(Correcting Anglo American's potential offer price per Sirius Minerals share.)
(Alliance News) - Stock prices in London are set to open lower on Wednesday after Iran struck back at the US for the assassination of Iranian general Qasem Soleimani.
In early company news, J Sainsbury reported a fall in sales in the third quarter, which includes the all-important festive period. Anglo American confirmed it is in takeover talks for fertilizer project developer Sirius Minerals. Greggs upgraded its profit guidance once again following an "exceptional" year.
IG says futures indicate the FTSE 100 index of large-caps to open 21.28 points lower at 7,546.10 on Wednesday. The FTSE 100 index closed down 1.49 points at 7,567.83 on Tuesday.
Iran fired missiles on Wednesday at Iraqi bases housing the US military, officials in Washington and Tehran said, in the first act of the Islamic republic's promised revenge for the US killing of a top Iranian general last week.
The Pentagon said it was still "working on initial battle damage assessments" after "Iran launched more than a dozen ballistic missiles against US military and coalition forces in Iraq".
Iranian state television reported an attack on one base housing US personnel, saying it was in response to Friday's killing in a US drone strike of Soleimani, one of the most important figures in the country's government.
"Until this morning, markets had been characterised by a 'wait-and-see' mode with respect to the Middle East tensions, the earnings season starting next week and Friday's non-farm payrolls report," said Danske Bank.
"The attacks mark a clear escalation and the next big thing to watch out for is the US response, which is likely to be a function of the actual damages done in this morning's attacks. We will therefore keep a close eye out for news flow on the damages," Danske Bank added.
Oil was higher in the wake of the heightened tensions in the Middle East. Brent was quoted at USD69.00 a barrel early Wednesday, versus USD68.02 at the London equities close on Tuesday.
Safe-haven gold was higher as well, quoted at USD1,589.60 early Wednesday, up from than USD1,568.77 at the London equities close on Tuesday and having spiked above USD1,600 overnight
In the US on Tuesday, Wall Street ended in the red prior to the strike, with the Dow Jones Industrial Average ending down 0.4%, the S&P 500 down 0.3% and Nasdaq Composite closing flat.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 1.6%. In China, the Shanghai Composite ended down 1.2%, while the Hang Seng index in Hong Kong is 0.9% lower in late trade.
In forex, sterling was quoted at USD1.3138 early Wednesday, up from USD1.3118 at the London equities close on Tuesday.
The euro was quoted at USD1.1147 early Wednesday versus USD1.1138 late Tuesday. Against the yen, the dollar was quoted at JPY108.34 versus JPY108.59.
"The all-important near-term event for FX markets will be the ongoing news flow from Iraq and the US response to the Iranian attacks," said Danske Bank.
In early UK company news, J Sainsbury said it delivered a good Christmas in a "competitive" market.
Total sales fell 0.7% excluding fuel in the third quarter - which covers the 15 weeks to January 4 - with grocery sales up 0.4% and clothing 4.4% higher, but general merchandise sales falling 3.9%.
Colder weather helped to boost clothing sales in the quarter, the supermarket said. While Argos outperformed the market in consumer electronics - and had "its biggest digital Black Friday to date - the toy and gaming markets declined year-on-year.
Like-for-like sales excluding fuel fell 0.7%, steeper than the 0.2% fall seen in the second quarter.
Retail markets remain "highly competitive", Sainsbury's said, and the consumer outlook continues to be uncertain. However, the supermarket said it is executing well against its strategy.
Sirius Minerals said it is in advanced talks with blue-chip miner Anglo American about a possible takeover over.
The talks regard a possible cash offer of 5.50p per Sirius share, which represents a 34% premium to the firm's last closing price of 4.10p. Based on this last closing price, shares in Sirius have slumped 81% over the past 52 weeks.
The offer would value Sirius at a whole at GBP386 million.
There can be no certainty that any firm offer will be made, said Sirius, though the board has indicated to Anglo that it expects to be able to recommend an offer if made at the proposed price.
Anglo confirmed the talks, saying it identified the project as being "of potential interest some time ago". The possible offer could bring "certainty" to Sirius shareholders whilst Anglo brings "financial, technical and marketing resources and capabilities" to progress to project.
In September, Sirius announced it had struggled to secure the required funding for its North Yorkshire polyhalite mine due to "market conditions". Consequently, the firm intended to slow the development of the mine. Sirius then came up with a two-stage development plan to a de-risk milestone of first polyhalite, with an upfront capital requirement of USD600 million.
Greggs once again upgraded its profit guidance following a strong end to an "exceptional year".
Total sales were up 14% in 2019, nearly double the 7.2% rate seen in 2018. Company-managed shop like-for-like sales were up 9.2%, vastly outpacing the 2.9% growth in 2018.
As a result of this strong performance, full-year underlying pretax profit is expected to be slightly higher than previous expectations. This is the third guidance upgrade from Greggs for 2019, having boosted its outlook in both November and February.
Growth continues to be driven by additional customer visits with strong demand across traditional ranges, said Greggs, "and, of course, the huge popularity of our now-iconic vegan-friendly sausage roll." The baker has now expanded on its vegan-friendly menu with the recent launch of a 'Vegan Steak Bake' and a vegan doughnut.
"We delivered a strong finish to what has been an exceptional year for Greggs. The major investments we have made in recent years to make Greggs an attractive choice in the food-on-the-go market are delivering. Consumers are responding very positively and we have seen increasing visits from both new and existing customers," said Chief Executive Roger Whiteside.
"Looking to the year ahead, we face strong sales comparatives and cost inflation headwinds present a challenge," said Whiteside. "However, with strong momentum in the business we see further growth opportunities across a number of channels as we invest in new ways to make Greggs more accessible and convenient for customers."
Finablr said travel money unit Travelex has been successful in containing the spread of ransomware known as Sodinokibi, which was detected on new year's eve.
Travelex confirmed that whilst there was some data encryption, there is no evidence that "structured" personal customer data has been encrypted, and also no evidence that any data has been stolen.
Travelex is gradually restoring a number of internal systems and is working to resume normal operations as quickly as possible, said Finablr.
In the economic calendar on Wednesday, there are UK Halifax house prices at 0830 GMT followed but eurozone consumer confidence at 1000 GMT and Irish retail sales at 1100 GMT. In the US there is the ADP employment report at 1315 GMT, a precursor to Friday's nonfarm payrolls.
By Lucy Heming; lucyheming@alliancenews.com
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