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(Alliance News) - Stock prices in London are seen opening slightly lower on Wednesday, tracking declines in Asia, with inflation concern returning to the fore as prices in China continued to surge.
In early company news, industrial software provider Aveva Group raised its interim dividend. Broadcaster ITV was upbeat about its prospects, but pub operator JD Wetherspoon reported a decline in first-quarter sales.
IG futures indicate the FTSE 100 index will open 11.04 points lower at 7,263.00. The blue-chip index closed down 26.36 points, or 0.4%, at 7,274.04 on Tuesday.
Aveva Group said it saw a good first half performance, delivering a "solid set of results" and laying foundations for future growth.
For the six months to September 30, revenue rose to GBP480.9 million from GBP332.6 million last year, but its pretax loss widened to GBP80.3 million from a GBP24.2 million loss.
Aveva said the loss was due to the amortisation of intangible assets relating to its combination with the Schneider Electric industrial software business and its OSIsoft acquisition.
Aveva declared an interim dividend of 13.0 pence, up 4.8% from 12.4p paid out last year.
The Cambridge-based firm said the integration with the OSIsoft businesses has progressed well. It said growth is expected to continue in the second half of the year on an organic constant currency basis, supported by a good contract pipeline and improving market conditions.
"End market conditions started to improve during the period following disruption caused by the Covid crisis. As a result, we are seeing the resumption of structural growth, driven by increased digitalisation and net-zero projects, across a wide range of industry sectors. We are also observing an increase in activity in the Energy and Marine sectors as energy prices recover and demand for transportation increases," said Chief Executive Officer Peter Herweck.
"We remain confident in the growth outlook and believe that our first half results form a strong foundation for us to build on and to meet our medium-term targets."
ITV said it has had an "outstanding" nine months with strong performances from its Studios and Media & Entertainment businesses driving revenue growth.
For the nine months to September 30, revenue was GBP2.79 billion, up 29% from GBP2.17 billion at the same time last year. Total advertising revenue came in at GBP1.36 billion, rising 31% from GBP1.04 billion.
As previously guided, ITV expects to propose a final dividend of 3.3p at the full year stage.
Looking ahead, ITV said total advertising revenue for 2021 is expected to be the highest in the company's history.
The broadcaster also highlighted it has a strong programming slate going into next year as it continues to invest in content and expects total schedule costs to be around GBP1.16 billion in 2022. This includes the FIFA World Cup, the FA Cup and a strong schedule of dramas at ITV Studios which will "drive increased levels of live and streaming viewing".
"With the combination of Broadcast and ITV Hub's mass simultaneous reach, our brand safe addressable advertising product and the strong economy, 2021 looks set to have the highest advertising revenue in ITV's history, despite the lockdown in the first quarter," said CEO Carolyn McCall.
JD Wetherspoon said like-for-like sales fell in the first quarter as the pub operator pointing to potential supply chain issues ahead of the busy Christmas holiday season.
For the 15 weeks to November 7, like-for-like sales were 8.9% lower than the record sales achieved in the same period in 2019.
Wetherspoon said supply chain issues have occurred from "time to time" but have usually related to a minority of items. The pub chain said problems have eased in recent weeks, but the busy Christmas period is yet to come.
"As outlined in our annual report, published in October 2021, there have been no outbreaks of Covid-19, as defined by the health authorities, among customers in Wetherspoon pubs. However, some customers have been understandably cautious. Improvement in trade will therefore depend, to some extent, on the outlook for the Covid-19 virus," said Chair Tim Martin.
"Whereas we have an increased element of caution about near-term sales, 'booster' vaccinations and better weather in the spring are likely to have a positive impact in the coming months," Martin added.
In Asia, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite closed down 0.4%, while the Hang Seng index in Hong Kong was up 0.6%. The S&P/ASX 200 in Sydney closed down 0.1%.
China's factory-gate inflation hit a 26-year high in October while fresh virus outbreaks and soaring food and energy prices sent consumer prices up more than forecast, official figures showed.
The producer price index has been rising for four straight months, putting pressure on authorities to stop costs from running out of control, just as officials battle to kickstart a recovery in the world's number two economy.
The reopening from lockdowns around the world has ramped up energy demand just as stockpiles are low, with supply struggles exacerbated by China's drive to meet environmental targets.
The PPI, which measures the cost of goods at the factory gate, jumped a bigger-than-expected 13.5% on-year in October, said the National Bureau of Statistics.
The consumer price index, a key gauge of retail inflation, meanwhile picked up more than expected in October after four months of decline. CPI rose 1.5% in October annually, accelerating from 0.7% in September.
"As we look ahead to this morning's European open, the focus remains very much on company earnings, against a backdrop of rising prices, with apprehension rising that the inflation genie still has some way to go in terms of further upward pressure, as we look ahead to this afternoon's latest US CPI numbers for October," said CMC Markets analyst Michael Hewson.
"Asia markets have seen a bit of a dive after Chinese PPI prices rose more than expected again in October, this time, pushing up to 13.5%, well above expectations of 12.2%, and herein lies the worry. While official CPI measures appear to be absorbing the worst of the price rises, PPI measures aren't, begging the question as to how long these can be absorbed by companies in their margins, or consumers in their wallets."
The pound was quoted at USD1.3550 early Wednesday, up from USD1.3530 at the London equities close Tuesday.
The euro was priced at USD1.1564, soft from USD1.1577. Against the Japanese yen, the dollar was trading at JPY113.00, firm from JPY112.94.
Brent oil was quoted at USD85.30 a barrel Wednesday morning, up from USD84.08 late Tuesday. Gold stood at USD1,824.15 an ounce, a touch lower against USD1,825.74.
The economic events calendar on Wednesday has US inflation readings at 1330 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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