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(Alliance News) - Stock prices in London are seen opening higher on Wednesday rebounding from losses on Tuesday that followed a suggestion that US interest rates might need to be hiked, as investors look ahead to a busy day of economic data.
In early company news, speciality chemicals company Croda International said it was undertaking a review of one of its businesses. Broadcaster ITV was upbeat on its first-quarter performance. Online retailer boohoo reported positive annual results as demand for its fast-fashion continues.
IG futures indicate the FTSE 100 index is to open 30.63 points higher at 6,953.80. The blue-chip index closed down 46.64 points, or 0.7%, at 6,923.17 on Tuesday.
Croda International said it was launching a strategic review of its Performance Technologies and Industrial Chemicals units.
Croda said the main objective will be to establish what ownership structure best serves this part of the business going forward, to create a stronger platform for its future growth.
The review is consistent with Croda's prioritisation of investments in the faster-growth life science and consumer markets, which now represent over 80% of company's profit, it noted. These are represented by its Personal Care and Life Sciences divisions.
Croda said the review will consider whether the company is "the best future owner of all the PTIC businesses within the context of opportunities to deploy more capital and resources within PTIC, as well as in Consumer Care and Life Sciences".
"The review will assess whether the full potential of PTIC can best be delivered under Croda, as a stand-alone business, or via a full or partial divestment. It will consider the extent of the mutual dependencies between PTIC and the rest of Croda, the practicality of all options, whilst prioritising the best interests of all stakeholders, including employees, customers and shareholders," Croda said in its statement on Wednesday.
The review is expected to conclude by the end of 2021, Croda added.
ITV said it made a positive start to 2021 with total revenue and total television viewing both up, despite the continuing pressures from the Covid-19 pandemic. The broadcaster said it finished the quarter strongly with a majority of shows back in production and a recovery in the advertising market.
For the first quarter to March 31, total external revenue was up 2% at GBP709 million from GBP694 million in the first quarter of 2020.
ITV Studios revenue was up 9% at GBP372 million from GBP342 million. In the Media & Entertainment division, revenue was down 3% at GBP484 million from GBP500 million, hurt by the national lockdown in the UK. ITV total advertising revenue was down 6%, but online revenue was up 14%.
Looking ahead, ITV expects May advertising trends to be up by around 85% and June up by between 85% and 90% compared to the same period in 2020, benefiting from the European football championships and the return of popular reality dating show Love Island over the summer.
ITV said that while there is uncertainty, the macro environment continues to improve, and it was encouraged by the outlook for total advertising in the first half, which it forecasts will be up around 26%, compared to the same period in 2020.
Further, ITV said it was confident that it will deliver its GBP30 million cost saving target for 2021.
boohoo Group said it delivered "another set of record results" despite the challenges posed by the Covid-19 pandemic.
For the financial year ended February 28, revenue was up 41% to GBP1.75 billion from GBP1.23 billion the year before, and pretax profit jumped 35% to GBP124.7 million from GBP92.2 million.
The fashion retailer said it saw strong revenue growth across all geographies with UK up 39% and international up 44%.
Looking ahead, boohoo said revenue growth for the full year to February 2022 is expected to be around 25% at a group level, with newly acquired brands, such as Debenhams online business, Dorothy Perkins, Wallis and Burton, expected to deliver five percentage points of this growth.
"Our newly acquired brands are being re-energised and made relevant for today's consumer across a broader market demographic. We are very excited about their potential and are already seeing the early rewards from their growth. We have also invested in improving the oversight and transparency of our supply chain and we are committed to embedding positive change through our ambitious Up.Front sustainability strategy. As we build for the future, we continue to invest across our platform, people and technology to further cement our position as a leader in global fashion e-commerce," said Chief Executive Officer John Lyttle.
In Asia on Wednesday, the Hang Seng index in Hong Kong was down 0.5%. Financial markets in Japan were closed for Children's Day. The market in Shanghai remained shut for Labor Day, reopening on Thursday. The S&P/ASX 200 in Sydney closed up 0.4%.
European and US equity markets mostly fell Tuesday, with the Nasdaq slumping on valuation concerns after US Treasury Secretary Janet Yellen said interest rates could rise.
The Dow Jones Industrial Average closed up 0.1%, but the S&P 500 and Nasdaq Composite ended down 0.7% and 1.9% respectively Tuesday.
Yellen, in a pre-recorded conversation with The Atlantic, said US lending rates may have to increase "somewhat" to keep a lid on inflation if President Joe Biden's latest spending proposals are enacted and the economy heats up.
The remarks added to pressure on stocks, especially the tech-rich Nasdaq, which has prospered during the pandemic due to the Federal Reserve's policy of near-zero interest rates.
Investors have been concerned about the risk of higher inflation and a sudden shift in Federal Reserve policy to combat it.
However, Yellen later clarified the comments and said she was not predicting nor suggesting the Fed tighten rates, which tempered losses on the S&P 500 and helped the Dow end slightly higher. But the Nasdaq still ended sharply down.
"When markets start to struggle to move higher on good news, as we saw last week, it usually doesn't take too long before they rollover and head lower, which appears to be what happened yesterday, though the selloff was predominantly tech driven in nature. The fact remains the economic data is only likely to improve, something we knew last week, and any by-product of that is likely to mean the prospect of either tighter monetary policy rates in one shape or another, at some point, with the only question being one of timing," commented CMC Market analyst Michael Hewson.
"With US markets closing off their lows, today's European market opens is likely to be a positive one, as we look ahead to another busy day of economic data," Hewson added.
The pound was quoted at USD1.3895 early Wednesday, up from USD1.3871 at the London equities close Tuesday.
The euro was priced at USD1.2005, lower against USD1.2015. Against the yen, the dollar was trading at JPY109.44, up from JPY109.33.
Brent oil was quoted at USD69.42 a barrel Wednesday morning, up sharply from USD68.46 a barrel late Tuesday. Gold was priced at USD1,776.03 an ounce, lower from USD1,782.51.
In Wednesday's economic calendar, there are PMIs from Germany and the eurozone at 0855 BST and 0900 BST respectively, and then there are eurozone producer prices at 1000 BST. In the US, ADP employment figures are at 1315 BST, the services PMI is at 1445 BST, and the ISM services PMI print follows at 1500 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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