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(Alliance News) - Stock prices in London are seen opening higher on Thursday following a strong finish in the US on Wednesday amid hopes of a coronavirus vaccine breakthrough.
In early company news, industrial turnaround specialist Melrose Industries reported a drop in interim revenue as the coronavirus downturn in the aerospace and automotive sectors hit earnings. Hotel operator PPHE Hotel said its interim results were hurt by closures of its properties due to the pandemic. IT services provider Kainos Group said it expects annual results in line with forecasts.
IG futures indicate the FTSE 100 index is to open 20.65 points higher at 5,961.60. The blue-chip index closed up 78.90 points, or 1.4%, at 5,940.95 on Wednesday.
Melrose Industries said its interim results were constrained by the coronavirus outbreak and global restrictions put in place to curtail the spread of the virus.
For the half year ended June 30, revenue fell 26% to GBP4.12 billion from GBP5.57 billion last year and its pretax loss widened to GBP685 million from GBP109 million the year before.
Melrose said it "considers it inappropriate" to pay an interim dividend for 2020 in light of the coronavirus crisis.
The turnaround specialist said trading over the summer months has been at the higher end of expectations, particularly in automotive and key Nortek markets.
The company backed its business model to "once again deliver" in the challenging circumstances brought about by the pandemic.
"With the support of our banks, shareholders and employees, we have been successful in positioning our group to emerge well from the crisis. Organically, we see some early signs of recovery in certain geographies, although GKN Aerospace will continue to experience market uncertainty. During the second half of 2020 we will continue to invest in our businesses to build for 2021 and future years. We also expect that 2021, and beyond, are likely to bring acquisition opportunities," the company said.
PPHE Hotel Group said trading was significantly impacted by the coronavirus outbreak from March which resulted in reduced customer demand and property closures.
For the half year ended June 30, revenue fell 60% to GBP61.9 million from GBP155.3 million last year and it swung to a pretax loss of GBP40.7 million from a profit of GBP4.3 million the year before.
Revenue per available room declined by 58.3%, with occupancy declining to 34.7% compared with 76.8% in the first half of 2019.
PPHE said it is currently operating 84% of its 45 properties across Europe.
"I am delighted that the majority of our properties are safely welcoming customers once again, and I am encouraged by the strong leisure demand and resulting market outperformance we have seen in our flagship properties in London and Amsterdam. Looking ahead, we are focused on maintaining this positive momentum and ensuring that the group is well-positioned to navigate the ever-evolving trading environment and to capitalise on future opportunities in line with our growth strategy," said Chief Executive Boris Ivesha.
Kainos Group said trading from April 1 continues to be resilient across its two specialist business areas, Digital Services and Workday Practice.
Kainos said its performance is supported by long-term customer relationships and diversified revenues across customers, end markets and geographic regions. As such, it expects results for the full year ending March 31 to be in line with consensus forecasts.
"Notwithstanding this strong performance, a robust pipeline and significant backlog, we remain mindful of the current economic disruption caused by Covid-19. We maintain a close dialogue with our customers and partners, and continue to pay careful attention to the impact that Covid-19 related disruption may have on them," the company said.
Watches of Switzerland Group said Chair Dennis Millard will not seek re-election at the company's upcoming annual general meeting in October.
The company said Millard will continue as chair until the close of the AGM and will be available until December 2020 to facilitate the transition to a new chair. Watches of Switzerland proposed that Senior Independent Director Tea Colaianni will take over as interim chair from the close of the AGM. The search for a permanent successor is underway.
In the US on Wednesday, Wall Street ended sharply higher, with the Dow Jones Industrial Average up 1.6%, S&P 500 up 1.5% and Nasdaq Composite up 1.0%. The S&P 500 and Nasdaq clocked up yet more record highs.
The Trump administration has urged US states to get ready to distribute a potential Covid-19 vaccine by November 1, media reported Wednesday, in the latest sign of the accelerating race to deliver a vaccine by year's end.
"CDC urgently requests your assistance in expediting applications for these distribution facilities," read a letter from Robert Redfield, director of the Centers for Disease Control and Prevention, quoted by The Wall Street Journal.
Commenting on Wall Street's overnight performance, Stephen Innes, chief global markets strategist at AxiCorp, said: "The S&P 500 scored its most significant advance in almost two months, driven by gains in previously lagged groups, such as utilities, materials, and real estate. Some of the year's best-performing stocks were among the biggest losers amid a risk-on rally supported by dovish comments from policymakers. The broad advance signaled extreme confidence in the global economy's bounce back from the pandemic knockdown, while positive news on a coronavirus vaccine could help speed up that recovery."
The pound was quoted at USD1.3303 Thursday morning, flat from USD1.3302 at the London equities close Wednesday.
The UK will provide a new GBP500 million funding package to support trials of a 20-minute Covid-19 test and efforts to explore the benefits of repeatedly testing people for the virus, the Health Secretary announced.
Money will go towards launching a new community-wide repeat population testing trial in Salford, Greater Manchester. Existing trials in Southampton and Hampshire, using a no-swab saliva test and a rapid 20-minute test, will also be expanded through the new funding.
Meanwhile, Sanofi and GlaxoSmithKline have kicked off the next phase of a trial of their Covid-19 vaccine candidate.
The duo have recruited 400 participants for Phase 1/2 of the study of their adjuvanted recombinant protein-based vaccine candidate.
This part of the study probes the tolerability and effectiveness of the vaccine candidate and the companies expect to report first results in early December. They also aim to begin phase 3 of the trial before the end of the year, should results from the current stage be promising.
The euro stood at USD1.1803 early Thursday, lower from USD1.1834. Against the yen, the dollar was trading at JPY106.33, up from JPY106.14.
Gold was lower, quoted at USD1,937.41 an ounce early Thursday from USD1,941.20 at the London equities close Wednesday. Brent oil was quoted at USD44.35 a barrel, down from USD44.82.
The Japanese Nikkei 225 index ended up 0.9%. In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is down 0.5%.
Growth in China's service sector eased by a hair in August, data showed, though the industry is continuing its recovery from lows seen earlier in the year due to Covid-19.
The headline seasonally adjusted business activity index slipped to 54.0 in August from 54.1 in July, Caixin said. Any number above 50.0 denotes growth.
Still to come in Thursday's economic calendar are a slew of PMI reports, with the eurozone at 0900 BST, UK at 0930 BST and US at 1445 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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