(Alliance News) - Stock prices in London are set to make modest gains on Tuesday after a lacklustre start to the week, shaking off losses in New York and Asia overnight.
"It looks like we are in for a bit of a chop-fest in financial markets for the rest of the week, until Friday's US non-farm payrolls gives the street some clarity on the Federal Reserve taper," said Jeffery Halley, senior market analyst at Oanda.
In early UK company news, both industrial turnaround firm Melrose Industries and baker Greggs highlighted supply chain issues, though the sausage roll maker did still raise its full-year outlook.
IG says futures indicate the FTSE 100 index of large-caps to open up 27.09 points, or 0.4%, at 7,038.10 on Tuesday. The FTSE 100 closed down 16.06 points, or 0.1%, at 7,011.01 on Monday.
Futures in London were pointing higher despite a tumble in New York on Monday, which fed into the Asian session overnight.
The Dow Jones Industrial Average ended down 0.9%, the S&P 500 down 1.3% and Nasdaq Composite down 2.1%.
In Tokyo on Tuesday, the Nikkei 225 index fell 2.2%. Against the yen, the dollar strengthened to JPY111.19 from JPY110.96.
Japanese business conditions continued to be disrupted by the latest rise in Covid-19 cases and subsequent restrictions during September, according to au Jibun Bank and IHS Markit survey results. The au Jibun Bank Japan composite purchasing managers' output index - which measures combined output in the manufacturing and service sectors – rose to 47.9 points in September from 45.5 points in August, highlighting a softer, moderate fall in private output.
Financial markets in Shanghai remain closed for National Day Golden Week, while the Hang Seng index in Hong Kong was flat on Tuesday.
The S&P/ASX 200 in Sydney closed down 0.4%, after Australia's central bank kept its key interest rate at record low levels, adding that it does not expect a hike until 2024.
The Reserve Bank of Australia, as expected, left its cash rate at 0.1%. It also will continue to purchase government securities at the rate of AUD4 billion, about USD2.91 billion, a week until at least mid-February 2022.
The RBA added: "It will not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range. The central scenario for the economy is that this condition will not be met before 2024."
Still to come in the economic events calendar on Tuesday are services PMI readings from Germany at 0855 BST, the eurozone at 0900 BST, the UK at 0930 BST, and the US at 1445 BST.
Sterling was quoted at USD1.3592 ahead of the data, slipping from USD1.3605 at the London equities close on Monday. The euro traded at USD1.1597 early Tuesday, down from USD1.1621 late Monday.
Gold was quoted at USD1,757.62 an ounce early Tuesday, lower than USD1,764.50 on Monday.
Brent oil was trading at USD81.42 a barrel early Tuesday, softening from USD81.85 late Monday but still trading around its best levels in three years after OPEC decided at a meeting on Monday to stick to planned moderate increases in output for November despite soaring crude prices.
A statement released after the brief videoconference meeting of the OPEC+ alliance said that participants had agreed to stick to the schedule agreed in July, namely to "adjust upward the monthly overall production by 0.4 million barrels per day for the month of November 2021".
In early UK company news, industrial turnaround firm Melrose Industries reported "frustrating" computer chip shortages.
Melrose said it is seeing improvement in its Aerospace end-markets, with revenue in the period up 16% on a year ago. Its performance is expected to improve further as the business continues restructuring.
However, Melrose did flag industry-wide supply problems hitting the Automotive and Powder Metallurgy divisions. While underlying demand is strong, the global semiconductor shortage has led to 'in month cancellations' from customers rising from a normal rate of around 1% to a current rate of 20% to 25%.
"Tightened supply of semi-conductors to the automotive industry are frustrating and difficult to plan for, but whilst they affect current trading, they don't impact long-term value, particularly as cash is well controlled and debt reduced," said Chief Executive Simon Peckham.
"We have made our businesses better, more flexible and resilient to deal with near term headwinds, and all our businesses are on track to achieve their margin targets assuming partial end market recoveries."
Greggs said it has managed to weather supply and staffing shortages and lifted its full-year outlook.
The baker reported like-for-like sales growth of 3.5% on a two-years basis for the third quarter. It noted that growth was particularly strong in August and remained in positive territory in September, with the two-year growth rate 3.0% in the four weeks to October 2.
And this growth was achieved despite staffing and supply chain disruption, it noted.
"Greggs has not been immune to the well-publicised pressures on staffing and supply chains, and we have seen some disruption to the availability of labour and supply of ingredients and products in recent months," said Greggs.
"Food input inflation pressures are also increasing; whilst we have short-term protection as a result of our forward buying positions we expect costs to increase towards the end of 2021 and into 2022."
Nonetheless, its strong performance in the third quarter lends confidence for the full-year, and Gregg expects its annual result to be ahead of previous internal expectations.
The baker is on Tuesday hosting a capital markets day, at which it will unveil plans for 500 of its shops to be open until 8pm by the end of next year as part of a bid to double revenue to around GBP2.4 billion by 2026. It is in the process of re-establishing an ordinary dividend policy and sees potential for additional distributions in the near term, the company added.
Assura said it has been "extremely active" in its financial year to date, with its portfolio of primary care properties standing at 625 with an annualised rent roll worth GBP127.5 million.
In the six months to September 30, the investor and developer added 27 properties to the portfolio for a total cost of GBP117 million, while completing 11 disposals for cash proceeds of GBP15 million.
"Assura is proud to have invested over GBP1 billion into primary care properties since April 2017 and currently have a record development pipeline totalling GBP480 million," said Chief Executive Jonathan Murphy.
Great Portland Estates flagged its strongest quarterly rent collection since 2019 and unveiled the sale of a London property for GBP181.5 million.
The FTSE 250-listed property investor reported GBP14.3 million of new annual rent signed in the quarter to September 30 and an improved period for rent collection, receiving 84% of all rents - its strongest quarterly performance since December 2019.
It also reported the sale of 160 Old Street, London for GBP181.5 million to a fund advised by J.P. Morgan Global Alternatives. The property was sold by the Great Ropemaker Partnership - a joint venture between Great Portland and Ropemaker Properties Ltd, the property nominee of the BP Pension Fund - at a 5% premium to its March valuation.
Hotel Chocolat reported a double-digit annual revenue increase and swing to profit, with results ahead of expectations.
Revenue grew 21% to GBP164.6 million in the year to June 27 from GBP136.3 million the year before. It swung to a pretax profit of GBP7.8 million from a loss of GBP7.5 million.
"This pleasing set of results primarily reflects the strong performance of the group's multichannel proposition and the group's fast-growing active customer database," the chocolatier and retailer said.
It opted not to pay a dividend given opportunities to invest fur further growth, and plans to recommence payouts "when it is appropriate to do so".
"The group has entered FY22 in a strong position, with an increased active customer base, and with multiple clear avenues for further growth, spanning product ranges, channels and territories, all of which are delivering encouraging progress. Since the period end the group has traded in line with the board's expectations," Hotel Chocolat said.
By Lucy Heming; lucyheming@alliancenews.com
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