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(Alliance News) - Stock prices in London are seen opening lower on Wednesday, with the FTSE 100 hindered by a stronger pound which has appreciated on Brexit deal optimism.
In early company news, online fashion retailer ASOS reported a sharp drop in annual profit, while housebuilder Barratt Developments said it started its new financial year well.
IG futures indicate the FTSE 100 index is to open 14.94 points lower at 7,196.70. The blue chip index closed 1.81 points lower at 7,211.64 on Tuesday.
"Fading cheerfulness on US-China trade negotiations and stronger pound could send the index below the 7,200p mark at the open," said London Capital Group's Ipek Ozkardeskaya.
ASOS said 2019 had been a "disappointing" year in terms of its financial performance, as substantial investment made in its operations proved to be more challenging than the retailer originally foresaw.
For the financial year ended August 31, pretax profit fell 68% to GBP33.1 million from GBP102 million last year, hurt by warehouse transition costs.
In July, ASOS warned sales growth in the US and Europe had been hurt by problems at its warehouses.
The retailer had anticipated pretax profit in a range between GBP30.0 and GBP35.0 million, a sharp fall on financial 2018's GBP102.0 million.
Revenue rose 13% to GBP2.73 billion from GBP2.42 billion in financial 2018. UK Retail Sales were up 15% to GBP993.4 million and International sales increased 11% to GBP1.66 billion.
"We ended the year better positioned than we began it and have made a solid start to financial 2020. Whilst mindful of consumer uncertainty and retail trends in a number of our markets we are confident in the substantial global opportunity for ASOS and look forward to the future with confidence," said Chief Executive Nick Beighton.
Barratt Developments said it has started its new financial year positively, with a good sales rate and a healthy forward order book.
For the 15 week period to October 13, Barratt's sales rate was 0.72 net private reservations per active outlet per average week. Total forward sales with joint ventures on October 13, was 12,963 homes, up from 12,903 at the same time last year.
Barratt said it continues to make good progress on its volume growth targets of 3% to 5% per annum over the medium term, with a focus on driving margin improvements.
"We have started our new financial year well. Based on current market conditions, we continue to expect to grow volume towards the lower end of our medium-term target range this year," said Chief Executive Officer David Thomas.
"As we said in September, whilst there is increased economic and political uncertainty, the group is in a strong position. We recognise that the economic outlook will depend on the form of the UK's EU withdrawal in the medium term. We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position, a continued focus on delivery of operational improvements across our business and an ongoing commitment to deliver high quality homes across the country," Thomas added.
Warehouse property investor Segro said it saw a strong operational performance in the period between July 1 to October 15.
Segro signed GBP15.3 million worth of new rental income in the third quarter, up 21% from GBP12.6 million in the third quarter last year, it said.
Segro reported a stable vacancy rate in the period of 4.9%, up from 4.8% at June 30.
"SEGRO continues to benefit from the structural trends of urbanisation and technological revolution, and despite the uncertain macro-economic backdrop at this time, we head into the final part of the year with confidence. Looking ahead, the combination of new rental income from the development programme, compounded with the benefits of active asset management of our existing portfolio, should enable us to drive sustainable growth in both earnings and dividends," said CEO David Sleath.
The pound was quoted at USD1.2754 early Wednesday, firm against USD1.2739 at the London equities close Tuesday.
UK Prime Minister Boris Johnson faces a race against the clock to secure a Brexit deal and get Tory Eurosceptics and the DUP onside to back him.
The UK PM carried out a charm offensive in Downing Street on Tuesday evening as he held a series of talks with backbenchers and the leaders of the DUP.
Meanwhile, his negotiating team worked through the night as reports increased that a deal was nearing, with a solution said to be forthcoming on the Irish border.
Addressing journalists on Tuesday, the PM's official spokesman said: "Talks remain constructive but there is more work still to do."
A deal will need to be published, along with a legal text, if the EU27 are to consider ratifying the Withdrawal Agreement at their gathering this week, meaning the pressure is on to sign off on the draft agreement.
Michel Barnier, the EU's chief negotiator, warned Johnson it was "high time to turn good intentions into legal text".
In addition, Irish Taoiseach Leo Varadkar, in a press conference in Dublin, said it remained uncertain whether a deal would be ready in time for the Brussels summit.
The Japanese Nikkei 225 index closed up 1.2%. In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is up 0.4%.
China on Wednesday expressed "strong indignation and firm opposition" to the US House of Representatives' passage of a bill in support of Hong Kong protesters.
The Hong Kong Human Rights and Democracy Act requires sanctions against Chinese officials "responsible for undermining fundamental freedoms" in the city.
The Hong Kong government also expressed "regret" over the bill passing in the US House.
The economic events calendar on Wednesday has UK and eurozone inflation readings at 0930 and 1000 BST respectively.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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