Last checked at 
(Alliance News) - The FTSE 100 looked set to continue its rally on Wednesday, as markets looked to be heading into an extended holiday weekend in the UK with bounce in their step.
Financial markets in London are closed on Thursday and Friday for the Queen's Jubilee bank holidays, returning on Monday next week.
In early corporate news in London, Tullow Oil and Capricorn Energy plan to merge. Dr Martens expects strong revenue growth. John Wood banked nearly USD2 billion from a business sale.
IG futures indicate the FTSE 100 index will open up 48.94 points, or 0.6%, at 7,656.60 on Wednesday. The index of London large-caps closed up 7.60 points, or 0.1%, at 7,607.66 on Tuesday.
The bright open in London comes despite a mixed day in Asia, hampered by weak manufacturing PMI data.
In Tokyo on Wednesday, the Nikkei 225 closed up 0.7%. The Shanghai Composite was down 0.3%, while the Hang Seng in Hong Kong was 0.6% lower. The S&P/ASX 200 ended 0.3% higher.
China's manufacturing sector contracted in May for the third month running, albeit at a slower pace than previously seen, a key economic indicator published on Wednesday has shown.
Following the posting of a rise in the purchasing managers' index for China's manufacturing sector by the National Bureau of Statistics on Tuesday, an alternative PMI compiled by business magazine Caixin broadly followed suit, showing a slight rise to 48.1 points for May from 46 points in April.
While the official index tends to more accurately reflect sentiment in large and state-owned enterprises, which are able to better profit from government stimulus measures, the alternative index produced by Caixin is seen as a better barometer of sentiment in medium-sized or privately-owned firms.
In both indexes, however, any result below the critical 50-point mark suggests that industrial activity is expected to decline.
Next door, Japanese manufacturers indicated that operating conditions improved at a solid rate in May, albeit not so strongly as the month before, survey results showed on Wednesday.
The headline au Jibun Bank Japan manufacturing PMI dipped slightly to 53.3 points in May from 53.5 in April. This marked the weakest improvement in manufacturing conditions since February.
The data pointed to a slight expansion in output. Growth was recorded for the third month in a row but the rate of the increase was the slowest in this period.
Oanda analyst Jeffrey Halley said: "Asian markets are trading with a negative tone today, with the ending of virus restrictions in Shanghai today having little to no positive impact. Mostly that is due to the flip-flop of the day in US markets, which reopened overnight. New York decided overnight to be nervous about Fed tightening once again, having dismissed it last week. Tomorrow, they may decide it's not a problem once again, who knows."
Stocks in New York ended lower on Tuesday after a three-day holiday weekend amid worries about inflation, Federal Reserve interest rate hikes and weakening consumer confidence. The DJIA closed down 0.7%, the S&P 500 index down 0.6% and the Nasdaq Composite down 0.4%.
In London early Wednesday, footwear and clothing company Dr Martens posted annual earnings ahead of market expectations, aided by the reopening of stores as Covid restrictions eased, and has guided for continued strong sales growth.
For the year ended March 31, pretax profit surged to GBP214.3 million from GBP69.7 million the year prior. Revenue rose to GBP908.3 million from GBP773.0 million.
The retailer declared an annual dividend of 5.5 pence, compared to none the year before.
"Today's strong results have been driven by our proven [direct to consumer]-first strategy and continue to build upon our track record of volume-led growth. When we listed, we committed to deliver high-teens revenue growth, and today we are pleased to report 22% constant currency growth and Ebitda ahead of market expectations. Our results were achieved against unprecedented Covid-19 disruption in our supply chain, which our teams navigated with flexibility and dedication," Chief Executive Kenny Wilson said.
Looking to financial 2023, Dr Martens guided for revenue growth in the high-teens.
Fellow retailer Frasers Group said Wednesday it has acquired certain intellectual property of the online women's fashion retailer Missguided and Mennace - both of which have fallen into administration - for GBP20 million.
"Following completion, the business will be operated by the administrator under a transitional agreement for a period of approximately eight weeks. It is then the intention that Missguided will operate as a standalone business within the group," Frasers explained.
Engineering and consulting firm John Wood Group agreed to sell its Built Environment Consulting business to WSP Global for about USD1.9 billion gross.
Chief Executive Robin Watson said: "We are very pleased to have agreed this sale with WSP. This transaction will deliver significant value for our shareholders and marks a new chapter for Wood. It enables us to move onto our next strategic phase with the financial flexibility to accelerate our strategy to capture the growth opportunities ahead across both energy security and sustainability."
The sale is expected to complete in the second half of 2022.
John Wood said it will use the proceeds from the sale to reduce its debt and strengthen its balance sheet. The firm ended 2021 with net debt of about USD1.4 billion. It expects now to be in a net cash position.
In other M&A news, energy firms Tullow Oil and Capricorn Energy have agreed to an all-share merger.
Under the deal terms, Capricorn shareholders will receive 3.8068 new Tullow shares for each Tullow shares, giving Capricorn shareholders 47% of the enlarged firm.
"The boards of Tullow and Capricorn believe the combination has compelling strategic, operational and financial rationale, with the ability to deliver substantial benefits to shareholders, host nations and other stakeholders," Tullow said in the statement.
"The combination represents a unique opportunity to create a leading African energy company, listed in London, with the financial flexibility and human resource capability to access and accelerate near-term organic growth, add new reserves and resources cost-effectively, generate significant future returns for shareholders, and pursue further consolidation."
Tullow Chair Phuthuma Nhleko is expected to become chair of the combined firm, with Capricorn Chair Nicoletta Giadrossi to become senior independent director. Tullow CEO Rahul Dhir will become CEO, while Capricorn Chief Financial Officer James Smith will take on the CFO role.
The pair guided for pre-financing free cash flows of USD2.4 billion from 2022 to 2025 following the merger.
Brent oil quoted at USD116.61 a barrel early Wednesday in London, down sharply from USD123.75 late Tuesday. Gold stood at USD1,834.50 an ounce, down from USD1,845.51.
Oanda's Halley added: "The announcement of the partial EU ban on Russian crude imports was a mild tailwind yesterday, but by and large, looked to have been already priced into markets. What did surprise markets was a Wall Street Journal article suggesting that OPEC might exempt Russia from the production quota agreement at tomorrow's OPEC+ meeting. Although its impact on WTI was minimal in context, Brent crude, the internationally traded benchmark, plummeted by 4.5%."
The pound was quoted at USD1.2589 early Wednesday in London, down from USD1.2605 at the London equities close on Tuesday. Against the yen, the dollar was trading at JPY129.21, higher on JPY128.50.
The euro stood at USD1.0713, sliding from USD1.0722.
The single currency was on the back foot despite data showing the eurozone's inflation rate rising to another record high in May on the fallout from Russia's invasion of Ukraine. Eurozone consumer price inflation is expected to be 8.1% in May, accelerating from 7.4% annually in April, according to the latest flash estimate from Eurostat on Tuesday.
Red-hot eurozone inflation intensified calls for interest rate hikes from the European Central Bank, which has already flagged plans to hike borrowing costs in July.
The economic events calendar on Wednesday has manufacturing PMI readings from the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.
CMC Markets analyst Michael Hewson said: "As we get a new month underway, we already know that the economic growth in Europe and the UK is slowing due to rising prices, and supply chain disruptions caused by the Russian invasion of Ukraine and Covid lockdowns in China.
"Today's manufacturing PMIs for May, while expected to be weaker, don't really reflect the disruptions being faced by the manufacturing sector across Europe."
There is a Bank of Canada interest rate decision at 1500 BST.
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
