(Alliance News) - Stocks in London are set to open higher on Tuesday, adding to Monday's gains, as sentiment has been boosted again by positive remarks from the US about its trade war with China.
In early UK corporate news, Imperial Brands said it was unable to meet its own annual expectations, while a strong performance from Primark boosted AB Foods. Wizz Air reported a sharp rise in passengers in October, and Euromoney Institutional Investor beat it own expectations.
IG says futures indicate the FTSE 100 index of London large-caps to open 11.41 points higher at 7,381.10 on Tuesday. The FTSE 100 index ended Monday up 67.27 points, or 0.9%, at 7,369.69, the index's best closing price in over a month.
London Capital Group analyst Ipek Ozkardeskaya commented: "Global markets trade with joy on improved trade optimism, as encouraging news continue breaking in from the US front. According to the latest news, the US is now debating whether to remove a part of tariffs imposed on Chinese imports on September 1. Such a charming move from the US would help breaking the ice between the two parties and pave the way towards a partial deal in the coming weeks. Or this is at least what investors are betting for."
In Asia on Tuesday, the Nikkei 225 closed up 1.8%. In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong is up 0.3%.
Ozkardeskaya added: "Japanese stocks hurried up at Tokyo open to catch up with yesterday's market rally, as Japanese investors returned from bank holiday."
The US is considering rolling back levies on USD112 billion worth of Chinese imports that were introduced on September 1, the Financial Times reported on Monday.
The 15% tariffs targeted Chinese consumer goods including televisions, books, nappies and sports shoes for the first time.
Five people briefed on discussions said the White House was considering dropping the levies as a concession to cement a partial deal to end the ongoing trade war between the two countries, according to the FT report.
In recent days, both Beijing and Washington have spoken positively about negotiations, including on trade in agricultural goods and poultry. On Sunday, Wilbur Ross, US commerce secretary, said the licences for US firms to sell to Huawei will be granted "very shortly", and that announcement boosted sentiment as it points to progress being made.
Continuing the good news from Asia, both manufacturing and services in China expanded in October, Caixin showed Tuesday, with the best growth in six months.
The composite output index for October reached 52.0 from the 51.9 registered in September, the best reading since April. This was driven by manufacturing, Caixin said. The services business activity index eased to 51.1 from 51.3 in September, meaning although there was still expansion in the sector, the pace slowed.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average adding 0.4%, the Nasdaq Composite 0.6% and the S&P 500 0.4%.
The pound was quoted at USD1.2895 early Tuesday, down from USD1.2908 at the London close on Monday.
In London, Imperial Brands said its financial 2019 was a "challenging year", with its annual results coming in below expectations due to "tough trading" in the Next Generation Products business, including e-cigarettes and vaping.
In the year ended September 30, pretax profit slipped to GBP1.69 billion from GBP1.82 billion the year before. Revenue grew 5.1%, however, to GBP31.59 billion from GBP30.07 billion.
Tobacco net revenue increased 2.7% to GBP7.71 billion from GBP7.51 billion with NGP net revenue growing 48% to GBP285 million from GBP187 million.
Despite the sharp rise, Imperial Brands said NGP's growth was "below the level we expected to deliver".
Chief Executive Alison Cooper said: "Our delivery was also impacted by an increasingly competitive environment and regulatory uncertainty in the USA. Growth in Europe was also slower, despite achieving leading retail shares in several markets. We have taken the learnings from this year to reset our NGP investment plans for 2020, prioritising the markets and categories with the highest potential for sustainable, profitable growth. We will scale up investment as the visibility on returns and regulatory uncertainties improves."
Imperial Brands upped its total dividend by 10% to 206.6p. The tobacco firm also announced Senior Independent Director Therese Esperdy as its new chair, replacing the outgoing Mark Williamson.
Esperdy will take over the role at the start of 2020.
Associated British Foods said it was able to deliver a "resilient" annual performance, with growth from its Grocery and Primark units offsetting decline in Sugar.
In the 52 weeks to September 14, pretax profit slipped 8% to GBP1.17 billion. Revenue increased 2% to GBP15.8 billion.
Chief Executive George Weston said: "We continued to pursue the opportunities to grow our businesses with a gross investment of over GBP800 million. Next year the group is well-positioned for further progress, with the continued expansion of Primark, a material improvement in our Sugar profit and strong profit growth in Grocery."
AB Foods upped its total dividend by 3% to 46.35p.
Euromoney Institutional Investor said its financial 2019 results will be "slightly" above its own expectations.
Adjusted revenue for the year ended September 30 is guided to be about GBP401 million, with underlying revenue flat.
Adjusted pretax profit is expected to be about 9% higher year on year at GBP104 million.
Euromoney said this reflects a continuation of "good" growth in the Pricing, Data & Market Intelligence segment, with underlying revenue up about 4% and about 10% growth in Fastmarkets subscriptions.
The company continued: "Asset Management continued to face challenges and saw revenue decline by about 4% on an underlying basis. Banking & Finance, our smallest segment which accounted for 15% of the group's revenues, was down by approximately 1%. BoardEx has now been fully integrated with strong underlying growth of approximately 11% year-on-year."
Euromoney is scheduled to release its annual results on November 21. It said the strategic review of its Asset Management business is "progressing well", and this will be reported a discontinued operation in the results.
Trainline said it saw "good" growth" in the first half, with net ticket sales up 19%.
In the six months to August 31, the ticketing website posted a pretax loss of GBP87.5 million, widened from GBP11.1 million a year before. Trainline said the bigger loss could be attributed to exceptional costs related to its IPO.
Revenue grew 29% to GBP129 million from GBP100 million, with net ticket sales jumping 19% to GBP1.84 billion from GBP1.54 billion.
Weir Group reported growth in the third quarter ended September, which the engineering firm said was underpinned by its expanded mining equipment offering.
Third-quarter orders for the group were 4% higher than the prior-year period and flat on a like-for-like basis.
Original equipment orders increased 41% driven by the GBP100 million Iron Bridge order in Minerals.
Aftermarket orders fell 7%, principally as a result of the accelerated downturn in North American oil and gas markets, Weir explained. Oil & Gas revenue was hurt by the same market conditions, while Minerals and ESCO were in line with expectations.
The group generated a positive book-to-bill ratio of 1.08 over the three-month period, Weir said.
Budget airline Wizz Air reported a 21% rise in passenger numbers in October to 3.7 million. Wizz Air's load factor increased 1.3 basis points in October year on year to 95.3%.
In the rolling twelve months to October, passengers are up 16% to 38.6 million with load factor rising 1.4 basis points to 93.5%.
Larger rival Ryanair reported 5% traffic growth in October to 13.8 million, with rolling annual growth of 9% to 151.0 million.
In the economic calendar on Tuesday, there is a services PMI from the UK at 0930 GMT and, later on, the same from the US at 1445 GMT.
There also are eurozone producer prices at 1000 GMT and the US trade balance at 1330 GMT.
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2019 Alliance News Limited. All Rights Reserved.
