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(Alliance News) - London's stock market rebound is set to continue on Wednesday with a raft of flash September PMI prints the main focus of the day.
In early UK company news, Halma reported improving sales trends as the safety and hazard detection firm also revealed its chair is moving to business information provider RELX. Travel food kiosk operator SSP guided to a 86% fall in second-half sales. Both Centerbridge Partners Europe and Platinum Equity said they do not intend to make a takeover offer for auto breakdown and insurance provider AA.
IG says futures indicate the FTSE 100 index of large-caps to open 72.14 points higher at 5,901.60 on Wednesday. The FTSE 100 closed up 25.17 points, or 0.4%, at 5,829.46 on Tuesday.
"After the sea of red that characterised Monday's sell-off, we saw a little bit of a turnaround on Tuesday, though not to the extent that we got anywhere close to changing the narrative of an ever-increasing concern about the economic outlook heading into year end," said Michael Hewson, chief market analyst at CMC Markets.
In the US on Tuesday, Wall Street ended in positive territory, with the Dow Jones Industrial Average ending up 0.5%, the S&P 500 up 1.1%, and the Nasdaq Composite up 1.7%.
CMC's Hewson said: "This strong performance on the part of US stocks is likely to translate into a similarly positive open for European stocks this morning, however there is rising concern that in light of surging infection rates across Europe, and the beginnings of a rise in hospitalisations, that the economic rebound from the lockdown lows is set to finish the year with a whimper."
A slew of PMI readings on Wednesday will round out the third quarter, which has seen a recovery in economic activity after the damage caused by the lockdowns of March and April. However, the rate of rebound slowed in August, so Wednesday's flash readings for September will be closely-watched.
There are PMIs from France, Germany, the eurozone, UK and the US at 0815 BST, 0830 BST, 0900 BST, 0930 BST and 1445 BST respectively.
The euro traded at USD1.1683 early Wednesday ahead of the data, marginally lower than USD1.1702 late Tuesday.
In early UK company news, Halma said it delivered a "resilient" performance in the year-to-date.
The life-saving technologies company said revenue trends have gradually improved from the end of the first quarter. Halma continues to expect adjusted pretax profit for the current financial year to be 5% to 10% below the year before that.
"There has continued to be a significant variation in demand in individual end-markets and geographic regions. The USA and Mainland Europe regions have delivered the most resilient overall trading performances. The UK and Asia Pacific have remained more challenging, although the latter has benefited from prior year acquisitions and a gradual recovery in China," said Halma.
Separately, Halma said Paul Walker intends to retire as chair and step down from the board by 2021. Halma's search for a replacement has started.
Walker will be moving to RELX to take up the same role.
SSP Group guided to a sharp fall in sales for the second half of the year.
Current weekly sales are running at approximately 76% below last year, the travel concessions owner said, representing an improvement from the third quarter, when sales were 95% lower in April and May and 90% lower in June.
This improvement has been driven by continental Europe, where weekly sales are 66% lower, while in the UK, North America and Rest of the World, sales remain around 80% to 85% down.
SSP has reopened just over a third of its units, ahead of previous expectations.
Overall sales in the second half of the year are expected to be down 86%, resulting in a reduction in revenue of around GBP1.3 billion compared to the second half of 2019.
"Encouragingly, the extensive management action to reduce the cost base, notably rent, overhead and labour, means that despite the weaker sales the underlying Ebitda and operating loss (on an IAS 17 basis) are expected to fall broadly in the middle of the ranges set out in the Interim results in June," said SSP.
While the decision to cut jobs across the group is "extremely regrettable", the company added, it has been a "necessary step" to protect the business.
Diploma has raised GBP194 million to fund its proposed acquisition of Windy City Wire Cable & Technology Products.
The technical products supplier said it raised GBP190 million via a share placing to institutional investors at a price of 1,711 pence each, while directors of the company subscribed for GBP265,000 worth of shares in total. Finally, retail investors subscribed via the PrimaryBid platform for a total of 222,200 shares, raising GBP4 million.
Diploma late Tuesday said it agreed a deal to buy US low-voltage wire and cable supplier Windy City Wire for GBP357 million. Diploma said Chicago-based WCW is a highly attractive business in a "core Diploma market" and expands its presence in the US.
Neither Platinum Equity nor Centerbridge Partners Europe intend to make a takeover offer for roadside rescue firm AA, the two said in separate statements.
Both said talks between them and AA were mutually terminated.
In early August, AA confirmed that several parties had made takeover proposals. Each of the three parties had until September 1 to lodge a firm intention to buy AA or make it known it was no longer interested in pursing a deal. The date was then extended to September 29.
The three parties were Centerbridge Partners and TowerBrook Capital Partners UK, acting jointly, and Platinum Equity Advisors and Warburg Pincus International, acting individually.
However, Centerbridge Partners on Wednesday confirmed that TowerBrook Capital is continuing to mull making an offer for AA.
Sterling was quoted at USD1.2691 early Wednesday, down on USD1.2717 at the London equities close on Tuesday.
The country faces an "unquestionably difficult" winter, UK Prime Minister Boris Johnson warned after announcing coronavirus restrictions which could last six months.
Johnson set out a package of measures for England, with office staff once again working from home, the wider use of face masks and a 10pm curfew on pubs and restaurants. He said that the new curbs could continue well beyond Christmas and New Year, unless there was progress in controlling the spread of the virus – and indicated tougher restrictions could be imposed if they failed.
The new package of measures – and similar or tougher measures elsewhere in the UK – followed scientists' warnings that the number of cases was doubling every seven days.
In Asia on Wednesday, the Nikkei 225 index ended down 0.1% as Japanese financial markets start the week late after holidays on Monday and Tuesday. Against the yen, the dollar was quoted at JPY105.12, versus JPY105.00 on Tuesday afternoon in London.
Business activity in Japan improved in September, but remained at contraction levels with continued declines in output, new orders and work backlog, flash PMI estimates from IHS Markit showed on Wednesday.
The Jibun Bank flash composite purchasing managers' index for Japan was 45.5 points, up from the final reading for August of 45.0. A reading above 50 points indicates expansion in the sector and one below a contraction.
The flash services PMI rose marginally to 45.6 in September from 45.0 in August, reflecting weaker declines in output, new orders and employment. However external demand remained weak, and the fall in incomplete work weighed on hiring, leading to employment falling for the seventh straight month.
In China, the Shanghai Composite is flat, while the Hang Seng index in Hong Kong is down 0.1%. Â
Gold was quoted at USD1,876.60 an ounce early Wednesday, lower than USD1,904.86 late Tuesday in London. Brent oil was trading at USD41.32 a barrel early Wednesday, soft on USD41.60 late Tuesday.
By Lucy Heming; lucyheming@alliancenews.com
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