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(Alliance News) - Stock prices in London are set to open lower on Friday, following negative trading in Asia overnight, as Hong Kong political concerns gave investors something new to worry about.
In early UK company news, blue-chips Burberry and United Utilities both reported annual profit declines, while Vodafone named the boss of Dutch brewer Heineken as its new chair.
IG futures indicate the FTSE 100 index is to open 69.05 points, or 1.2%, lower at 5,946.20. The large-cap index closed down 51.91 points, or 0.9%, at 6,015.25 on Thursday.
The Hang Seng index in Hong Kong is down 5.0% on Friday in late trading. Elsewhere in China, the Shanghai Composite closed down 1.4%. In Japan, Tokyo's Nikkei 225 index closed down 0.8%.
"The Hang Seng is sharply lower as it was reported that China are planning on introducing a national security law on Hong Kong. Such a move would strengthen Beijing's control over the territory, which would probably spark protests," said CMC Markets UK analyst David Madden.
China has launched one of its fiercest assaults on Hong Kong's treasured autonomy with its move to impose a security law, pro-democracy campaigners said Friday as they vowed to take to the streets in protest.
The proposal for the security law – expected to ban treason, subversion and sedition – was introduced into China's rubber-stamp parliament at the opening of its annual session on Friday morning.
It followed repeated warnings from China's communist leaders they would no longer tolerate dissent in Hong Kong, a semi-autonomous city that endured seven months of massive pro-democracy protests last year.
Hong Kong has been allowed a limited form of autonomy since returning from British to Chinese rule in 1997, with those unique freedoms enshrined under a "One Country, Two Systems" handover agreement.
However, a huge pro-democracy movement has built in the face of fears China has been steadily eroding those freedoms.
Activists said the planned national security law, if implemented, would be one of the most significant erosions of Hong Kong's liberties since 1997.
Madden added: "President Trump is likely to weigh in on the matter if the Chinese authorities take a tough stance in relation to Hong Kong."
The Dow Jones Industrial Average closed 0.4% lower on Thursday. The S&P 500 lost 0.8% and the Nasdaq Composite 1.0%.
US President Donald Trump on Thursday pressed for a broader reopening of the US as coronavirus-related job losses mounted, while parts of Europe embraced post-lockdown life.
With summer approaching on both sides of the Atlantic, more stores opened their doors and beaches welcomed tourists, despite the global number of virus cases passing five million.
The crisis of course is far from over – Russia and Latin America emerged as the next hotspots, even as Europe and the US headed into the next phase, like Asia before them.
But Trump, with an eye on his re-election prospects in November, made it clear he hoped more state governors would move toward a loosening of anti-virus restrictions.
"We did the right thing but we now want to get going...you'll break the country if you don't," he told African-American leaders in Michigan, a key election battleground state.
The US recorded 1,255 coronavirus deaths in the past 24 hours, bringing the total to 94,661, according to the latest real-time tally Thursday reported by Johns Hopkins University.
The country – hardest hit by the pandemic in terms of the number of fatalities – has now confirmed a total of 1.6 million cases, the Baltimore-based school reported.
Against the yen, the dollar was trading at JPY107.46 early Friday in London, marginally down from JPY107.85 late Thursday.
The pound was quoted at USD1.2210 early Friday, firm from USD1.2250 at the London equities close Thursday. The euro was at USD1.0926 early Friday, soft from USD1.1008 late Thursday.
In commodities, gold was quoted at USD1,728.70 an ounce early Friday, lower than USD1,749.03 late Thursday. Brent oil was at USD34.46 a barrel, down from USD36.18.
On the London Stock Exchange, Burberry said it has made "strong" progress against its strategy during the 52 weeks ended March 28 and is well prepared to navigate through Covid-19.
The luxury fashion house delivered revenue of GBP2.63 billion in its most recently ended financial year compared to GBP2.72 billion the year prior. Pretax profit dropped to GBP168.5 million from GBP440.6 million year-on-year.
Burberry highlighted that it had seen "strong" momentum in brand, product and sales before the Covid-19 outbreak, ahead of its previous expectations. Comparable sales grew by 4% in the first nine months of its financial year, but dropped by 27% in the final quarter, with around 60% retail stores closed at end of March.
"Given current uncertainty", Burberry followed many other listed companies in skipping its final dividend, meaning its full-year payout dropped 73% to just 11.3 pence, having paid 42.5p a year earlier. It said future dividend payments will be reviewed at the end of financial 2021.
"We have a strong balance sheet and liquidity, with space for investment when markets recover. We have found new ways to strengthen our connection with consumers, drawing on our digital leadership. We have also mobilised our resources in support of the relief efforts," said Chief Executive Marco Gobbetti.
He added: "It will take time to heal but we are encouraged by our strong rebound in some parts of Asia and are well-prepared to navigate through this period."
United Utilities reported revenue growth to GBP1.86 billion in the year to the end of March from GBP1.82 billion. However, pretax profit dropped to GBP303.2 million from GBP436.2 million, due to an increase in operating expenses to GBP1.23 billion from GBP1.18 billion.
The water and wastewater services provider lifted its dividend for the year to 42.60p from 41.28p paid a year earlier. United Utilities noted that intends to review its dividend policy going forward, after a clearer picture of the post-Covid-19 economic environment emerges.
Vodafone Group said Jean-Francois Van Boxmeer will be appointed as a non-executive director following the telecommunication company's annual general meeting on July 28, subject to shareholder approval.
Vodafone said Van Boxmeer then will succeed Gerard Kleisterlee as chair in November. Kleisterlee - who has been Vodafone's chairman for nine years - will step down and retire from the board on November 3.
Van Boxmeer is currently chief executive of brewer Heineken NV. He has been Heineken's boss since 2005 and will hand over the role to his successor in June.
Public transport operator Go-Ahead Group said it is providing vital regional bus services in England, supported by an essential government funding package, which the Department for Transport has indicated will continue beyond June.
In recent weeks, the company said it has been operating between 40% and 50% of normal scheduled mileage, carrying around 10% of usual passenger numbers.
Turning to rail operations, the company noted that its resilient financial performance in UK rail franchises is offset by weaker-than-expected German rail operation.
Go-Ahead is currently operating around 80% of contracted services in its Norwegian rail business. This has increased from around 50% in April, as restrictions begin to be lifted in Norway.
Looking forward, Go-Ahead said, with the impact of Covid-19 and support measures, its overall operating profit for the year ending June 27 is now expected to be in the range of GBP63 million to GBP75 million. A year ago, the company's operating profit totalled GBP104.3 million.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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