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(Alliance News) - Stock prices in London are seen opening slightly higher on Wednesday as the positive momentum from a successful coronavirus vaccine trial earlier this week continued.
In early company news, gaming company Flutter Entertainment raised its full-year earnings guidance after a strong third quarter. Defence contractor BAE Systems confirmed annual guidance in a positive trading update. Pub operator JD Wetherspoon said the regulatory situation for pubs in the UK is in a "complete muddle".
IG futures indicate the FTSE 100 index is to open 13.25 points higher at 6,310.10. The blue-chip index closed up 110.56 points, or 1.8%, at 6,296.85 on Tuesday.
Flutter Entertainment said its performance in the third quarter exceeded expectations in both sports and gaming.
For the quarter ended September 30, total revenue was up 27% to GBP1.33 billion from GBP1.04 billion in the third quarter last year. Sports revenue was up 32% to GBP798 million from GBP606 million, and gaming revenue was up 21% to GBP527 million from GBP436 million.
Looking ahead, Flutter expects annual earnings before interest, tax, depreciation and amortisation, excluding the US, to be in a range between GBP1.28 billion from GBP1.35 billion, driven by higher customer volumes across all divisions. This is higher than the previously guided range of GBP1.18 billion to GBP1.33 billion.
In the US, increased investment in customer acquisition is expected to lead to an EBITDA loss of GBP160 million to GBP180 million, the group formerly known as Paddy Power Betfair said.
"We are very pleased to have retained our position as the number 1 online operator in the US, where FanDuel has made significant progress against each of its key priorities. We have enhanced the customer experience, secured further strategic media partnerships and acquired more new customers than anticipated. We are on track to generate more than USD1.1 billion of GGR in the US this year, which will mark a major 'first' for an online operator," Flutter Chief Executive Peter Jackson said.
BAE Systems said it has continued to deliver a resilient performance in line with its expectations for a strong second half.
The Farnborough-based firm said full-year guidance for 2020 sales and cashflow remains unchanged from the 2020 interim results. However, underlying earnings per share are now expected to be slightly higher than previously guided, with good operational performance and an expected lower tax rate offsetting negative currency movements.
BAE said order intake expectations for 2020 are ahead of its original pre-Covid-19 planning for the year.
"Demand for our capabilities remains high, and we recognise our role not only in supporting national security, but also in contributing to the economies of the countries in which we operate," said Chief Executive Charles Woodburn.
JD Wetherspoon reported a fall in first-quarter sales as the ubiquitous pub chain bemoaned the impositions of tighter coronavirus restrictions by the UK governmnent.
For the 15 weeks to November 8, like-for-like sales decreased by 28%. Wetherspoon said sales in October were significantly lower than in previous months, following the imposition of a number of new restrictions, including changes in the virus tier categories, a 10pm curfew, a requirement to order all food and drink 'at the table', and the mandatory use of face masks when moving around inside pubs.
Wetherspoon estimates the 'cash burn' during the current month of closure to be around GBP14 million. It said 756 pubs in the UK and Ireland now are closed, while 64 in Scotland and 51 in Wales are open, though operating under restrictions.
"For any pub or restaurant company trading in different parts of the UK, and for customers generally, the constantly changing national and local regulations, combined with geographical areas moving from one tier to another in the different jurisdictions, are baffling and confusing. The entire regulatory situation is a complete muddle," Chair Tim Martin said.
"However, the initial regulations, following reopening, introduced on 4 July, were carefully thought through, followed thorough consultation, and were based on solid scientific foundations of social distancing and hygiene. The benefits of the regulatory hyperactivity since then, including the imposition of a curfew, are questionable," Martin added.
UK Prime Minister Boris Johnson will face sustained pressure from within his own party not to extend the national lockdown next month after senior Tory backbenchers formed a group to resist any such move. Some 32 Conservatives rebelled against the government when the Commons approved the second lockdown for England which lasts until December 2.
Johnson said he expects the nation to return to a tiered local system by then and promised members of Parliament a vote for the replacement to the four-week lockdown. Former chief whip Mark Harper and ex-Brexit minister Steve Baker will lead the "Covid recovery group" to resist any extension of the measure in the Commons vote.
US pharma company Pfizer and Germany's BioNTech provided a much-needed boost to markets on Monday when they said their candidate for a Covid-19 vaccine had been 90% effective, raising hopes for a return to a semblance of normality in the world.
The US on Tuesday registered a record 200,000 new Covid-19 cases in one day. The vaccine news brought some relief from an otherwise grim picture, with tighter restrictions imposed in Europe and the Middle East, and a surge in the US claiming 1,535 lives in 24 hours.
"This week's news on a vaccine, while welcome doesn't change the fact that France, Germany and the UK are still in the middle of partial economic lockdowns, while infection rates in the US have continued to rise, however for now markets appear content to ignore this and are now focussing on the potential green pastures of a post pandemic world, with a workable vaccine. Whether this is premature, only time will tell but for now investors appear content to ride this particular wave until it breaks," commented CMC Markets analyst Michael Hewson.
In Tokyo, the Nikkei 225 index closed up 1.8% on Wednesday. In China, markets are narrowly mixed. The Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong is up 0.2%.
The pound was quoted at USD1.3284 on Wednesday morning, up from USD1.3224 at the London equities close Tuesday.
The euro stood at USD1.1820 early Wednesday, flat from USD1.1817 late Tuesday. Against the yen, the dollar was trading at JPY105.42, firm from JPY105.27.
Brent oil was trading at USD44.03 a barrel Wednesday morning, up sharply from USD43.08 late Tuesday. Gold was quoted at USD1,881.70 an ounce, down from USD1,882.66.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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