far the most bereaved by the pandemic on the planet.
"The harsh dose of Covid-19 reality capped a lousy night for the US, and by association, world markets. The Trump administration, fresh from chopping US visa availability, proposed fresh tariffs on an array of European goods, and tariffs on Chinese lobsters. The Defense Department also published a list of Chinese companies with uncomfortably close ties to the Chinese military," said Jeffery Halley, senior market analyst, Asia Pacific, at Oanda.
"Trade disagreements and tensions being precisely what the world does not need right now," Halley said.
The European Commission expressed concern Wednesday at a US threat to impose punitive taxes on European imports over a dispute over US aircraft makers Boeing and Europe's Airbus.
A document released late Tuesday from the US Trade Representative says it is considering levying taxes of up to USD3.1 billion on European products over the fairness of subsidies to Airbus.
The USTR document listed products from France, Germany, Spain and Britain, ranging from olives to decaffeinated coffee, as possibly subject to the new tariffs. The proposed measures would be "very damaging", said a Commission spokesman.
In the US on Wednesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 2.7%, the S&P 500 down 2.6%, and the Nasdaq Composite down 2.2%.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.2%. Financial markets in Hong Kong and Shanghai are closed on Thursday for the Dragon Boat Festival holiday. Â
Against the yen, the dollar was quoted at JPY107.15, up versus JPY106.44.
In early UK company news, London Stock Exchange Group said Anna Manz will join as chief financial officer from speciality chemicals firm Johnson Matthey.
Manz will step down as Johnson Matthey's CFO on November 20, the day after the firm's interim results. A process has commenced to find her successor. Manz will succeed David Warren at LSEG who announced in October his intention to retire from the group and step down from the board.
Prior to Johnson Matthey, Manz spent 17 years at Diageo in a number of senior finance roles and as chief strategy officer. She also serves as a non-executive director at ITV.
Defence contractor BAE Systems said the Covid-19 pandemic has dented trading in the second quarter.
At its UK-based Air and Maritime sectors, second-quarter disruptions have particularly hit cost recoveries and sales volumes, offset somewhat by a strong underlying operational performance and cost-control measures. The US-based Controls and Avionics business "has been and is expected to be impacted for the near-term", especially in the commercial aftermarket and product delivery lines.
Demand remains high, though, with order intake in line with BAE's original expectations for the year.
Sales for the half-year are expected to be broadly stable year-on-year, but profit is expected to fall 15% due to cost under recoveries in the period, significantly reduced volumes in higher margin commercial work, and the sales mix.
"As we return towards full operational tempo we expect the business performance in the second half to be much stronger than in the first half, assuming no new significant Covid-19 related disruptions," said BAE.
The company added that it will provide an update alongside its interim results on its move to defer the decision on a 2019 final dividend.
Auto Trader reported annual profit growth and said it has been encouraged by recent demand following the easing of the UK's lockdown.
Revenue for the year ended March was up 4% to GBP368.9 million, while pretax profit was up 4% to GBP251.5 million.
"Since the early stages of the pandemic we have endeavoured to act decisively and responsibly to ensure we and our customers could emerge in as strong a position as possible when the crisis passes. We've been encouraged by the strong initial bounce back in used car demand, and whilst the short-term outlook remains uncertain, we believe the case for moving more of the car buying process online is stronger than ever," said Nathan Coe, chief executive of Auto Trader.
Since the start of June, when retailers were allowed to re-open showrooms, Auto Trader said both visitors and enquiries have "rebounded strongly" and are now at record levels. With high levels of demand in the market, used car pricing has remained strong.
The Covid-19 outbreak is "likely to result in an increase in the level of exclusive use vehicle ownership", Auto Trader believes, and the current environment should accelerate the shift online for the car buying process.
Royal Mail reported a slump in full-year profit, announced plans to cut 2,000 management jobs and said it is targeting the restart of dividends in the 2022 financial year.
Revenue for the financial year that ended in March was GBP10.84 billion, up 2.5% from GBP10.58 billion the year before, which comprised 53 weeks. However, pretax profit slumped to GBP180 million from GBP241 million as operating costs rose 3.7% to GBP10.62 billion.
Profit was also hit by a GBP51 million regulatory fine and a GBP91 million impairment charge, which was up from GBP68 million the year before.
To save costs, Royal Mail is to cut around 2,000 UK management roles and this, along with targeting flat non-people costs, is expected to deliver an annual operating profit benefit in the 2022 financial year of GBP330 million.
Looking out, the postal operator continues to expect UKPIL to be "materially" loss-making in the financial year ahead, while GLS profitability may potentially be reduced.
The year's dividend per share of 7.5 pence reflects the board's decision not to recommend a final dividend, against a total payout of 25p the year before. Royal Mail does not expect to pay a dividend in the financial year ahead, but it is targeting the restart of payouts in the 2022 financial year.
Sterling was quoted at USD1.2408 early Thursday, soft from USD1.2427 at the London equities close on Wednesday.
In the UK, the government is due to publish the latest data from its coronavirus test and trace service as the prime minister continues to defend it from criticism.
The Department for Health & Social Care is expected to release figures for England on Thursday the NHS Test and Trace Service between June 11 and 17, its third week of operation.
The euro traded at USD1.1237 early Thursday, down from USD1.1263 late Wednesday.
Gold was quoted at USD1,764.46 an ounce early Thursday, lower than USD1,775.65 on Wednesday. Brent oil eased to USD39.96 a barrel early Thursday from USD40.44 late Wednesday.
The economic events calendar on Thursday has first-quarter US GDP readings, jobless claims and personal consumption expenditure figures at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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