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(Alliance News) - Stock prices in London are seen opening flat on Monday amid mixed trading in Asian equity markets, as tensions between the US and China continue to weigh on investor sentiment.
In early company news, pork and poultry products supplier Cranswick said it expects annual results ahead of its expectations. Construction company Costain Group said its first-half performance was resilient in light of challenges posed by Covid-19. UK Mortgages said it will get on with its strategic review after M&G Investment Management ended its pursuit of the company on Friday.
IG futures indicate the FTSE 100 index is to open just 3.86 points higher at 6,093.90. The blue-chip index closed down 95.58 points, or 1.6%, at 6,090.04 on Friday.
Cranswick said trading in the first quarter of its financial year has been strong, and its outlook for the current financial year ending March 27 is now expected to be ahead of previous expectations.
For the 13 weeks to June 27, Cranswick said revenue was 25% ahead of the first quarter the year before, while like-for-like revenue was 19% higher.
Cranswick said as a result of the current shift towards greater in-home consumption, retail demand has been "exceptionally robust". This - combined with increased poultry sales from its new Eye facility, which continues to perform strongly, and the benefit from new contract wins - has comfortably offset lower foodservice revenue, the company said.
The positive performance has so far continued in the second quarter of the financial year, Cranswick said.
"Whilst the board remains cautious about the longer-term economic impact of Covid-19, the uncertainty surrounding the ongoing Brexit negotiations, and the conclusion of trade deals with other countries, the outlook for the current financial year ending March 27, 2021 is now expected to be ahead of its previous expectations," Cranswick said.
Costain said its performance was resilient in the first half of 2020 during the Covid-19 pandemic, with all contracts now operational, and it has made strong progress with its strategic objectives.
Costain expects to report an operating profit, before the A465 and Peterborough & Huntingdon contracts, of GBP5.7 million for the first half, with both its trading divisions, Transportation and Natural Resources, profitable. The company reported an underlying operating profit of GBP21.2 million for the first half of 2019.
Costain said its order book stood at GBP4.2 billion at June 30 and has over GBP1 billion of work on its frameworks. Costain added it has a strong balance sheet, with net cash of GBP140.9 million as at June 30.
"We now have a strong balance sheet, over GBP2 billion of contracts and frameworks secured and confirmed in the period and continue to have a growing pipeline of opportunities. I am confident that we are well placed to deliver significant growth in profit in 2021," said Chief Executive Alex Vaughan.
UK Mortgages acknowledged M&G Investment Management's decision on Friday not to make an offer for the company, reiterating MAGIM's proposals undervalued UK Mortgages and its future prospects.
UK Mortgages said it now will commence its previously announced review of future strategy in a bid to create value for shareholders.
"While the offer period has now ended, the board is very aware of the feedback from shareholders received through the period. The board is committed to ensuring that the review of future strategy provides shareholders with a strategy that delivers a clear pathway to enhanced liquidity as well as a narrowing and removal of the discount at which the shares trade versus the net asset value," Chair Chris Waldron said.
The Japanese Nikkei 225 index closed down 0.8%. In China, the Shanghai Composite is up 2.6%, while the Hang Seng index in Hong Kong is down 0.2%.
Japan's economy shrank a record 7.8% in the April-June quarter, the worst contraction in the nation's modern history, data showed, as the coronavirus deepens the country's economic woes.
The contraction from the previous quarter was slightly worse than expectations but is still significantly less severe than declines seen in many other industrial economies.
Still, it is the worst economic contraction for Japan since comparable data became available in 1980, eclipsing the brutal impact of the 2008 global financial crisis.
The economy contracted an annualised 28%, with domestic demand falling 4.8% and exports of goods and services plunging 19%.
Meanwhile, high-level talks between the US and China set to take place over the weekend on their "phase one" trade agreement were called off, with no new date agreed upon for talks to resume.
US President Donald Trump kept up his drumbeat against Beijing, warning he could target more Chinese tech firms including Alibaba.
The president's warning came as he issued another executive order stating internet giant ByteDance must sell its interest in the Musical.ly app it bought and merged with TikTok. The move follows an order last week that TikTok and WeChat end all operations in the US.
The pound was quoted at USD1.3091 early Monday, slightly lower than USD1.3104 at Friday's equities close in London.
The UK housing market enjoyed its busiest month in over 10 years, listings site Rightmove said in its monthly tracker on Monday, bucking the trend of the summer period being a slow one for the sector.
In August, the average asking price fell 0.2% monthly to GBP319,497, though this still represented a 4.6% annual climb.
Rightmove noted the number of sales agreed during the month surged to the highest level since its index began over 10 years ago. And notably, the number of sales was 20% over the previous high.
The euro was priced at USD1.1855, up from USD1.1832. Against the yen, the dollar was quoted at JPY106.56 in London, firm from JPY106.48.
In commodities, Brent oil was trading at USD45.18 a barrel Monday morning, up from USD44.70 a barrel Friday evening in London.
Gold was quoted at USD1,943.87 an ounce early Monday, soft from USD1,945.10 an ounce Friday evening.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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