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(Alliance News) - Stocks in London are set to open lower on Thursday after some disappointing industrial data from China as jitters grow over the prospects for signing a trade deal with the US.
In early UK company news, Burberry reported a rise in interim sales but tweaked its full-year margin guidance amid disruption in Hong Kong. National Grid reported a fall in profit, and FirstGroup took a hit from an impairment charge.
IG says futures indicate the FTSE 100 index of large-caps to open 22,41 points lower at 7,328.80 on Thursday. The FTSE 100 index closed down 14.23 points, or 0.2%, at 7,351.21 on Wednesday.
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average ending up 0.3%, the S&P 500 up 0.1% and Nasdaq Composite closing 0.1% lower.
The Dow got a boost as Walt Disney shares surged 7.3%. The media giant's new streaming television service, Disney+, got off to a stellar start by signing up 10 million subscribers on its first day.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.8%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong is down 1.1%. The Hang Seng is nearly 5% lower since the week began.
In data overnight, Japan's economy grew between July and September for the fourth quarter in a row, according to figures released by the country's government. Gross domestic product climbed by 0.1% compared to the previous quarter, with an annual increase of 0.2%.
In China, industrial production growth slowed by more than expected to 4.7% in October on the year prior.
Data from the Chinese National Bureau of Statistics on Thursday showed industrial output expansion decelerated from the 5.8% annual growth recorded in September. The October print also disappointed the 5.4% October growth forecast by economists, according to the consensus cited by FX Street.
"Meanwhile investors are worried that the US and China may not seal a trade deal next month, as there appears to be some misunderstanding regarding the farm product purchases. Donald Trump claims that China agreed to buy up to USD50 billion worth of US farm products including soybean and pork, but China doesn't want to sign off on an explicit number to give itself the freedom to stop purchases if things go wrong, again," said Ipek Ozkardeskaya at London Capital Group.
In political news, pro-democracy protesters challenging China's rule of Hong Kong on Thursday choked the city for a fourth straight working day, firing arrows at police, barricading roads and disrupting transport links, as schools and businesses closed.
The territory has entered its sixth month of protests, which have morphed from mass rallies into a "blossom everywhere" campaign of debilitating disruption by groups of black-clad, mainly student, demonstrators.
Violence has intensified this week across the financial hub, leaving several people in critical condition, stretching police resources and hammering the transport network.
Despite the turmoil in one of its key markets, London-listed fashion house Burberry said it was pleased with its performance in the first half.
Revenue was up 5% in the six months to September 28 at GBP1.28 billion, with comparable store sales rising 4% - made up of first quarter comparable sales growing 4% and this rate accelerating to 5% in the second quarter. Pretax profit grew to GBP192.6 million from GBP174.1 million.
Asia Pacific revenue increased by a mid-single digit percentage, with mainland China up mid-teens, South Korea up high-single digits and Japan up mid-single digits. Hong Kong, however, declined by double-digits.
Europe, Middle East, India and Africa grew by a mid-single digit percentage and the Americas by low-single digits, Burberry said.
The company maintained its guidance for "broadly stable top-line and adjusted operating margin", despite pressure on margins from disruptions in Hong Kong.
Burberry now expects its gross margin to be down around 150 basis points, previously a 100 basis point decline, reflecting mix and "the disruptions in higher margin market Hong Kong".
Elsewhere in early company news, National Grid said it delivered a "solid" performance in the first half, despite revenue and profit both falling.
Revenue was GBP6.29 billion in the six months to September 30, down 0.9% from GBP6.35 billion a year ago. Pretax profit fell 23% to GBP404 million from GBP522 million.
"For 2019-20, we continue to expect to deliver good financial performance in our US business following the agreement of a number of regulatory filings. As expected, the UK business remains on track to deliver continued outperformance," said National Grid.
BHP Group said it has named Mike Henry, the president of its Australia unit, as its chief executive, effective January 1. Henry replaces incumbent Andrew Mackenzie who will step down as a member of the firm's executive team on December 31, before retiring on June 30, 2020.
Henry was appointed president of Operations Minerals Australia, which looks after the company's iron ore, copper, coal and nickel assets in the country, back in 2016. He has been a member of BHP's executive leadership team since 2011.
UK retailer Card Factory reported a fall in like-for-like sales in the third quarter, though said sales in the first nine months of the financial year have been robust.
Card Factory said like-for-like sales in the third quarter fell 0.3%, while sales were up 0.9% in the nine months to October 31. Total sales in the nine months grew 5.0%, a pace the company described as "robust".
Card Factory stores saw an increase in average spend, following targeted improvements to its range of card and non-card products, but like-for-like sales were hit by weaker footfall in the quarter and declined 0.4%.
"Our quality-value proposition and new product ranges give us confidence that we are well positioned to deliver a good performance in our key Q4 trading period. The board anticipates profits for the full year to be broadly in line with its previous expectations," said Chief Executive Karen Hubbard.
Transport operator FirstGroup reported a wider interim loss on an impairment charge.
Revenue for the first half grew to GBP3.53 billion from GBP3.30 billion a year ago, but its loss widened to GBP187.1 million from GBP4.6 million, largely due to a GBP124.4 million impairment of its Greyhound operations.
"We have taken a number of important steps since our announcement in May including the sale process for Greyhound, future UK Bus pension scheme funding and the strengthening of our Rail portfolio. We are intent on realising value for shareholders and will actively manage our entire portfolio by all appropriate means. We look forward to reporting on further progress in the second half," said Chief Executive Matthew Gregory.
Defence firm QinetiQ reported growth in revenue and profit for the first half of its financial year.
QinetiQ posted revenue of GBP486.5 million for the six months to September 30, up from GBP420.3 million a year ago. Pretax profit rose to GBP71.3 million from GBP52.7 million.
The FTSE 250 constituent said it saw a 38% increase in orders, up 30% on an organic basis, driven by growth across the group.
The economic events calendar on Thursday has UK retail sales at 0930 GMT and eurozone GDP data at 1000 GMT. In the afternoon, there are US producer prices at 1330 GMT.
FXStreet consensus sees UK retail sales growing 3.7% year-on-year in October, faster than the 3.1% rise recorded in September.
By Lucy Heming; lucyheming@alliancenews.com
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