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(Alliance News) - Stocks in London are set for a smoother end to a rocky week that has seen markets battered by inflation worries.
In early UK company news, accounting software firm Sage raised its organic recurring revenue growth guidance, Cinven said its takeover approach for Sanne was rebuffed, and Sabre remained confident in serving an "attractive dividend for the year".
IG says futures indicate the FTSE 100 index of large-caps to open 25.17 points, or 0.4%, higher at 6,988.50 on Friday. The FTSE 100 closed down 41.30 points, or 0.6%, at 6,963.33 on Thursday.
"Today's European session looks set to start on a positive note after yesterday's US rebound," said Michael Hewson, chief market analyst at CMC Markets, adding that a factor behind the move higher was a decline in US 10-year yields.
In the US on Thursday, Wall Street rebounded, with the Dow Jones Industrial Average ending up 1.3%, the S&P 500 up 1.2%, and Nasdaq Composite up 0.7%.
New York's bounce back came despite US producer price growth for April beating expectations a day after a blowout consumer price index reading.
US producer prices jumped 6.2% year-on-year in April, the largest advance since 12-month data were first calculated in November 2010. This marked an acceleration from growth of 4.2% in March and topped expectations, according to FXStreet, for 5.9%.
On Wednesday, data had shown the annual US consumer inflation rate surged to 4.2% in April from March's 2.6%. Markets had expected an April rate of 3.6%.
CMC's Hewson cautioned: "While US markets managed to reverse some of Wednesday's losses it was notable that the Nasdaq rebound lagged behind, in a sign that perhaps the downside bias that we've seen so far this week might not be completely done with."
In early UK company news, accounting software firm Sage reported a sharp fall in interim profit but strengthened its outlook for organic recurring revenue growth.
Revenue for the financial half-year to March 31 fell 4% to GBP937 million, though organic total revenue rose 1.4% and organic recurring revenue by 4.4%. Pretax profit dropped 31% to GBP190 million from GBP275 million.
The organic operating profit margin narrowed to 20.2% from 23.2%, which Sage said reflected its planned additional strategic investment to accelerate growth across Sage Business Cloud with a focus on cloud native solutions.
Despite the profit fall, the firm bumped up its dividend by 2.0% to 6.05 pence from 5.93p a year ago.
"Sage performed strongly in the first half against tough comparators, with continued recurring revenue growth and increasing levels of new customer acquisition, principally in cloud native solutions," said Chief Executive Steve Hare.
Sage said it now expects organic recurring revenue growth for the full-year to be towards the top end of its 3% to 5% guidance range. As previously guided, the organic operating margin is expected to be as much as three percentage points below the 2020 financial year, reflecting "strategic investment" in the business.
"Looking beyond FY21, we expect margins to trend upwards over time, as this additional investment drives recurring revenue growth and operating efficiencies," the company said.
Cinven said it made a takeover approach to FTSE 250-listed Sanne earlier in May, but this was rejected.
Cinven, adviser to the managing general partners of the Cinven funds, confirmed that on May 4, it approached Sanne with a 830p-per-share cash offer. In addition, shareholders would be able to receive the final dividend of 9.9p per share declared in May.
Sanne shares closed at 603p in London on Thursday, meaning Cinven's approach was at a 38% premium.
However, the proposal was rebuffed on May 12 by the London-based fund and corporate services firm.
Cinven is considering its position, it said, though cautioned there is no certainty any offer will be made. It has until the end of business on June 11 to either make a firm offer or walk away.
Sabre Insurance said it is confident that volumes will continue to increase as the number of drivers and car sales rise.
First quarter volumes were in line with expectations, it said, while gross written premiums for the four months to April 30 were GBP46.0 million, down from GBP54.6 million a year ago. The firm remains focused on "prioritising underwriting profitability over volume", with price increases "materially ahead" of the market.
It is too early to identify meaningful market quote volume increases as lockdown eases, the motor insurer said, though it noted April volumes were ahead year-on-year.
"Volumes through Q1 were in line with our expectations, during which we continued to execute our strategy of focusing on profitability over volume. Alongside that, we continue to investigate and implement new rating factors and potential new, complementary product offerings which will help drive disciplined and profitable volume growth in future periods," said Chief Executive Geoff Carter.
He added: "Premiums in April were 14.6% higher than the same period last year, with the weekly run-rate increasing relative to 2020 towards the end of the month and into the first week of May. This is despite us being consistent with regard to our pricing discipline and against a backdrop of low quote volumes across the market."
Sabre remains confident of providing an "attractive dividend for the year", the CEO said.
Housebuilder Crest Nicholson has agreed to sell its 50% stake in Longcross Studio, a film studio in Longcross Garden Village, Surrey, and a parcel of associated land on the southern side of the side.
The sale is to Longcross General Partner Ltd, an Aviva Investors company. Aviva is the existing joint venture partner for the scheme, and the pair continue to jointly own the remainder of Longcross Garden Village.
"This transaction supports one of the group's five strategic priorities which is to utilise and maximise the value of its land portfolio," said Crest Nicholson.
The proceeds from the sale are expected to deliver a one-off contribution in excess of GBP10 million to adjusted pretax profit for the 2021 financial year, with the receipt of around GBP45 million cash consideration by the end of the financial year.
It was a positive session in Asia overnight, with the Japanese Nikkei 225 index ending up 2.3%. In China, the Shanghai Composite was up 1.6%, while the Hang Seng index in Hong Kong was up 0.9%. The S&P/ASX 200 in Sydney ended up 0.5%.
The better mood saw the dollar edge down.
Sterling was quoted at USD1.4047 early Friday, firm on USD1.4045 at the London equities close on Thursday, even as UK government ministers are poised to order further action in response to the spread of the coronavirus variant dominant in India as new figures show cases have more than doubled in a week.
Data from Public Health England shows a rise in cases from 520 to 1,313 this week in the UK, with the agency saying cases were "rising in the community", and it was assessing the impact and severity of the variant. One response being considered is bringing forward the date for a second dose of vaccine for eligible groups to increase protection.
UK Prime Minister Boris Johnson has not ruled out local lockdowns being necessary to contain the spread of the virus. He said the government was "anxious" about the variant and "there is a range of things we could do, we are ruling nothing out" - though said there was "nothing that dissuades me" from easing England's lockdown further on Monday.
The euro traded at USD1.2100 early Friday, rising against USD1.2071 late Thursday. Against the yen, the dollar declined to JPY109.49 versus JPY109.60.
Gold was quoted at USD1,829.64 an ounce early Friday, up from USD1,823.80 on Thursday. Brent oil was trading at USD66.63 a barrel, down from USD67.55 late Thursday.
The economic events calendar on Friday has European Central Bank meeting minutes at 1230 BST and US retail sales figures at 1330 BST, followed by industrial production at 1415 BST.
By Lucy Heming; lucyheming@alliancenews.com
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