Experian Share News (EXPN)

(Alliance News) - Stocks in London are set to open lower on Wednesday after Wall Street ended in the red overnight, the mood darkened by questions raised over Moderna's encouraging Covid-19 vaccine news.

In early UK company news, Rolls-Royce announced plans to cut 17% of its workforce, Marks & Spencer reported a fall in annual profit as it took costs and write-downs related to Covid-19, and Experian held its dividend as it reported a strong year.

IG says futures indicate the FTSE 100 index of large-caps to open 36.03 points lower at 5,966.20 on Wednesday. The FTSE 100 index closed down 46.36 points, or 0.8%, at 6,002.23 on Tuesday.

The lower open in Europe follows a downbeat session on Wall Street overnight. Wall Street ended in the red Tuesday, with the Dow Jones Industrial Average down 1.6%, the S&P 500 down 1.1%, and the Nasdaq Composite down 0.5%.

"Optimism surrounding Moderna's potential Covid-19 vaccine faded a little, and that was a contributing factor to the low note the Dow Jones and the S&P 500 finished on. An article in STAT news claimed that that Moderna's phase one trial lacked sufficient evidence, so doubt was cast over the study," said David Madden at CMC Markets.

US biotech firm Moderna reported "positive interim" results on Monday in the first clinical tests of its vaccine against the new coronavirus performed on a small number of volunteers.

The doubts over the vaccine news came as the US recorded another 1,536 coronavirus deaths over the past 24 hours, the Johns Hopkins University tracker said.

That figure raises to 91,845 the total number of Covid-19 deaths in the US. The US tops the global rankings both for the highest death toll and the highest number of infections, with more than 1.5 million cases.

And US Covid-19 deaths are projected to surpass 113,000 by mid-June, a modelling average showed, underlining the country's status as the nation worst affected by the pandemic.

"The new forecast for cumulative US deaths by June 13 is about 113,000, with a 10% chance of seeing fewer than about 107,000 and a 10% chance of seeing more than 121,000," the Covid-19 Forecast Hub at the University of Massachusetts said on its website.

The latest projections come as most US states take steps – some minor, some more substantial – to re-open their shuttered economies and communities while facing the challenge of instilling confidence among Americans that it is safe to begin returning to normal.

The World Health Organization has agreed to launch an investigation into its coronavirus response, as Beijing accused Washington of shirking its responsibility after US President Donald Trump threatened to quit the UN agency. WHO Director-General Tedros Adhanom Ghebreyesus said dealing with the pandemic must come first, however.

On Monday Trump threatened to make permanent a temporary freeze on US funding to the body. Beijing hit back Tuesday, charging him with trying to "smear" China and damage the WHO for political ends.

In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.8%. In China, the Shanghai Composite is down 0.6%, while the Hang Seng index in Hong Kong is down 0.1%.  

In early UK company news, Rolls-Royce proposed a major restructuring in light of the "unprecedented" impact of Covid-19 on its business and the whole of aviation industry.

The jet engine maker expects to cut at least 9,000 roles from its workforce of 52,000. In addition to the savings generated from its headcount reduction, it will cut spending across plant and property, capital and other "indirect" cost areas.

The proposed reorganisation is expected to generate annualised savings of more than GBP1.3 billion, of which headcount is expected to contribute around GBP700 million. Cash restructuring costs are likely to be around GBP800 million, with outflows incurred across 2020 to 2022.

The reorganisation will predominantly affect the Civil Aerospace business, where Rolls-Royce will carry out a "detailed review" of its facility footprint.

"Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simply not there," said Chief Executive Warren East.

Credit checking firm Experian reported a "strong" year as it delivered organic revenue growth at the top end of its guidance range, though profit did fall.

Revenue for the year to March 31 grew 7% to USD5.18 billion, with organic growth of 8%. Pretax profit fell 2%, however, to USD942 million.

"The Covid-19 crisis began to escalate late into our financial year with limited financial impact in FY20. We took swift action across our business in response to the unfolding crisis. We have operations in 45 countries and numerous industry segments, including in many of the societies hardest hit by the pandemic," said CEO Brian Cassin.

"We are confident that, once the crisis abates, we will be well placed to continue to deliver on our growth agenda," said Cassin. "Accordingly, we have held our second interim dividend level at 32.5 cents per share."

Marks & Spencer reported a fall in profit for its recently ended financial year as it took costs and stock write-downs due to Covid-19.

Revenue for the year to March 28 was down 1.9% to GBP10.18 billion and pretax profit slumped 20% to GBP67.2 million. The pretax profit figure included adjusting items of GBP335.9 million, with GBP212.8 million of this for costs and stock write-downs due to Covid-19.

Food like-for-like sales were up 1.9% while clothing sales fell 6.2% - the latter including an estimated 2.2% hit from Covid-19 in March.

CEO Steve Rowe said the results reflect a year of "substantial progress" with some "green shoots" in its clothing arm in the second half.

"However, they now seem like ancient history as the trauma of the Covid crisis has galvanised our colleagues to secure the future of the business," said Rowe.

The Covid-19 crisis started to impact the business in the first week of March with reductions in Clothing & Home sales across all its markets. While Food sales were resilient, "we did not experience the stockpiling performance of the supermarkets", M&S noted.

M&S in a 'Covid-19 scenario' is assuming a 70% decline in UK Clothing & Home revenue for the four months to July and only a gradual return to original budgeted levels by February 2021, which will hit annual revenue by GBP1.5 billion. In UK Food, it expects a 20% decline in revenue in the period to July with sales "level" thereafter.

"This scenario has been stress tested and even in the event of a longer and deeper impact on trading, the group maintains sufficient liquidity. Although we will be drawing on our available credit facilities in the coming year, under the scenario the business will have significant liquidity headroom throughout the next 18 months. We are pleased to note that in the first 6 weeks of the new year, sales and cash have substantially outperformed the scenario," M&S said.

M&S decided against paying a final dividend, and does not anticipate making any payout in its 2021 financial year.

In the economic calendar on Wednesday, there is eurozone inflation at 1000 BST. Minutes from the US Federal Reserve's last meeting are at 1900 BST.

Already out, data showed UK consumer prices fell on a monthly basis in April and the annual inflation rate softened considerably.

Month-on-month, prices fell 0.2% in April after a flat reading the month before. Annually, the inflation rate was 0.8%, notably slower than the 1.5% recorded for March and the 1.7% recorded in February.

Year-on-year, liquid fuels prices slumped 42% and gas prices were down 12% amid a collapse in international oil prices, bringing the broader electricity, gas & other fuels category 6.8% lower as a whole.

Clothing prices fell 3.1% while food prices were up 1.3%.

Sterling dipped after the data to be quoted at USD1.2244 early Wednesday after the data, flat against USD1.2245 at the London equities close on Tuesday.

The euro traded at USD1.0944 early Wednesday, firm on USD1.0930 late Tuesday. Against the yen, the dollar was quoted at JPY107.79 versus JPY107.94.

Gold was priced at USD1,746.93 an ounce early Wednesday, higher than USD1,740.26 on Tuesday. Brent oil was trading at USD34.80 a barrel early Wednesday, up from USD34.56 late Tuesday.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.