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(Alliance News) - Stock prices in London are seen opening lower on Thursday tracking steep falls in Asian equity markets, as widening bond yields in the US continued to spook investors concerned about rising inflationary pressure.
The 10-year US Treasury note yield firmed to 1.48%, having encroached upon 1.5% earlier.
In early company news, insurer Aviva raised its dividend and said it will disposed of operations in Italy, continuing its restructuring. Irish building materials firm CRH said it delivered a robust annual performance and also raised its payout. Asset manager Schroders posted record high assets under management.
IG futures indicate the FTSE 100 index is to open 61.27 points lower at 6,614.20. The blue-chip index closed up 61.72 points, or 0.9%, at 6,675.47 on Wednesday.
Aviva said it will sell its remaining Italian life and general insurance businesses for EUR873 million in cash.
It will sell its general insurance business in Italy to Allianz for EUR330 million and life insurance business to French insurance firm CNP Assurances for EUR543 million.
Aviva said it expects to use the increased capital and cash to support debt reduction, investment for long-term growth, and the return of excess capital to shareholders.
For 2020, the insurer posted adjusted operating profit of GBP3.16 billion, down 0.6% from GBP3.18 billion in 2019.
The insurer declared a 2020 total dividend of 21 pence, up 35% from 15.5p per share in the prior year.
Chief Executive Officer Amada Blanc said: "Our performance in 2020 demonstrates the resilience of our core businesses and our growth potential. We delivered record sales in group protection; record sales of bulk purchase annuities; and record net flows in savings and retirement, where we are the largest provider of workplace pensions in the UK.
"Aviva is financially strong and following the completion of the major disposals, we will be in a position to make a substantial return of capital to our shareholders. We are also announcing today an GBP800 million debt tender offer. This allows us to accelerate our debt reduction plans and lower debt by a total of GBP1.7 billion in the first half of this year."
Building materials firm CRH said it delivered a robust performance in a challenging environment due to Covid-19 related disruption in key construction markets of North America and Europe.
For 2020, revenue was USD27.6 billion, down 1.8% from USD28.1 billion in 2019 and profit before tax from continuing operations was USD1.66 billion, down 24% from a restated USD2.18 billion.
CRH raised its annual dividend 25% to 115.0 cents with 93.0 cent final payout and said it plans to resume its share buyback programme with USD0.3 billion by end of June.
"Our 2020 performance is testament to the commitment of our people and the strength and resilience of our business model. Through the repositioning of our business in recent years and our relentless focus on continuous business improvement, we have delivered record levels of profitability, margins and cash generation. Although the near-term outlook remains uncertain, our unique portfolio of businesses together with the strength of our balance sheet leaves us well positioned to capitalise on the growth opportunities that lie ahead," said Chief Executive Officer Albert Manifold.
Schroders said it delivered strong results with a focus on cost discipline and good client inflows, despite the challenging conditions.
For 2020, net income was GBP2.18 billion, up from GBP2.12 billion in 2019, while pretax profit fell to GBP610.5 million from GBP624.6 million.
Schroders said it generated net flows of GBP42.5 billion, and assets under management increased 15% to a record high of GBP574.4 billion from GBP500.2 billion in 2019.
The asset manager declared a 2020 total dividend 114.0p per share, unchanged from 2019.
"The group is increasingly balanced towards the higher growth areas of Private Assets & Alternatives, Solutions and Wealth Management. We believe the macro-economic environment will accelerate demand for these areas going forward and we are well positioned to service clients around the world with the solutions they need. We maintain a strong capital position and are confident our diversified business model will continue to generate value for our clients, shareholders and wider stakeholders," the company said.
The Japanese Nikkei 225 index closed 2.1% lower on Thursday. In China, the Shanghai Composite ended down 2.1%, while the Hang Seng index in Hong Kong is down 2.2%.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.4%, S&P 500 down 1.3%, and Nasdaq Composite down 2.7%.
"The global equity markets continue to dive headlong into the plunge pool as high flyer tech stock remains significantly vulnerable to higher yields," said Axi's Stephen Innes. "The market focus remains worryingly on higher interest rates, a by-product of market-based inflation expectations, as well as the throughput effect into the heavily owned tech sector, where alarm bells are sounding amid lofty valuations."
The pound was quoted at USD1.3962 early Thursday, down from USD1.3988 at the London equities close Wednesday, in the wake of the UK budget statement on Wednesday.
UK Chancellor of the Exchequer Rishi Sunak has vowed to build a "fairer and more just" country in the memory of those who lost their lives to coronavirus, after setting out plans to begin repairing the nation's finances after the pandemic.
Sunak used the UK government budget to extend the furlough scheme and Universal Credit increase as part of a GBP65 billion lifeline for an economy still battered by the Covid crisis.
But taxes on business profits are set to rise from 2023, while income tax thresholds will be frozen, meaning more than a million extra people will be dragged into paying it as wages increase.
It will take the UK's tax burden to its highest level since the 1960s, according to the Office for Budget Responsibility.
The euro was priced at USD1.2060, lower from USD1.2077. Against the yen, the dollar was quoted at JPY107.12, up from JPY106.87.
Elsewhere, members of the OPEC group of oil producers and allies are expected to raise output in a meeting Thursday, in response to a rebound in demand and prices.
Brent oil was trading at USD64.50 a barrel Thursday morning, up from USD64.16 late Wednesday.
While the so-called OPEC+ group is often at loggerheads over how much oil to pump to the market, a sudden plunge in prices triggered by the coronavirus pandemic led members to agree on a dramatic cut in output to underpin prices.
Now that vaccination campaigns are underway and demand from China, the world's largest oil importer, has bounced back to pre-pandemic levels, the success of the meeting on Thursday will hinge on whether heavyweights Russia and Saudi Arabia can agree on a way forward.
Gold was quoted at USD1,716.37 an ounce, down from USD1,722.45.
Thursday's economic calendar has US initial jobless claims at 1330 GMT, after construction PMIs from the eurozone at 0900 GMT and the UK at 0930 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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