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LONDON (Alliance News) - UK shares are set to open slightly higher Wednesday, building on strong gains made on Tuesday, as the rebound in oil prices continues to support the energy-intense FTSE 100.
Outside of the resources sector, Sky posted a big increase in pretax profit for its first half, boosted by a rise in revenue and exceptional gains from its sale of its stakes in ITV and the National Geographic Channel, in its first results that incorporate its acquisitions of Sky Italia Srl and a majority stake in Sky Deutschland AG.
The broadcaster posted a pretax profit of GBP1.21 billion for the half year to end-December, compared to GBP507 million a year before, on revenue of GBP4.30 billion compared to GBP3.67 billion. Profit was boosted by a GBP492 million gain from the sale of its 6.4% stake in ITV PLC and a GBP296 million gain from the sale of its stake in the National Geographic Channel.
IG futures indicate the FTSE 100 to open 8.2 points higher at 6,880.0. The index closed up 1.3% on Tuesday at 6,871.80 supported by the rise in oil prices and hopes that a debt proposal put forward by Greece's new finance minister will help resolve the country's dispute with its creditors.
However, according to a report by the Financial Times on Tuesday, the European Central Bank is showing resistance to a key element of the proposed funding plan tabled by the new Greek government, potentially meaning Greece could be left with no source of outside funding when its international bailout expires at the end of this month.
Greek Finance Minister Yanis Varoufakis has proposed to European officials that the country will raise EUR10 billion by issuing short-term Treasury bills as "bridge financing" in order to tide Greece over for the next three months while it works to agree a new bailout from its Eurozone partners.
But the ECB is understood to be unwilling to approve the debt sale, resisting any move to raise a EUR15 billion ceiling on t-bill issuance to EUR25 billion, as has been requested by Athens, according to two officials involved in the talks, the FT said.
Brent oil continues its bounce back from recent lows to trade at USD57.72 a barrel before the London equity market open Wednesday. US benchmark West Texas Intermediate is quoted at USD52.25 a barrel.
"The rally in crude prices has helped put a floor under energy stocks, in the process taking some of the recent downward pressure off US markets, which had been starting to look a little heavy. The recovery in energy stocks has also helped underpin the FTSE 100 which has been somewhat of a serial underperformer over the past few months," says Michael Hewson, chief market analyst at CMC Markets.
Wall Street also posted a strong performance Tuesday, with the DJIA closing up 1.8%, the S&P 500 ending up 1.4%, and the Nasdaq Composite closing up 1.1%.
In Asia, the Nikkei closed up 2.0% Wednesday despite a report of a slight slowdown in the Japanese service sector. The Markit Purchasing Managers' Index reading for January came in at 51.3, marking a slower expansion in the sector from December, when the reading was 51.7.
The Hang Seng trades up 0.4% and the Shanghai Composite continues down 1.0% after HSBC services PMI for China fell to 51.8 in January from 53.4 in December. This marks the slowest rate of expansion in the sector in six months.
Hargreaves Lansdown reported a drop in first-half pretax profit despite a rise in assets under administration over the course of the six months, in what it described as a "muted" time for stocks and retail investors. In a statement, the investment management product provider said pretax profit declined to GBP101.9 million in the six months ended December 31 from GBP104.1 million in the corresponding period last year. Assets under administration rose to GBP49.1 billion at the end of 2014, from GBP46.9 billion six months earlier and GBP43.4 billion at the same stage last year.
Chemical manufacturer Victrex said it "has seen a solid start to 2015", reporting a rise in revenue during the first quarter of its financial year, driven by increased sales volumes from its consumer electronics business.
There are full year results expected from pharmaceutical giant GlaxoSmithKline at 1200 GMT.
Still ahead in the economic calendar is Markit services PMI readings from France at 0850 GMT, Germany at 0855 GMT, the eurozone at 0900 GMT, the UK at 0930 GMT and the US at 1445 GMT. There will also be retail sales from the eurozone at 1000 GMT, while in the afternoon the focus will be on US ISM non-manufacturing PMI at 1500 GMT and US EIA crude oil stocks at 1530 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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