(Alliance News) - Stock prices in London are seen opening higher on Wednesday tracking slight gains in Asian equity markets and fresh records on Wall Street, as the US government's infrastructure bill won Senate approval.
In early company news, antivirus software firm Avast posted strong results, as it nears a takeover by larger US peer NortonLifeLock. Steam management systems maker Spirax-Sarco Engineering raised its dividend after its own strong set of half-year results.
IG futures indicate the FTSE 100 index is to open 15.36 points higher at 7,176.40. The blue-chip index closed up 28.74 points, or 0.4%, at 7,161.04 on Tuesday.
Avast reported a resilient set of results for the first half, it said, against the backdrop of a strong prior year performance.
For the six months to June 30, revenue was up 8.8% at USD471.3 million from USD433.1 million the year before, and pretax profit was USD269.3 million, more than double from USD115.3 million.
In addition, billings were USD482.7 million, up 2.9% from USD469.1 million the year prior.
Avast declared an interim dividend of 4.8 cents per share.
"We are optimistic about Avast's prospects for the second half of the year, and as comparator period trends start to normalise, we anticipate a re-acceleration of billings growth. The launch of our new flagship Avast One product remains on track for later this year. Our focus remains on driving customer engagement, acquisition and retention, which will require higher levels of margin investment in R&D, innovation and marketing over the medium term," said Chief Executive Officer Ondrej Vlcek.
On Tuesday, US cybersecurity firm NortonLifeLock said it agreed with Avast on the terms of a merger. The deal is in the form of a cash and share takeover offer by Norton for Avast. Under the terms of the merger, Avast shareholders will be entitled to receive a combination of cash and newly issued shares in Norton.
Based on Norton's closing share price of USD27.20 on July 13, being the last trading day for NortonLifeLock shares before combination talks were revealed on July 14, the merger values Avast between USD8.1 billion and USD8.6 billion, depending on Avast shareholders' elections.
Spirax-Sarco Engineering reported a strong first half performance.
For the six months to June 30, revenue rose 13% to GBP643.7 million from GBP569.7 million last year, and pretax profit increased to GBP150.0 million, up 41% from GBP106.3 million.
Spirax-Sarco declared an interim dividend of 38.5 pence, up 15% from 33.5p paid last year.
Looking ahead, the Cheltenham, UK-based firm expects its second half operating margin to be similar to the first half margin of 24%.
CEO Nicholas Anderson said: "A strong recovery of global industrial production in the first half of this year, combined with exceptional Covid-19 vaccine related demand in Watson-Marlow, has supported strong organic sales and profit growth across all three businesses.
"These results continue to demonstrate the robust business model, strategy and execution of our group, being achieved through the outstanding efforts and dedication of all our employees in managing the higher levels of demand to meet our customers' needs. This excellent first-half execution underpins our improved full-year profit outlook."
Deliveroo hailed a strong first half in the wake of its disappointing stock market debut earlier this year.
For the six months to June 30, revenue rose 82% to GBP922.5 million from GBP507.4 million in the prior year, and its pretax loss narrowed to GBP104.8 million from GBP128.4 million.
During the period, Deliveroo said gross transaction value was up 99% at GBP3.39 billion from GBP1.70 billion, and orders jumped to 148.8 million from 74.5 million. GTV is defined by the company as the total value paid by consumers, excluding any discretionary tips.
Looking ahead, Deliveroo raised its annual GTV growth guidance in a range of 50% to 60%, up from 30% to 40%.
Deliveroo declared no interim dividend, in line with year before.
"We are seeing strong growth and engagement across our marketplace as lockdowns continue to ease. Demand has been high amongst consumers. We have widened our consumer base, seen people continuing to order frequently and we now work with more food merchants than any other platform in the UK. At the same time, more riders are choosing to continue to work with the company because they value the work we offer," said CEO & founder Will Shu.
"As reflected in our guidance, whilst we expect that consumer behaviour may moderate later in the year, we remain excited about the opportunity ahead and our ability to capitalise on it," Shu added.
The Japanese Nikkei 225 index closed up 0.7% on Wednesday. In China, the Shanghai Composite was up 0.1%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney ended up 0.2%.
Investor attention will be on US inflation data, due at 1330 BST. This could have a bearing on the Federal Reserve's decision about when to start tapering the vast bond-buying programme that has been a major pillar of support for global markets since April last year.
Rising prices in recent months and robust jobs creation in June and July have ramped up pressure on the central bank to tighten policy in order to prevent the US economy from overheating.
"Market consensus is expecting monthly inflation pressures to ease both for core and headline inflation. However, the inflation print for June surprised to the upside and if the same thing happens today, this would give further momentum for US yields and dollar as it stirs more hawkish expectations to the Fed," said analysts at Danske Bank.
Meanwhile on Tuesday, the US Senate approved Joe Biden's historic USD1.2 trillion infrastructure plan, paving the way for a major victory to the president if it wins final passage in the lower chamber of Congress.
The package received rare bipartisan support among Washington's highly-polarized political elite, passing by 69 votes to 30 after winning the backing of a third of Republicans. The measure now faces a make-or-break vote in the House of Representatives in the coming weeks, where its future is less certain as divisions have sprung up in the Democratic majority.
Wall Street ended mostly higher. The Dow Jones Industrial Average rose 0.5% and the S&P 500 by 0.1%, but the Nasdaq Composite closed 0.5% lower. The Dow and S&P 500 ended at fresh records.
"While the Nasdaq finished lower the Dow and S&P 500 both closed at new record highs, in the aftermath of the passing of the new infrastructure bill through the Senate, with Asia markets continuing the resilient tone with a similarly positive session. As we look towards today's European open there is an expectation of a similarly positive bias as we look towards this afternoon's US CPI numbers," said CMC Markets analyst Michael Hewson.
The dollar was strong following the Senate vote and ahead of the CPI reading.
The pound was quoted at USD1.3825 early Wednesday, down from USD1.3847 at the London equities close on Tuesday.
The euro was priced at USD1.1711, lower from USD1.1724. Against the Japanese yen, the dollar was trading at JPY110.70, up from JPY110.52.
Brent oil was quoted at USD70.80 a barrel Wednesday morning, down from USD70.92 late Tuesday. Gold was trading at USD1,731.22 an ounce, higher against USD1,726.99.
Wednesday's economic calendar has the US CPI print at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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