(Alliance News) - Stock prices in London are seen opening higher on Tuesday fuelled by a strong close in the US on Monday as confidence in an economic recovery continues.
In early company news, industrial software firm AVEVA Group reported strong annual results but British American Tobacco lowered its revenue forecast due to the coronavirus crisis.
IG futures indicate the FTSE 100 index is to open 20.91 points higher at 6,493.50. The blue-chip index closed down 11.71 points, or 0.2%, at 6,472.59 on Monday.
AVEVA Group said annual profit nearly doubled on higher revenue.
For the year ended March 31, revenue rose 8.8% to GBP833.8 million from GBP766.6 million in financial 2019, and pretax profit surged 97% to GBP92 million from GBP46.7 million.
AVEVA kept its final dividend unchanged at 29.0 pence, which it said reflected its strong balance sheet position and cash generation.
The company reported growth across all geographic regions, with Asia-Pacific showing particular strength. Further, AVEVA implemented its AVEVA Flex subscription model during the year, which it said supported strong growth in subscriptions.
AVEVA said it has not furloughed any employees or made any reductions to headcount related to Covid-19. It also does not expect to utilise any government-backed financing.
However, the company highlighted global economic disruption relating to Covid-19 is expected to hurt the growth rate of the industrial software market in the short term.
Chief Executive Craig Hayman said: "AVEVA's team has adapted impressively to the current market and operating environment. The safety of our employees is paramount and I was very pleased that we managed to deliver a successful close to our financial year with 95% of employees working remotely. We are focused on being digital in everything that we do, accelerating Cloud and driving the rollout of our subscription offering, AVEVA Flex."
"Looking forward, AVEVA is well placed to navigate through the challenges of the current environment, with the benefit of recurring revenue from multi-year contracts. AVEVA is in a strong position and our strategy and medium-term objectives remain unchanged."
British American Tobacco said it was performing well against a backdrop of a very challenging and volatile trading environment.
BAT said it continues to see good pricing and strong volume and value share growth across its combustibles business, with good market share growth across all three of the new categories - vapour, tobacco heating and modern oral.
BAT said the strong operational performance is reflected in its continued commitment to its 65% dividend payout policy.
The Rothmans and Dunhill cigarette maker said trading in developed markets is strong, with continued good pricing and little evidence of accelerated downtrading to date. BAT pointed to a particularly strong performance from its business in the US, which has been highly resilient throughout the Covid-19 crisis.
However, in developing markets including Bangladesh, Vietnam and Malaysia, BAT said the hit to trading from Covid-19 has been "more pronounced".
"In addition, closures and other lock-down measures in certain countries, in particular South Africa, Mexico and Argentina, have persisted longer than anticipated. In South Africa, there are still no signs of the Covid-19 related tobacco sales ban being lifted," BAT said.
As such, BAT expects an annual headwind of 3% from Covid-19 on constant currency adjusted revenue.
BAT also expects a foreign exchange translation headwind of around 1% on first half 2020 adjusted diluted earnings per share growth and around 2% for the full year. The company now expects a mid-single-digit figure for annual constant currency adjusted diluted EPS growth, from a previously 'high-single' figure.
BAT expects annual constant currency-adjusted revenue growth in a range of 1.0% to 3.0%, down from the lower end of the 3% to 5% range expected previously.
BAT will report interim results on July 31.
New York City - the epicentre of the coronavirus outbreak in the US - began partially reopening its shattered economy on Monday after almost three months of lockdown, even as the World Health Organization warned the health crisis was "worsening" worldwide.
Some 400,000 New Yorkers were allowed to return to work as retailers began offering limited in-store and curbside pickup, with construction and manufacturing also permitted to resume operations.
Wall Street ended higher Monday, with the Dow Jones Industrial Average up 1.7%, the S&P 500 up 1.2% and Nasdaq Composite up 1.1%. The Nasdaq Composite set a new record closing high, and the S&P 500 erased its losses for the year.
The Japanese Nikkei 225 index closed down 0.5% on Tuesday. In China, the Shanghai Composite is up 0.6%, while the Hang Seng index in Hong Kong is up 1.5%.
The pound was quoted at USD1.2706 early Tuesday, up from USD1.2689 at the London equities close on Monday.
Talks on a post-Brexit free trade deal between the UK and Japan will start on Tuesday, the Department for International Trade has said. Ministers say the negotiations will expand on the current EU-Japan arrangement and secure extra benefits in areas such as digital trade.
International Trade Secretary Liz Truss and the Japanese minister for foreign affairs, Motegi Toshimitsu, are launching talks by video call.
The euro was quoted at USD1.1290, flat from USD1.1294. Against the yen, the dollar was quoted at JPY107.97, down from JPY108.61.
Brent oil was priced at USD40.84 a barrel Tuesday morning, down from USD41.14 late Monday.
Gold was at USD1,698.04 an ounce, up from USD1,691.14 late Monday.
The economic events calendar on Tuesday has eurozone GDP readings at 1000 BST. In addition, the US Federal Reserve's two-day monetary policy meeting gets underway on Tuesday, with a rate decision due on Wednesday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
