LONDON (Alliance News) - Stock prices in London are pointed to extend gains on Wednesday as the pound declined overnight following parliament's rejection of an amendment to keep the UK in the EU until the end of 2019.
In early company news, London Stock Exchange Group said it will take a minority stake in Euroclear Holding, Wizz Air saw operating costs rise in the third quarter, and Low & Bonar laid out plans to raise GBP54 million as its annual loss widened.
IG says futures indicate the FTSE 100 index of large-caps to open 28.87 points higher at 6,862.80 on Wednesday. The FTSE 100 closed up 86.83 points, or 1.3%, at 6,833.93 on Tuesday.
"A mixed start for Europe is expected on Wednesday, with the FTSE the rare outperformer after the pound dipped on Tuesday evening following more Brexit votes in parliament," said Oanda senior market analyst Craig Erlam.
UK Prime Minister Theresa May is preparing to return to the EU to try to renegotiate her Brexit deal after members of Parliament gave their backing to proposals to replace the controversial backstop.
But one of the prime minister's most important negotiating weapons was ripped from her hands, as the House of Commons also voted to block a no-deal Brexit.
May secured the backing of the Commons to go back to Brussels, as MPs voted by 317 to 301 in favour of a proposal from Tory grandee Graham Brady for her to try to replace the backstop with "alternative arrangements" to keep the Irish border open after Brexit.
European Council President Donald Tusk, in response to Tuesday's vote, insisted that the withdrawal agreement struck last November is not open for renegotiation.
Meanwhile, a cross-party plan, headed by Tory Caroline Spelman and Labour's Jack Dromey, won by 318 votes to 310, majority 8. It "rejects the UK leaving the EU without a Withdrawal Agreement and a Framework for the Future Relationship".
MPs however rejected Labour former minister Yvette Cooper's call for an extension of Article 50 to keep the UK in the EU until the end of the year in order to reach a deal.
Sterling was quoted at USD1.3087 early Wednesday, having dipped below the USD1.3060 mark after the rejection of the Cooper amendment. Sterling had been quoted at USD1.3152 at the London equities close on Tuesday.
Oanda's Erlam commented: "As far as the pound is concerned, I don't view the drop on Tuesday as anything more than profit taking. The votes were merely symbolic and the view of parliament could easily change when May returns from Brussels without the amendments to the withdrawal agreement that she and others crave."
In company news, London Stock Exchange Group said it will buy just under a 5% stake in financial market infrastructure company Euroclear Holding for EUR278.5 million.
LSE's purchase of a 4.92% stake is expected to strengthen its existing operational and commercial relationship with Euroclear, and the FTSE 100-listed firm expects that an LSE representative will join the Euroclear board.
The transaction will be funded from existing cash and debt facilities.
"We look forward to working with Euroclear to drive continued innovation and efficiencies for the benefit of our customers and the wider market," said LSE Chief Executive David Schwimmer.
Central and eastern Europe-focused airline Wizz Air Holdings said revenue rose in the three months to the end of December but profit dropped as costs stacked up.
Passengers in the third quarter rose 15% to 8.1 million, as revenue in the period grew 21% to EUR512.7 million. However, pretax profit dropped to EUR1.8 million from EUR14.6 million a year ago as operating expenses shot up 26% to EUR512.7 million.
Wizz Air maintained its annual net profit guidance in a range of between EUR270 million to EUR300 million.
"Where we will be within this range will depend on the extent of March yield pressures which will be affected year-on-year given Easter falls after the financial year-end in April and external factors such as Brexit uncertainty," commented Chief Executive Jozsef Varadi.
Satellite communications firm Inmarsat said it has won a contract to provide its GX Aviation inflight broadband to Indonesian national carrier Garuda.
The agreement to supply Garuda Indonesia with GX Aviation marks an extension of Mahata's existing 10-year contract with low-cost carrier Citilink, also part of the Garuda Indonesia Group. No financial details of the contract were disclosed.
Taptica International and RhythmOne both confirmed they are in advanced talks for an all-share merger to create "one of the leading video advertising companies in the US".
The merger is intended to be constructed as an acquisition of RhythmOne by Taptica, with Taptica proposing to issue 16 new shares for each 19 RhythmOne shares. On this basis, Taptica shareholders would own 50.1% of the combined group and RhythmOne shareholders 49.9%.
The companies stressed that there is no certainty a firm offer will be made, and Taptica now has until February 26 to put in a firm bid or walk away. Taptica has a market capitalisation of about GBP115 million, while RhythmOne's market cap is GBP147 million, making a combined firm worth about GBP262 million.
Low & Bonar said its loss widened for its recently ended financial year as it set out plans to raise GBP54 million.
Revenue for the year ended November 30 fell 3.3% to GBP431.9 million, as the performance materials maker's pretax loss widened to GBP42.2 million from GBP19.7 million last year.
In line with a trading statement put out in December, Low & Bonar cut its dividend to 1.42p from the 3.05p paid out last year.
Alongside the results, Low & Bonar said it is looking to raise GBP54 million through a fully underwritten placing and open offer of 359.6 million shares at 15p each.
Shares in Low & Bonar closed at 18.1p on Tuesday.
"Despite internal initiatives to improve the group's cash generation throughout financial year 2018, which have realised GBP18 million of improvements in working capital during that period, net debt has remained high as a result of the reduced profits of the group," said Low & Bonar.
The firm continued: "This has been exacerbated by the challenging trading environment experienced through financial year 2018, including the significant impact of raw material cost increases and volatility in exchange rates."
In the US on Tuesday, Wall Street finished mixed, with the Dow Jones Industrial Average ending up 0.2% but the S&P 500 down 0.2% and Nasdaq Composite dipping 0.8%.
Shares in Nasdaq constituent Apple closed down 1.0% but rose 5.0% in post-market trade after the iPhone maker reported figures in line with the negative sales outlook issued earlier in January.
Apple said second quarter iPhone revenue declined 15% on a year prior, while total revenue from all other products and services grew 19%. The company said services revenue reached an all-time high of USD10.9 billion, up 19% over the prior year.
Apple posted revenue of USD84.3 billion in the three months ended December 29, a decline of 5% from the same quarter a year earlier. Earnings per diluted share were USD4.18, up 7.5%.
The earnings report comes four weeks after Apple Chief Executive Tim Cook announced a slowdown in iPhone sales in China, marking the first decline in a over decade in sales there.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite is 0.4% lower, while the Hang Seng index in Hong Kong is up 0.1%.
In the economic calendar on Wednesday, there are mortgage approval data for the UK at 0930 GMT and eurozone consumer confidence at 1000 GMT, followed by German CPI at 1330 GMT.
In the US, private payroll processor ADP releases employment change figures for January, a precursor to Friday's monthly nonfarm payroll data, while the Federal Reserve announces its latest monetary policy decision at 1900 GMT. This will be followed by a press conference with Fed Chair Jerome Powell.
