Last checked at 
(Alliance News) - Stock prices in London are seen opening lower on Friday following a sell-off on Wall Street overnight amid concerns over rising inflation, a possible US debt default, and signs the global economic recovery is slowing.
In early UK company news, pub chain JD Wetherspoon reported a drop in annual revenue due to tight restrictions. Convenience food maker Greencore expressed optimism over its prospects. Online electrical goods retailer AO World raised guidance.
IG futures indicate the FTSE 100 index is to open 57.12 points lower at 7,029.30. The blue-chip index closed down 21.74 points, or 0.3%, at 7,086.42 on Thursday.
JD Wetherspoon reported a drop in annual earnings as the pub chain continued to hit out at the UK government's decision to impose lockdown restrictions and the detrimental effects this has had on the industry.
For the financial year ended July 25, revenue dropped to GBP772.6 million from GBP1.26 billion a year ago, and the pretax loss more than tripled to GPB167.2 million from GBP44.7 million.
Like-for-like sales fell 38%, bar sales decreased by 42% and food sales by 37%.
Wetherspoon declared no full-year dividend, unchanged from last year.
Turning to current trading, Wetherspoon said like-for-like sales in the first nine weeks of the current financial year were 8.7% lower than the same weeks in August and September 2019 - before the pandemic started.
"Pubs have been at the forefront of business closures during the pandemic, at great cost to the industry - but at even greater cost to the Treasury. In spite of these obstacles, Wetherspoon is cautiously optimistic about the outcome for the financial year, on the basis that there is no further resort to lockdowns or onerous restrictions," said Chair Tim Martin.
"The biggest threat to the pub industry, and also, inter alia, to restaurants, theatres, cinemas, airlines and travel companies, relates to the precedent set by the government for the use of lockdowns and draconian restrictions, imposed under emergency powers. This threat, which is also a threat to civil society and democracy, has been regularly articulated by many commentators, including the former Supreme Court judge Lord Sumption," Martin added.
Greencore said it has seen a further improvement in revenue, profitability and cash flow momentum during the fourth quarter of its financial year, which ended September 24, supported by a continued increase in demand for food-to-go categories and new business wins.
The Dublin-based company said revenue trends continued to recover with revenue 27% above fourth quarter 2020 levels and 1% above equivalent pre-Covid levels in 2019. For the full year, Greencore expects to report revenue of GBP1.32 billion. It posted revenue of GBP1.26 billion in financial 2020.
In addition, Greencore expects to generate adjusted operating profit towards the upper end of previous guidance of between GBP36 million and GBP40 million for financial 2021.
"We are pleased with the further improvement in our business in the fourth quarter, in particular the increase in demand across the business and our strong underlying cash generation," said Chief Executive Officer Patrick Coveney. "Greencore has a strong position in the dynamic UK convenience food market and, looking forward, we remain confident in our medium-term prospects."
Ahead of its interim results in November, AO World said it has continued to see growth in a challenging operating environment.
For the six months to September 30, revenue increased 5% on a one-year like-for-like basis against strong comparatives during the Covid-19 lockdown for the online-only retailer.
AO pointed to challenging market conditions in both the UK and Germany markets which resulted in lower volumes than expected, particularly in the second quarter.
AO said given the market conditions over the past 18 months, performance over the comparable period in first half of financial 2020 provided a more "meaningful overview" of business performance than a direct comparison with financial 2021.
Therefore, on a two-year like-for-like basis, revenue grew 66%, with the UK business growing 63%. Like-for-like revenues in Germany grew 84% over the same period.
Looking ahead, AO said adjusted earnings before interest, tax, depreciation and amortisation for the full year is expected to be between GBP35 million and GBP50 million. AO posted adjusted Ebitda of GBP19.6 million in financial 2020.
Profit is set to be more heavily weighted than usual towards the second half of the year driven by the peak trading period, it noted.
"Whilst we continue to see industry-wide issues relating to ongoing supply chain disruption, we have implemented measures to help mitigate these challenges in our logistics operations. We expect revenue growth in the second half of the year to record a similar growth rate to the first half of this year and anticipate that group," AO World said. "Whilst the macro-outlook remains uncertain, we have confidence in the proven resilience of our business model and are well placed to meet customer demand in our peak third quarter sales period."
UK equity markets were set to open on the back foot after Wall Street ended sharply lower on Thursday.
In the US on Thursday, Wall Street ended sharply lower, with the Dow Jones Industrial Average down 1.6%, S&P 500 down 1.2% and Nasdaq Composite down 0.4%.
News that US lawmakers had finally passed legislation to avert a costly government shutdown did little to allay concerns about the fact that they are unable to agree a deal to raise the debt limit.
Top officials including Treasury Secretary Janet Yellen and Federal Reserve boss Jerome Powell have warned that failure to do so before the cash runs out in mid-October would leave the country unable to pay its bills and default, leading to an economic catastrophe.
At the same time, Democrats continue to bicker among themselves over Joe Biden's multi-trillion-dollar infrastructure and social spending bills, which will still face a tough passage through Congress.
Investors are also preparing for the Fed to start tapering its massive bond-buying programme before the end of the year.
CMC Markets analyst Michael Hewson commented: "There's certainly plenty to be concerned about from surging energy prices, supply chain disruptions, and concerns about more persistent inflation. Today's European open looks set for a negative start, after yesterday's lower finish from the US, as well as sharp declines in Asia, although Chinese markets are closed, as we look ahead to a full day of data, ranging from manufacturing PMIs to the latest inflation numbers from the EU, as well as US personal consumption numbers."
The Japanese Nikkei 225 index closed down 2.3% on Friday. Financial markets in Shanghai and Hong Kong were closed for the National Day holiday. The S&P/ASX 200 in Sydney closed down 2.0%.
Japan's manufacturing sector posted slower growth in September, data showed, with new orders and output both falling for the first time in 2021.
The au Jibun Bank manufacturing purchasing manager's index fell to 51.5 points in September from 52.7 points in August.
The reading, though lower than August's tally, was still above the 50.0 no-change mark, suggesting a "softer, more marginal improvement in the health of the sector".
Meanwhile, China's top state-owned energy companies have been ordered to ensure there are adequate fuel supplies for the approaching winter at all costs, a Bloomberg report said Friday, as the country battles a power crisis that threatens to hit growth in the world's number two economy.
Bloomberg News, citing people familiar with the matter who did not want to be named, reported that Vice Premier Han Zheng had told energy companies to make sure there is enough fuel to keep the country running and that Beijing would not tolerate blackouts.
The pound was quoted at USD1.3448 early Friday, down from USD1.3495 at the London equities close Thursday.
The euro was priced at USD1.1579, lower against USD1.1584. Against the yen, the dollar was trading at JPY111.20, down from JPY111.50.
Brent oil was quoted at USD78.29 a barrel Friday morning, down from USD78.50 late Thursday. Gold stood at USD1,754.82 an ounce, lower against USD1,760.78.
Friday's economic calendar has eurozone inflation at 1000 BST. The day will be dominated by a raft of manufacturing PMIs from Germany at 0855 BST, the eurozone at 0900 BST, the UK at 0930 BST, and the US at 1445 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
