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(Alliance News) - London's blue-chip stocks extended gains in early dealings as the pound continued to weaken ahead of crucial Brexit talks between the UK and EU on Tuesday.
The top FTSE 100 riser in London was JD Sports after the release of its interim results, while easyJet sank in the FTSE 250 on plans to cut capacity.
The FTSE 100 index was up 17.65 points, or 0.3%, at 5,955.05 early Tuesday. The mid-cap FTSE 250 index was up 20.97 points, or 0.1%, at 17,663.17. The AIM All-Share index was flat at 958.33.
The Cboe UK 100 index was up 0.3% at 592.53. The Cboe 250 was up 0.1% at 15,078.44, and the Cboe Small Companies down 0.1% at 9,458.57.
"The FTSE is opening on the front foot, adding to yesterday's impressive gains after upbeat risk sentiment and a sliding pound helped lift the index 2.3%. Sentiment looks set to remain steady for now, although the real test will be when US cash markets open after the long weekend," said Fiona Cincotta at City Index.
Wall Street futures were looking largely positive ahead of Tuesday's session, with the Dow Jones and S&P pointed up 0.9% and 0.7% respectively, but the tech-heavy Nasdaq seen flat. Financial markets in the US will reopen on Tuesday after being closed on Monday for the Labor Day holiday.
Sterling was quoted at USD1.3134 early Tuesday, lower than USD1.3170 at the London equities close on Monday, as Brexit worries came to the fore ahead of the latest round of UK-EU talks.
UK Prime Minister Boris Johnson's chief negotiator, David Frost, said "we must make progress this week" if an agreement is to be reached by the end of a post-Brexit transition period in December.
For that, "we need to see more realism from the EU about our status as an independent country", he said ahead of Tuesday's talks with the EU's Michel Barnier in London.
Talks have been deadlocked for months over issues such as the extent of EU access to UK fishing waters, state aid, and fair competition rules. Both sides say a deal must be agreed by a mid-October EU summit. But there was concern in Brussels after the Financial Times reported Johnson planned to legislate to override parts of the Withdrawal Agreement struck before Britain left the EU in January.
In mainland Europe, the CAC 40 in Paris was down 0.1% while the DAX 30 in Frankfurt was up 0.2% early Tuesday. The euro traded at USD1.1804, down against USD1.1824 late Monday.
Boosting the FTSE 100 in early trade was JD Sports Fashion, shares up 8.3% in opening dealings.
Revenue for the half-year ended August 1 came in at GBP2.54 billion, down 6.6% from GBP2.72 billion a year ago. Pretax profit dropped by almost two thirds to GBP41.5 million from GBP129.9 million.
JD Sports said the reduction in profitability was due to additional costs associated with the shift in revenue to online channels, particularly during the period of temporary store closures.
"Given the unique circumstances of this trading period, we are reassured by the strength of the JD brand as demonstrated by the retention of more than 90% of the total revenues. However, it should be recognised that this has necessitated additional costs principally relating to the provision of enhanced health and safety measures, in all areas of the business, together with increased costs of online fulfilment, including performance marketing," said Executive Chair Peter Cowgill.
The retailer added that it is "generally encouraged" with its performance post-lockdown, though noted that retail footfall remains comparatively weak.
JD Sports said it is appropriate to reinstate guidance for the full-year.
"Assuming a prudent but realistic set of assumptions for the peak trading period that reflect an uncertain outlook for consumer confidence, the ongoing challenges of attracting footfall to stores and the potential for further operational restrictions; we would presently anticipate delivering a headline profit before tax for the full year of at least GBP265 million when calculated under IFRS 16 'Leases'," the retailer said.
JD Sports reported headline pretax profit of GBP438.8 million for the year to this past February 1.
DS Smith advanced 5.6%. The packaging firm said it has performed in line with expectations since the start of May, despite the challenges thrown up by Covid-19.
The company said its like-for-like corrugated box volume performance has improved over the period since the initial impact of Covid-19, and in August there was a return to positive year-on-year growth.
Its operations in northern Europe have continued to perform well, while there has been "pleasing recovery momentum" in southern and eastern Europe since May. DS Smith added that it is "encouraged" by the progress in North America.
"While the macro-economic outlook remains challenging, we are pleased to see volume growth in August and the reduced OCC costs. Our customer focus, strong cost control, cash generation, and liquidity profile, together with continued performance in line with our expectations, gives us confidence for the future," said Chief Executive Miles Roberts.
Experian rose 2.6% after it lifted its second-quarter guidance following stronger trading in July and August.
The credit checking firm now expects organic revenue growth for the quarter in a range of 3% to 5%, helped by further strength in its US mortgage business. This had previously been guided to a range of flat to down 5%.
With "continued investment in our innovation agenda", Experian now expects organic growth in costs of between 2% and 3% for the first half, having been previously guided to being held broadly flat.
In the FTSE 250, easyJet shares fell 5.4%. The budget airline plans to fly slightly less than the 40% of planned capacity previously touted for the fourth quarter due to the UK's travel quarantine measures.
"Due to the constantly evolving government restrictions across Europe and quarantine measures in the UK, including yesterday's announcements that removed seven Greek islands from the exemption list, customer confidence to make travel plans has been negatively affected," easyJet said.
In response to this reduced demand for travel, easyJet expects to fly "slightly less" than the 40% of planned capacity for the fourth quarter that was flagged previously.
The airline added that it "would not be appropriate" to maintain any forward looking financial guidance, for the 2020 and 2021 financial years, at this time.
easyJet Chief Executive Johan Lundgren said: "We know our customers are as frustrated as we are with the unpredictable travel and quarantine restrictions. We called on the government to opt for a targeted, regionalised and more predictable and structured system of quarantine many weeks ago so customers could make travel plans with confidence."
easyJet's update came after the UK government on Tuesday said arrivals from seven Greek islands - Lesvos, Tinos, Serifos, Mykonos, Crete, Santorini and Zakynthos - will need to self-isolate for 14 days, but mainland Greece is to maintain its exemption.
Other airlines were lower as well early Tuesday, with British Airways parent International Consolidated Airlines down 2.1% and Ryanair down 1.8%.
The Japanese Nikkei 225 index closed up 0.8% Tuesday. Against the yen, the dollar was slightly lower, quoted at JPY106.24 versus JPY106.28.
In China, the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong is 0.2% higher in late trade.
Gold was quoted at USD1,931.24 an ounce early Tuesday, firm on USD1,929.44 on Monday. Brent oil was trading at USD41.82 a barrel, slipping from USD42.10 late Monday.
The economic events calendar on Tuesday has eurozone GDP readings at 1000 BST.
By Lucy Heming; lucyheming@alliancenews.com
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