(Alliance News) - Stocks in London are set to open higher on Thursday on news of another round of US-China trade talks, while the pound continued to rally amid further high-stakes votes in Westminster last night.
In early UK company news, William Hill promoted its digital officer to become the betting firm's next chief executive officer, online fashion retailer boohoo raised its guidance, and Go-Ahead said its annual results in both bus and rail were slightly ahead of expectations.
IG says futures indicate the FTSE 100 index of large-caps to open 22.44 points higher at 7,333.70 on Thursday. The FTSE 100 index closed up 43.07 points, or 0.6%, at 7,311.26 on Wednesday.
Sentiment was boosted overnight after the Chinese Commerce Ministry said top Chinese and US trade officials have agreed to meet in October to discuss solutions to their year-long trade war.
Chinese Vice Premier Liu He spoke on the phone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
Their last call had been on August 13, the Commerce Ministry said. The officials had decided then to meet in September in Washington, but since then the US and China have imposed new sets of tariffs on each other, with previous arrangements falling through.
"Combined with the developments in Hong Kong, [the US-China trade news] helped the positive outlook in Asia. US equity index futures have been given a boost, and European stock markets are called higher too," said David Madden at CMC Markets, referencing Hong Kong leader Carrie Lam's decision on Wednesday to formally withdraw an extradition bill that led to months of mass protests.
In the UK, the pound continued its climb higher after the UK government paved the way for proposals seeking to block a no-deal Brexit on October 31 to become law before Parliament is suspended.
Lord Ashton of Hyde, Conservative chief whip in the Lords, announced the breakthrough following talks with Labour after a lengthy procedural battle threatened to run through the night.
He said all stages on the EU (Withdrawal) (No. 6) Bill will be completed in the Lords by 5pm on Friday. It is unclear what led to a breakthrough given the strong opposition of UK Prime Minister Boris Johnson's government to the Bill in the Commons.
The proposed legislation requires a delay to Brexit beyond October 31 unless a divorce deal is approved or Parliament agrees to leaving the EU without one by October 19.
This came after Johnson's snap general election plan was roundly rejected by MPs and his bid to keep a no-deal Brexit on the table suffered a major blow. The government failed to secure the support of two-thirds of MPs for an early election, with the Commons voting 298 to 55, 136 short of the number needed.
Sterling was quoted at USD1.2221 early Thursday, higher than USD1.2193 at the London equities close on Wednesday. Earlier this week, the pound had traded below the USD1.20 mark at levels not seen since 1985.
"The latest developments don't mean that the UK will leave the EU with a suitable deal, it only means that the Brexit deadline will be delayed by at least another three months. Yet the tiniest hope of a Brexit deal is enough to lift the sentiment across the pound markets," commented Ipek Ozkardeskaya at London Capital Group.
In early UK company news, industrial turnaround firm Melrose Industries reported a narrowed loss amid what it called a pleasing performance from the GKN businesses.
Revenue for the six months to the end of June came in at GBP5.70 billion, triple the GBP1.85 billion achieved a year ago. The group's pretax loss narrowed to GBP128 million from GBP372 million.
Melrose said it is trading in line with expectations for 2019, with the three main divisions of GKN on track to achieve their targets. Having owned the GKN business for just over a year, Melrose said it is pleased with how they have responded to initial investments and initiatives.
Melrose declared an interim dividend of 1.7p per share, up 10% year-on-year.
"These results show the initial fruits of the 'improve' stage of Melrose's ownership of GKN and, with the overall GKN margin increasing positively, we are excited about what is possible. The performance is in line with expectations and leverage is better than expected," said Chair Justin Dowley.
Electronics retailer Dixons Carphone said it is on track to meet its annual targets despite a challenging market for mobile phones.
UK & Ireland electricals like-for-like sales were up 2% in the 13 weeks to July 27, with International sales up 4%. However, UK & Ireland mobile comparable revenue was down 10% in "what continues to be a challenging traditional postpay market", meaning phones purchased on monthly contracts.
Despite this, Dixons said it is on track for both its trading this year and its longer-term transformation plans.
"The current political and economic climate is volatile but, assuming no material disruption from that, we stand by our full-year guidance, as we do our longer-term commitments on EBIT margin and cashflow," said Chief Executive Alex Baldock.
On a reported basis, Dixons group sales were flat in the period.
Transport operator Go-Ahead Group said its annual results in both bus and rail were slightly ahead of forecasts.
Revenue for the year to June 29 rose 10% to GBP3.81 billion, though pretax profit fell by a third to GBP97.0 million. Before exceptional items, profit fell more modestly, by 7.6%, to GBP113.8 million.
Go-Ahead proposed a flat payout of 102.08p.
Bus operating profit before exceptional items was up 4.7% at GBP95.7 million, while Rail operating profit nearly halved to GBP25.4 million from GBP44.5 million.
"Rail operating profit was slightly ahead of expectations, driven by strong performance at Southeastern, but was lower than the prior year which included a part year of operating the London Midland franchise," explained Chief Executive David Brown.
"Overall for 2020, we are confident that the group will deliver another robust performance in line with our expectations as we continue to execute our clear and well-defined strategy; strengthening our core business, diversifying into international markets and developing new ways of responding to a changing world," he added.
William Hill said it has promoted Chief Digital Officer Ulrik Bengtsson to the role of chief executive, effective from the end of September. Philip Bowcock, currently CEO, will step down on that date.
"This change is part of William Hill's succession planning and consistent with the group's strategy of becoming a digitally led and internationally diverse gambling company," the firm explained.
William Hill Chair Roger Devlin added that Bengtsson is "ideally suited to lead our next phase of growth".
Online fashion retailer boohoo said it expects results for the current financial year to be ahead of previous guidance.
boohoo expects sales growth of between 33% and 38%, versus 25% to 30% seen previously. Its earnings before interest, tax, depreciation and amortisation margin should remain at around 10%, in line with previous guidance.
The firm said its performance has been ahead of expectations with strong revenue growth driving operating leverage across its key brands.
In the US on Wednesday, Wall Street ended in the green, with the Dow Jones Industrial Average up 0.9%, the S&P 500 up 1.1% and the Nasdaq Composite up 1.3%.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 2.1%. In China, the Shanghai Composite was up 1.2%, and the Hang Seng index in Hong Kong was down 0.7%,
The economic events calendar on Thursday has German factory orders at 0700 BST and US services PMI at 1445 BST. Before this in the US is the ADP employment report at 1315 BST, a precursor to Friday's monthly jobs report.
