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(Alliance News) - Stock prices in London are seen opening lower on Thursday as investors look ahead to an interest rate decision from the European Central Bank at 1245 BST.
The ECB is expected to begin winding down its massive bond-buying programme and signal a rate hike is in the pipeline - widely expected in July.
In early company news, British American Tobacco maintained annual guidance. Contract-for-difference provider CMC Markets cut its dividend after an annual profit drop. Online electrical goods retailer AO World will close in Germany.
IG futures indicate the FTSE 100 index is to open 41.50 points lower at 7,551.50. The blue-chip index closed down 5.93 points, or 0.1%, at 7,593.00 Wednesday.
British American Tobacco said its transformation continues at pace, with strong revenue and volume growth in all three New Categories driving share gains across key markets.
The Dunhill and Lucky Strike cigarette maker said New Category business is increasingly contributing to its overall performance, and it is confident in delivering its GBP5 billion New Category revenue and profitability targets by 2025.
BAT maintained its 2022 guidance for revenue growth of 2% to 4% at constant currency and mid-single-figure adjusted diluted EPS growth at constant currency.
At current foreign exchange rates, BAT expects a translation tailwind of 2% on adjusted diluted EPS growth for the half year and 5% for all of 2022.
BAT flagged that the global tobacco industry volume is now expected to shrink by 3% in 2022, worse than the 2.5% decline previously forecast, due to the continuing global uncertainty over the ongoing Ukraine and Russia war.
"We are highly cash generative. In line with our active capital allocation framework, and in addition to our growing dividend, we are on track to return GBP2 billion to shareholders through our 2022 share buyback. We are committed to delivering superior long-term shareholder returns," said Chief Executive Officer Jack Bowles.
CMC Markets expressed its determination to use its technology to enter new markets and new geographies and expand its non-leveraged offering, as the online trading platform posted a sharp drop in annual profit.
For the financial year that ended March 31, net operating income was down 31% to GBP281.9 million from GBP409.8 million in financial 2021 and pretax profit plunged to GBP92.1 million from GBP224.0 million.
CMC said it saw a decrease in market volatility, particularly in the first half, compared to "exceptional" levels seen in 2021. This resulted in lower client trading activity and lower client income retention throughout the period which hurt leveraged and non-leveraged businesses, it explained.
In addition, total operating expenses have increased by GBP3.6 million to GBP187.6 million, with the main driver being investments in strategic initiatives resulting in higher personnel, professional fees and technology costs.
CMC declared a total dividend of 12.4 pence for financial 20222, cut by 60% from 30.6p paid out the year before.
CEO Peter Cruddas said: "There is significant opportunity and growth potential in the self‑directing investment platform space, especially in the UK, not just for improved technology but also transaction costs and fees. We believe commissions, execution spreads and custodial fees are too high and too expensive for retail investors.
"We will utilise our platform technology, including pricing and execution, to drive down the transaction costs of investments for retail clients, just like we did in Australia, where we are the number two investment platform for retail investors."
FirstGroup said the series of "unsolicited, conditional proposals" from private equity firm I Squared Capital Advisors undervalue the company.
The transport operator said the offer of 118 pence per share in cash, plus 45.6p more contingent on the proceeds of FirstGroup's recent disposals of First Transit and Greyhound, "significantly undervalues" FirstGroup's continuing operations and its future prospects. As such, its board has unanimously rejected the proposal.
AO World said it will close its business in Germany. Having launched a strategic review of the business in January, the retailer concluded closure was the best course of action.
"This decision was based on the continuing deterioration in the outlook for the German business, as well as the board's responsibilities to shareholders and other stakeholders," AO said.
"AO will now increase its focus on its leading online position in the UK electricals market and optimising the group's profit and cash generation potential," it added. AO World said the UK business continues to trade in line with the board's expectations for financial 2023.
On Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.8%, S&P 500 down 1.1% and Nasdaq Composite down 0.7%.
In Asia on Thursday, Tokyo's Nikkei 225 index finished marginally higher. In China, the Shanghai Composite was down 0.6%, and the Hang Seng index in Hong Kong was down 0.8%. The S&P/ASX 200 in Sydney lost 1.4%.
On Wednesday, investors had been were spooked by a report from the Organisation for Economic Co-operation & Development, which said it had cut its 2022 growth outlook to 3.0% - from 4.5% predicted in December - owing to the Ukraine war.
The OECD also doubled its inflation estimate to 8.5%, a 34-year high.
"European stocks finished yesterday very much on the back foot after the OECD followed up yesterday's World Bank global growth downgrade, with one of its own," said CMC Markets analyst Michael Hewson.
"US markets also underwent a similarly negative session for the same reasons, a trend that has continued this morning in Asia, and look set to translate into a lower European open," Hewson added.
China's exports rebounded strongly in May, data showed Thursday, with factories restarting and supply chains untangling as Shanghai slowly emerged from a gruelling lockdown.
The city of 25 million underwent a rolling lockdown from late March and was then fully sealed off for around two months, as China tightly adheres to a zero-Covid approach to fight the outbreak.
But as restrictions have eased, overseas shipments from the world's second-biggest economy bounced back 17% on-year in May, up from 3.9% in April, according to customs data released on Thursday.
Imports rose 4.1% last month, according to customs data, also beating expectations. China's trade surplus was around USD79 billion last month, up from USD51 billion in April, the Customs Administration said in a statement.
The pound was quoted at USD1.2520 early Thursday, down from USD1.2545 at the London equities close Wednesday.
The euro was priced at USD1.0710, lower against USD1.0737. Against the yen, the dollar was trading JPY133.89 in London, down from JPY133.94.
Brent oil was quoted at USD123.51 a barrel Thursday morning, up sharply from USD122.00 late Wednesday. Gold stood at USD1,849.33 an ounce, lower against USD1,858.48.
In Thursday's economic calendar, the latest US jobless claims numbers are at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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