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(Alliance News) - Stock prices in London are seen opening lower as the prospect of a US stimulus deal being agreed by lawmakers in Capitol Hill gets increasingly unlikely and ahead of a resumption of Brexit talks between the UK and EU.
In the UK, Chancellor Rishi Sunak is set to announce a new support package for businesses affected by Tier 2 virus restrictions, according to reports. Talks with the EU will continue Thursday, as a Brexit deal deadline looms.
On the London Stock Exchange, pest control and hygiene firm Rentokil said its annual results will be in-line with expectations. British Airways-parent International Consolidated Airlines Group warned of another capacity cut as Covid-19 infections rise.
IG futures indicate the FTSE 100 index is to open 15.5 points lower at 5,761.0. The London blue-chip index closed firmly in the red on Wednesday, shedding 1.9%, or 112.72 points at 5,776.50.
Germany's DAX 30 is called 0.5% lower and the CAC 40 in Paris down 0.4%.
The pound was quoted at USD1.3145 on Thursday morning in London, flat from its level at the UK equities close Wednesday.
The euro stood at USD1.1855, down from USD1.1868 at the European equities close Wednesday.
Airline firm IAG said "recent overall bookings have not developed as previously expected" as Europe as imposed additional curbs in response to the second wave of the virus. Local lockdowns, extensions of quarantine requirements and a lack of pre-departure testing or air corridors have not been adopted as "quickly as anticipated" either.
"In response to the high uncertainty of the current environment, IAG now plans for capacity in fourth quarter 2020 to be no more than 30% compared to 2019. As a result, the group no longer expects to reach breakeven in terms of net cash flows from operating activities during fourth quarter 2020," IAG cautioned.
IAG back in September said it expected fourth-quarter capacity to decline by 60% compared to 2019, so Thursday's announcement puts that at 70%.
Total revenue in the third quarter ended September 30 fell 83% annually to EUR1.2 billion, and IAG swung to an operating loss of EUR1.3 billion from EUR1.4 billion profit a year earlier, figures showed on Thursday. IAG will report detailed third-quarter results on October 30.
Also among the blue-chips updating on its third quarter was Rentokil, which posted a 4.3% revenue hike, or 8.5% in constant currency.
Revenue came in at GBP758.1 million during the period, with "all core categories delivering performance improvements".
It also reported a "return to M&A" action, sealing six acquisitions during the quarter, five in pest control.
The FTSE 100 firm reiterated its plan to pay a dividend for 2020 and said annual results will be at least "in line with expectations".
Consumer goods giant Unilever posted underlying sales growth of 4.4% in the third quarter, though total revenue slipped 2.4% annually to EUR12.9 billion. For the first nine months of 2019, revenue was 1.8% lower at EUR38.6 billion.
Unilever continued to see "elevated levels" of sales of hand and home hygiene products, as well as of foods consumed at home. Its ice cream business - which houses the Ben & Jerry's brand - continued to struggle, though its decline eased in third quarter.
The company's unification earlier in October received the thumbs up from its UK shareholders, but Unilever warned Thursday the deal in its current form will "infringe" several tax treaties.
Referring to an exit tax bill tabled in the Dutch Parliament earlier this month, Unilever noted changes had been made compared to the initial proposal in July, but risks remained for its unification plans.
"Despite the amendments made, Unilever has received legal advice that, if the bill were enacted in its current form with retroactive effect and were applied to unification, it should infringe the Dutch UK tax treaty, other tax treaties which the Netherlands has concluded with states in which shareholders of Unilever PLC or Unilever NV reside, primary and secondary EU law and the First Protocol to the European Convention on Human Rights," Unilever cautioned.
However it insisted its unification "remains in the best interests of Unilever, its shareholders and other stakeholders as a whole".
The Shanghai Composite was down 0.3% on Thursday afternoon in China. The Hang Seng Index in Hong Kong was up 0.2%. In Tokyo, the Nikkei 225 closed down 0.7%.
Wall Street ended in the red on Wednesday. The Dow Jones Industrial Average lost 0.4%, while the S&P 500 shed 0.2%. The Nasdaq Composite fell 0.3%.
A White House official on Wednesday said the next two days of talks over a new US stimulus package will be critical, as Washington policymakers touted only incremental progress in negotiations, AFP reported.
After months of dialogue and increasing signs of progress in recent days, both Democrats and Republicans say differences remain but they are nonetheless starting to put elements in writing that could become a legislative package costing trillions of dollars.
Congressional Democrats have been holding out for a broad bill with a number of support measures while Republicans have tried to hold down the price tag and narrow the focus, but both sides say they want to win approval before the November 3 election.
"I don't think our chances get better after election. I do think the next 24 to 48 hours will tell us a whole lot," White House chief of staff Mark Meadows said on Fox News.
"Despite an optimistic tone and purported narrowing of differences, the pre-election fiscal stimulus's odds continue to look very low," AxiCorp analsyt Stephen Innes noted.
Against the yen, the dollar was trading at JPY104.62, improved from JPY104.53 at the London equities close Wednesday.
Focus also will be on Brexit talks which resume on Thursday after the UK and EU lost seven days of negotiations to threats and brinkmanship, and with just weeks left to salvage an agreement.
The UK had been refusing since Friday to restart long-running negotiations over a future free trade deal, after EU leaders said at a summit the previous day that London must compromise on the outstanding issues.
Prime Minister Boris Johnson had signalled he was ready to abandon the process, but following a Wednesday phone call between the two sides' top mediators his office said there was now a basis for continued talks.
In a joint document, they agreed the UK's David Frost and EU negotiator Michel Barnier would hold a new round of negotiations in London over the coming days, as both sides warn a deal must be struck by the end of the month.
Also to come on Thursday are US jobless claims at 1330 BST.
Brent oil was priced at USD41.72 a barrel, down from USD41.95.
An ounce of gold fetched USD1,917.12, down from USD1,922.40.
By Eric Cunha; ericcunha@alliancenews.com
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