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(Alliance News) - Stocks in London are seen opening higher on Wednesday, tracking gains in Asian equity markets as investors look ahead to the latest set of manufacturing PMI figures.
In early company news, gambling firm 888 Holdings delivered a record first-half performance. Digital technology company Kainos Group expressed confidence in its outlook and made an acquisition. Books and stationery retailer WH Smith lifted its outlook for its recently ended financial year, but cautioned on the period ahead.
IG futures indicate the FTSE 100 index is to open 25.50 points higher at 7,145.20. The blue-chip index closed down 28.31 points, or 0.4%, at 7,119.70 on Tuesday.
888 Holdings said it delivered a record first half revenue and profit, made strong strategic progress, and increased its full year expectations.
For the six months ended June 30, revenue was up 39% to USD528.4 million from USD379.1 million last year and pretax profit up 14% to USD57.9 million from USD50.9 million.
888 declared an interim dividend of 4.5 US cents, up from 3.2 cents paid out at the same time last year.
Turning to current trading, 888 said revenue throughout July and August increased by a mid-single digit percentage compared to the prior year period. It noted the slowdown in the rate of growth reflected retail and leisure venues reopening across international markets and the previously stated expected effects of regulatory and compliance changes.
For the remainder of the year, 888 said it remained mindful of the tougher comparables in the fourth quarter, a period that enjoyed an exceptionally strong performance in both betting and gaming revenues during 2020. However, it is confident that revenue and adjusted earnings before interest, tax, depreciation, and amortisation in the full year will be slightly ahead of its prior expectations.
"The strong momentum from 2020 continued into the first half of 2021, with growth driven primarily by regulated markets, where we believe ongoing market share gains continue to reflect our product-leadership strategy, highly effective data-driven marketing, and our excellent content," Chief Executive Officer Itai Pazner said.
"The board remains confident that, with 888's advanced technology, products and diversification across markets, the group remains well positioned to deliver further strategic progress during 2021 and beyond," added Pazner.
Kainos Group said trading from April 1 to date continued to be resilient across the business as organisations continue to increase their investment in digital solutions.
Kainos said its performance was further enhanced by its long-term customer relationships and the expansion of revenue across customers, markets and geographic regions.
As a result, for the full year ending March 31, 2022, Kainos expects revenue to be ahead of current consensus forecasts and adjusted profit to be in line with consensus forecasts. It posted revenue and adjusted pretax profit of GBP234.7 million and GBP57.1 million respectively in financial 2021.
"While the ongoing economic disruption caused by Covid-19 will be a feature in future trading periods, our outlook remains confident, which reflects our significant pipeline and robust backlog," the company said.
Separately, Kainos said it has expanded its Americas Workday operations by acquiring UNE Consulting for an undisclosed sum. The acquisition is Kainos's fifth in the Workday partner ecosystem and the second in the Americas, after the acquisition of IntuitiveTEK, based in Denver, Colorado, in 2020, it added.
WH Smith said it was encouraged by improving trends across the business despite its Travel and High Street units continuing to be hurt by the Covid-19 pandemic.
For the second half, group revenue was 65% of the same period two years ago. This marked an improvement from the first half figure of 60%. For the eight weeks to August 28, revenue recovered further to stand at 71% of the levels reported two years ago.
WH Smith said it expects the outcome for the financial year ended August 31 to be slightly ahead of expectations.
However, it warned on the year ahead.
WH Smith said: "As previously stated, we remain confident in revenues returning to pre-Covid levels in the next two to three years. While there will be a return to good levels of profitability in the year ending August 2022, the trajectory of the recovery in travel remains uncertain. This combined with the previously announced accounting finance charges relating to the successful convertible bond issue on April 29, means that we currently anticipate the levels of profitability for the year ending August 2022 will be at the lower end of market expectations."
In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.1%, the S&P 500 down 0.1% and the Nasdaq Composite ending marginally lower.
"Futures in the US and Europe are up today following the dip in US stock markets in yesterday's session. Prices of stocks fell as an unexpected surge in Eurozone inflation and the recommencement of travel restrictions took investors by surprise," said AvaTrade analyst Naeem Aslam.
The Japanese Nikkei 225 index closed up 1.3%. In China, the Shanghai Composite was up 0.7%, while the Hang Seng index in Hong Kong was up 0.5%. The S&P/ASX 200 ended down 0.1%.
Chinese manufacturers signalled a slight deterioration in business conditions in August, driven by a drop in output and new work, data from Caixin and IHS Markit showed.
The headline seasonally adjusted purchasing managers' index posted below the neutral 50.0 level, at 49.2 points in August, down from 50.3 points in July, to signal a deterioration in the health of the sector. Though only marginal, it was the first time that business conditions had worsened since April 2020, with the index dipping to its lowest level for a year-and-a-half.
Meanwhile, improvement in operating conditions in the Japanese manufacturing sector softened slightly in August, figures from au Jibun Bank and IHS Markit showed.
The headline au Jibun Bank Japan manufacturing purchasing managers' index dipped to 52.7 points in August from 53.0 points in July. This indicated a softer improvement in the health of the sector, reflecting the continued impact of the Covid-19 pandemic.
Against the yen, the dollar was trading at JPY110.25, up from JPY110.01.
The pound was quoted at USD1.3735 early Wednesday, down from USD1.3753 at the London equities close Tuesday.
On the economic front, the decline in UK shop prices eased in August, numbers released early Wednesday showed, as consumers face the prospect mark-ups as retailers juggle shipping costs and Brexit red tape.
According to the latest British Retail Consortium-NielsenIQ tracker, shop price deflation eased to 0.8% annually in August, slowed from July's 1.2% decline.
Non-food prices slipped 1.2% in August, following July's 1.8% fall. Food deflation eased to 0.2% from 0.4% in July. Fresh food deflation also eased, slipping to 0.6% from 1.0%. It was the ninth successive month that fresh food prices have fallen.
The euro was priced at USD1.1798, marginally lower from USD1.1802.
Brent oil was quoted at USD72.09 a barrel Wednesday morning, down from USD72.12 late Tuesday, ahead of an OPEC meeting. Gold was trading at USD1,812.44 an ounce, up from USD1,805.13.
Wednesday's economic calendar has a raft of manufacturing PMI data from the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. In addition, EU unemployment data is released at 1000 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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