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(Alliance News) - Stock prices in London are seen opening lower on Wednesday, tracking steep falls in Asian equity markets, as investors become increasingly concerned over rising coronavirus cases in Europe.
In early company news, hazard detection and life protection firm Halma raised its annual profit guidance. Utility Severn Trent set out its climate change initiatives, which it will put to a shareholder vote. Housebuilder Bellway reinstated its dividend
IG futures indicate the FTSE 100 index is to open 35.59 points lower at 6,663.60. The blue-chip index closed down 26.91 points, or 0.4%, at 6,699.19 Tuesday.
Halma said it has made good progress in the second half of the financial year and now expects adjusted pretax profit for financial 2021 to be similar to that in financial 2020, compared to prior guidance of around 5% below the prior year. It posted adjusted pretax profit of GBP267.0 million in financial 2020.
Halma said this includes a small hit from movements in exchange rates, compared to the broadly neutral effect forecast at the time of the half year results.
Halma said order intake is currently ahead of revenue and ahead of the same period last year, saying this reflected the agility of its business model and the benefits of focus on niche markets with long-term growth drivers.
Water works Severn Trent said it intends to seek shareholder approval for climate change action plan at its annual general meeting in July.
Severn Trent submitted emissions targets to reduce greenhouse gas emissions by 2030. In January, it had submitted several project proposals to regulator Ofwat to invest "hundreds of millions of pounds" as part of the Green Recovery initiative which would enable it to deliver new low-carbon water sources, to create new jobs, and to enhance river quality and flood resilience in the region.
Chief Executive Officer Liv Garfield said: "As a water company we take care of one of life's essentials, so a healthy environment is vital to the long term sustainability of our business. Taking positive action to mitigate climate change and ensure we are resilient to its impact is at the core of that goal. We have set ourselves bold ambitions which we believe will benefit all our stakeholders over the long term, which is why we're pleased to offer this engagement opportunity to our shareholders at our upcoming AGM."
Housebuilder Bellway said it delivered a good first-half trading performance, achieving record interim revenue due to its strong brought forward sales position, alongside strong customer demand.
For the six months to January 31, Bellway posted revenue of GBP1.72 billion, up 12% from GBP1.54 billion the year before, but pretax profit was GBP280.2 million, down 4.0% from GBP291.8 million.
Bellway said its forward order book on March 14 was GBP1.64 billion, up 8.4% from GBP1.52 billion at the same time the year before. It also expects the full-year average selling price to rise to GBP295,000 from GBP293,054.
In addition, Bellway reinstated its interim dividend at 35.0 pence per share, having made no interim payout last year.
Bellway said the fundamentals of the housing market remain robust, with an underlying requirement for new homes in the UK, supported by an ongoing environment of low interest rates, and the mortgage market is broadly supportive. It also welcomed the UK government's extension of the stamp duty holiday to the end of June.
"As the country prepares to emerge from the latest national 'lockdown', Bellway is in an excellent position to continue its long-term, disciplined growth strategy, increasing the supply of good quality, new homes, while generating future value for our stakeholders," Chair Paul Hampden Smith said.
Sentiment in equities markets was being hurt early Wednesday by fears that lockdowns will stifle the ongoing economic recovery. Europe's two biggest economies, Germany and France, as well as a number of other countries, have been forced to reimpose more stringent restrictions to battle the spread of Covid-19, at the same time as they struggle to get their vaccination programmes off the ground.
In Asia, the Japanese Nikkei 225 index closed down 2.0% on Wednesday. In China, the Shanghai Composite ended down 1.3%, while the Hang Seng index in Hong Kong was down 2.2%.
Hong Kong and Macau suspended the use of Pfizer-BioNTech's coronavirus vaccine on Wednesday after being informed of a packaging problem affecting one batch of vials, while stressing they did not believe there was a safety risk.
The vaccination scheme was opened to anyone above the age of 30 last week after officials struggled to attract enough elderly people and those in priority groups.
CMC Markets analyst Michael Hewson commented: "The optimism that had characterised the rebound in travel and leisure stocks these past few weeks, appears to be slowly bleeding away, against a backdrop of rising concern that a European third wave is likely to delay any sort of return to normal when it comes to international travel this year. Adding to the uncertainty around the progress in vaccination is EU threats to limit exports of vaccination supplies to countries they deem as not playing fair when it comes the production of vaccine.
"These concerns over a weaker or delayed recovery look set to continue this morning, as we look to a weaker open for European stocks."
The pound was quoted at USD1.3714 early Wednesday, down sharply from USD1.3778 at the London equities close Tuesday.
The euro was priced at USD1.1840, lower from USD1.1861. Against the yen, the dollar was trading at JPY108.50, down from JPY108.67.
Brent oil was quoted at USD61.00 a barrel Wednesday morning, sharply lower against USD62.09 at the London equities close Tuesday. Gold was trading at USD1,730.15 an ounce, higher from USD1,727.16.
The economic events calendar on Wednesday has flash PMI readings from Germany, the eurozone and the UK at 0830 GMT, 0900 GMT and 0930 GMT respectively, while there is the same for the US at 1345 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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