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(Alliance News) - Stock prices in London are set to open higher on Tuesday following some encouraging Chinese retail and industrial data.
Closer to home, figures showed the UK unemployment rate has nudged up to 4.1% and there are nearly 700,000 fewer people employed since March, when the country went into lockdown.
In early UK company news, online grocer Ocado posted a surge in sales for the third quarter. Transport operator FirstGroup said it now expects a small adjusted operating profit for the first half. Defense and security equipment maker Chemring guided to a full-year outturn towards the top end of market forecasts.
IG says futures indicate the FTSE 100 index of large-caps to open 13.25 points higher at 6,039.50 on Tuesday. The FTSE 100 closed down 5.84 points, or 0.1%, at 6,026.25 on Monday.
In China, the Shanghai Composite is up 0.4%, while the Hang Seng index in Hong Kong is up 0.5%. ÂÂ
Retail sales in China have grown for the first time since the coronavirus pandemic began, official data showed Tuesday, as the world's second-largest economy promotes domestic spending as part of its recovery.
Spending had previously remained sluggish despite China bringing the virus largely under control, with shoppers still cautious amid global uncertainty.
But the key indicator of consumer sentiment rose 0.5% on-year in August – better than the flat growth that analysts polled by Bloomberg had anticipated. The figure is up from a drop of 1.1% in the month before and follows a plunge of 21% in the January to February period.
Industrial output, which has recovered more quickly than retail, strengthened further last month. It grew 5.6% from a year ago, better than economists expected and more than the 4.8% increase in July.
Stephen Innes, chief global markets strategist at AxiCorp, said: "This data is about as strong a signal as one could expect and will continue to support the steady economic growth recovery. Hence the small pop in risk asset (oil and stocks) across the board."
In Asia on Tuesday, the Japanese Nikkei 225 index ended down 0.4%. Against the yen, the dollar was flat, quoted at JPY105.66 versus JPY105.64.
In the US on Monday, Wall Street ended in the green, with the Dow Jones Industrial Average ending up 1.2%, the S&P 500 up 0.3%, and the Nasdaq Composite up 1.9%.
In early UK company news, Ocado said its switchover to Marks & Spencers from Waitrose is going well.
Retail revenue was up 52% in its third quarter - spanning the 13 weeks to August 30 - while average orders per week rose 9.6%. Retail sales grew faster compared to the second quarter as demand remained high, Ocado noted, and comes against a "seasonally softer" quarter a year ago.
Customers have "responded positively" to the online grocer's switchover to Marks & Spencer products at the start of the month.
Demand for the new range has driven both an increase in the number of products in customer baskets and strong forward demand, Ocadoo said, and the weighting of M&S products in the average Ocado basket is higher than Waitrose prior to the switchover.
"Our aim is to continue to set the bar as we begin again to welcome new customers who are seeing the benefits of online shopping in ever greater numbers and we remain focused and on track to increase capacity by 40% through to 2021," said Ocado Retail Chief Executive Melanie Smith.
Ocado said it expects full-year earnings before interest, taxes, depreciation and amortisation of "at least" GBP40 million, as it noted Ocado Retail's strong trading performance in the first three quarters of the year.
FirstGroup ahead of its annual general meeting touted a stronger-than-expected financial performance between the start of April and end of August.
Adjusted operating profit and cash from operations were ahead of expectations during the period, the bus and train operator said, driven by better revenue recovery and strong cost control.
"The group is now expecting to deliver a small adjusted operating profit for the seasonally weaker first half of the financial year, ahead of our expectations earlier this summer," said FirstGroup.
The FTSE 250 constituent added that it is "resolutely focused" on divesting its North American businesses and is encouraged by "significant interest" from potential buyers.
Chemring, which makes sensors and countermeasures, said trading thus far has been to plan despite a challenging environment, and its expected full-year outturn - for the financial year to October 31 - is now expected towards the upper end of current analyst expectations.
The current range of analyst expectations for adjusted operating profit for the current financial year is GBP47 million to GBP53 million, the firm noted.
Order intake to August 31 was up 4% on the same period last year, and its order book at the same date was GBP452 million, versus GBP449 million at October 31, 2019.
"We have good momentum as we near the end of FY20 and move into FY21 and, despite the near-term uncertainty that Covid-19 presents, I remain confident that our leading technologies, deep long-term customer relationships and sole-source or market leading positions mean Chemring's long-term prospects remain strong," said Chemring CEO Michael Ord.
Sterling was quoted at USD1.2878 early Tuesday, off its morning lows after UK jobs data but still soft on USD1.2888 at the London equities close on Monday.
The UK unemployment rate edged up in July, official figures showed, as the Covid-19 pandemic continues to dent the labour market.
The UK unemployment rate was 4.1% for the May to July period, up 0.2 of a percentage point from the three months to May. Estimates for the three-month period showed 1.4 million people out of work, up 104,000 on a year ago and 62,000 more than the prior quarter.
Early indicators for August suggest that the number of employees in the UK on payrolls was down around 695,000, or 2.4%, compared with March, the Office for National Statistics said.
The claimant count reached 2.7 million in August, more than doubled from March and up 73,000 on July.
Outside of data, UK lawmakers late on Monday backed a new bill that would override parts of the Brexit treaty struck with the EU last year, despite outrage in Brussels and alarm at home over such an overt breach of international law.
Members of Parliament in the House of Commons gave their initial approval to the UK Internal Market Bill by 340 votes to 263, clearing the way for four days of detailed scrutiny of the text this week and next.
UK Prime Minister Boris Johnson earlier argued the legislation was a "safety net" against what he claimed were EU threats to impose tariffs on UK internal trade and even stop food going from mainland Britain to Northern Ireland. But EU leaders have dismissed this as "spin" and warned Johnson to uphold commitments he himself made in the Brexit treaty last year – demanding he withdraw the offending parts of the new bill by the end of September.
The row threatens to disrupt already tough post-Brexit trade negotiations.
The euro traded at USD1.1893 early Tuesday, up from USD1.1884 late Monday.
Gold was quoted at USD1,965.51 an ounce early Tuesday, higher than USD1,961.00 on Monday. Brent oil was trading at USD39.57 a barrel, unchanged on USD39.56 late Monday.
The economics events calendar on Tuesday has a ZEW survey economic sentiment for the eurozone and Germany at 1000 BST, with US industrial production at 1415 BST.
Kantar releases its latest UK grocery market survey at 0800 BST.
By Lucy Heming; lucyheming@alliancenews.com
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