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(Alliance News) - Stock prices in London are set to open lower on Friday, as the fourth round of talks on a post-Brexit trade deal between the UK and the EU is set to close with little sign of progress.
In early UK company news, Biffa said it will be paying no final dividend despite doubled profit, while Workspace reported a fall in property valuation but an increase in customer demand.
IG futures indicate the FTSE 100 index is to open 35.86 points, or 0.6%, lower at 6,377.30. The blue-chip index closed down 40.97 points, or 0.6% at 6,341.44 on Thursday.
"Markets in Europe succumbed to some profit taking yesterday in the wake of an extended stimulus program from the European Central Bank," said CMC Markets UK analyst Michael Hewson.
The European Central Bank on Thursday upped its pandemic bond-buying programme by a more-than-expected EUR600 billion and held its key interest rates unchanged.
The Frankfurt-based central bank kept its interest rates on main refinancing operations, the marginal lending facility, and the deposit facility all unchanged at 0.00%, 0.25% and minus 0.50%, respectively.
However, the pandemic emergency purchase programme has been increased by EUR600 billion to a total of EUR1.35 trillion from EUR750 billion previously. Most analysts had pencilled in a EUR500 billion top-up to the stimulus package.
The central bank launched PEPP in March in a bid to shore up the eurozone economy, after the Covid-19 pandemic put a halt to activity across the bloc.
"Usually when a central bank announces a significant stimulus program the currency tends to slide back; however the euro rose to its highest levels since the March 10," said Hewson.
The euro was at USD1.1345 early Friday, firm from USD1.1333 late Thursday.
The pound was quoted at USD1.2609 early Friday, up from USD1.2592 at the London equities close Thursday.
The fourth round of talks between Britain and the EU on a post-Brexit trade deal end on Friday amid little sign of progress.
The four days of negotiations marked the final opportunity for the two sides to move the process forward before a potentially make-or-break high-level summit later this month.
The UK has until the end of June to seek an extension to the current transition period – which finishes at the end of the year – to allow more time for discussions, something Prime Minister Boris Johnson has vowed he will not do.
There is mounting concern among business – already hit hard by the fallout from the coronavirus pandemic – at the prospect of a "cliff edge" break to the UK's remaining access to the EU single market with no new deal to replace it.
On the London Stock Exchange, housebuilder Taylor Wimpey said it is progressing construction on a majority of its sites across England and Wales, with Scottish sites now also starting preparation for a return to construction.
Total completions - including joint ventures - in the 22 weeks to the end of May were 2,455 compared to 4,052 a year earlier, reflecting the impact of site closures, Taylor Wimpey said.
UK net sales rate has increased to 0.51 for week ending May 31 and is now 0.72 for the five months to the end of May. However, this is still lower than 0.99 a year ago.
The company said it is experiencing a "very high" level of demand for appointments, as majority of its show homes and sales centres have reopened in England, though on an appointment-only basis.
Looking ahead, Taylor Wimpey said its order book remains "strong", with a healthy increase in reservations made in recent weeks. The UK order book has continued to increase. As at week ending May 31 its total value stood at GBP2.78 billion versus GBP2.52 billion the year before.
Turning to UK companies reporting their full-year results early Friday, waste management firm Biffa said that, for the 52 weeks ended March 27, revenue grew by 6.6% to GBP1.16 billion from GBP1.09 billion a year ago.
This resulted in more than doubled pretax profit of GBP56.4 million versus GBP21.5 million a year earlier.
Despite that Biffa will pay no final dividend, as part of its Covid-19 cash conservation efforts. This means its annual dividend dropped by 66% to 2.47 pence a share from 7.20p paid in financial 2019.
"Proactive steps to conserve cash have included temporarily suspending mergers & acquisitions activity and dividends; reducing capital expenditure, operating costs, pay and bonuses; utilising government assistance where appropriate and securing the necessary support from our lenders and suppliers," explained Chief Executive Michael Topham.
"These actions have placed us in a strong position to withstand the immediate impact of the crisis as we continue to provide critical and sustainable infrastructure and services," added Topham.
Service office provider Workspace said it had to deal with the uncertainty caused by Brexit and the UK general election in its most recently-ended financial year, which had been eclipsed by the dramatic impact of the Covid-19 pandemic.
Pretax profit for the year to the end of March declined to GBP72.5 million from GBP137.3 million a year earlier, with a small reduction in underlying property valuation of 0.3% - or GBP8 million - compared to a GBP61 million increase in the prior year.
Trading profit after interest, meanwhile, was up 12% to GBP81.0 million, driven by a 10% increase in net rental income to GBP122.0 million.
During the year, Workspace said it has seen strong customer demand, with enquiries averaging 1,087 per month, up from 1,048 the year before, and lettings averaging 121 per month versus 103.
Like-for-like rent roll was up 1.9% to GBP90.4 million, with occupancy up 2.6% to 93.1%, offset by 0.7% fall in rent per square feet to GBP43.32.
The London-based company lifted its total dividend by 10% to 36.16p per share from 32.87p paid a year earlier.
"Looking forward, we will undoubtedly see subdued levels of operational performance in the short term with a reduction in rental income," said Chief Executive Graham Clemett.
"We believe that, with our well established flexible offer and the quality of our space and services, Workspace is ideally positioned to benefit as London recovers from the impact of the Covid-19 pandemic," added Clemett.
Elsewhere, Gamma Communications said it saw strong growth in the first quarter of 2020, with that positive momentum continuing into the second quarter.
Although the company highlighted some impact on the rate of growth as a result of Covid-19, it said it remains positive about the prospects for the group both in 2020 and in the longer term.
Gamma said its Dutch business continues to trade positively and as expected. It has seen similar trends to the UK - an increased interest in Cloud PBX products from new customers and low levels of cancellation from existing customers.
Despite that, and as a result of the current market environment, Gamma said it has taken actions to reduce its operational and capital spend.
The company's balance sheet remains strong, it said. Gamma had GBP53.9 million in cash at the end of 2019. Since that time Gamma has paid GBP4.1 million in connection with the acquisition of Exactive and GBP17.8 million in connection with the acquisition of Voz. Gross cash balance at May 31 was GBP46.8 million.
Looking ahead, the company said it remains positive about the prospects for the business, despite the uncertainty around the depth and length of the coming recession.
Wall Street closed mixed on Thursday. The Dow Jones Industrial Average closed marginally higher, but the S&P 500 lost 0.3% and the Nasdaq Composite finished 0.7% lower.
Against the yen, the dollar was trading at JPY109.18 early Friday in London, firm from JPY108.98 late Thursday.
The Hang Seng index in Hong Kong is up 0.9% on Friday. Elsewhere in China, the Shanghai Composite is up 0.3% in late trade. In Japan, Tokyo's Nikkei 225 index closed up 0.7%.
Japan's household spending recorded its worst drop in nearly two decades in April, government data showed Friday, as the world's third-largest economy reels from the impact of the coronavirus pandemic.
Spending fell 11% from a year earlier, with a sales tax hike last year adding to woes, according to data released by the internal affairs ministry.
The figure was largely in line with market expectations of a 13% drop, and marked the seventh straight month of declines since the government hiked the sales tax in October.
The April drop was partly attributed to declines in spending on transport and telecommunications, as well as on leisure activities.
In commodities, gold was quoted at USD1,711.74 an ounce early Friday, down from USD1,713.66 late Thursday. Brent oil was at USD40.14 a barrel, up from USD39.28.
The economic events calendar on Friday has UK Halifax house price index readings at 0830 BST and the US jobs report for May at 1330 BST.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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