(Alliance News) - Stock prices in London are seen opening lower on Thursday, with equity markets showing more signs of weakness ahead of the European Central Bank unveiling its monetary policy decision later.
European stocks have drifted lower for two sessions in a row as investors cautiously look to Thursday's interest rate decision.
"In light of upward revisions in the growth and inflation outlook, we expect ECB to reduce the Q4 PEPP [pandemic emergency purchase programme] purchase pace back to the January/February level of EUR60 billion per month, but from a market perspective ECB will attempt to keep this meeting as uneventful as possible in our view. If ECB do not indicate that the purchase pace will revert to the Jan/Feb level of around EUR60 billion/month, this will de facto be an extension of PEPP beyond March 2022," analysts at Dankse Bank commented.
IG futures indicate the FTSE 100 index is to open 60.0 points lower at 7,035.53. The blue chip index closed down 53.84 points, 0.8%, at 7,095.53 on Wednesday.
The ECB Governing Council meets in Frankfurt, announcing its latest policy decision at 1245 BST. This will be followed by a press conference with President Christine Lagarde at 1330 BST.
In early UK corporate news, Wm Morrison Supermarkets, the object of a takeover battle, posted a first-half revenue rise, though profit fell. Genus, a provider of biotechnology to cattle and pig farmers, saw annual earnings rise but warned of volatility ahead, while gambling firm 888 Holdings has agreed a deal to acquire the international arm of former London listing William Hill.
Morrisons said its pretax profit in six months to August 1 fell 43% to GBP82 million from GBP145 million a year earlier. Pretax profit before exceptional items and adjusted for business rates relief a year earlier was higher, however, up 42% to GBP105 million and GBP74 million. Morrisons had GBP93 million in rates relief waived in the same period a year earlier.
Total revenue, including fuel sales, rose 3.7% annually to GBP9.05 billion from GBP8.73 billion. Total sales excluding fuel were largely unchanged year-on-year at GBP7.55 billion.
Like-for-like sales excluding fuel are 8.4% higher than they were two years earlier, but down 0.3% annually. In the second quarter alone, like-for-like sales dropped 3.7%, compared to a rise of 2.7% in the first three months of the financial year.
"Across the business the whole Morrisons team has shown commendable resilience facing into a variety of continuing challenges during the first half, including the ongoing pandemic, disruption at some of our partner suppliers, and the impact on our supply chain of HGV driver shortages. As we approach our busiest time of year, I'm confident the team will continue to rise to all challenges and keep up all the good work to improve the shopping trip for customers," Chair Andrew Higginson said.
Direct Covid-19 costs fell to GBP41 million from GBP155 million.
Morrisons added: "In addition, with the majority of our cafés closed until mid-May, and our fuel and food-to-go volume recovering gradually throughout the first half of 2021/22, we incurred considerable lost profit of GBP80 million in these key areas of our business compared to a pre-Covid-19 year such as 2019/20."
The company, which paid a 2.04 pence payout a year earlier, decided against a dividend due to it being under offer.
Fellow FTSE 250 constituent Genus saw earnings rise in the first half of 2021. Revenue rose 4.2% to GBP574.3 million from GBP551.4 million a year earlier. Pretax profit was up 21% to GBP55.8 million from GBP46.3 million.
Genus lifted its payout by 10% to 32.0p per share from 29.1p.
"Genus performed very strongly and made significant strategic progress in the 2021 fiscal year. The group continued to show its resilience during the Covid-19 pandemic and I would like to thank our people who have shown great dedication to our customers whilst navigating the many challenges that the pandemic has caused," Chief Executive Stephen Wilson added.
However, Wilson warned "recent volatility in the Chinese porcine market" will only get worse.
"As a result of this headwind, and despite an expected strong performance in the other areas of the business, we expect Genus's growth to be lower than our medium-term goal in the current year before increasing again in FY23," Wilson added.
888 Holdings said it has entered a deal with Caesars Entertainment to acquire William Hill's non-US assets for GBP2.2 billion. 888 had said on Monday that it was in advanced talks for a deal.
William Hill International includes 1,400 UK betting shops, as well as assets in Italy, Spain and the Nordics.
"The acquisition will create a global online betting and gaming leader by bringing together two highly complementary businesses and combining two of the industry's leading brands. The Acquisition represents a transformational opportunity for 888 to significantly increase its scale, further diversify its product mix and accelerate the upward shift of its revenue growth profile," 888 said.
"The combination of 888 and William Hill International is expected to deliver significant operating efficiencies, including pretax cost synergies of at least GBP100 million per year, leading to improved profit margins."
888 has received fully committed debt financing from JP Morgan, Morgan Stanley and Mediobanca worth roughly GBP2.1 billion.
The company also plans to secure roughly GBP500 million from a capital raise, "to create a more beneficial long-term capital structure".
Ahead of the ECB monetary policy decision, the euro was slightly higher against the dollar. The single currency fetched USD1.1822 on Thursday morning London time, from USD1.1815 at the European equities close on Wednesday.
The pound was quoted at USD1.3770 early Thursday in London, up from USD1.3745 late Wednesday. Against the yen, the dollar was trading at JPY110.10, down from JPY110.40.
Brent oil was quoted at USD72.82 a barrel, up from USD72.35. Gold fetched USD1.788.33 an ounce, down from USD1,791.85.
In the US on Wednesday, the Dow Jones Industrial Average fell 0.2% and the S&P 500 ended down 0.1%. The two benchmarks have now fallen for three sessions in-a-row. Following four successive days in the green, the tech-heavy Nasdaq Composite fell 0.6% on Wednesday.
In Asia on Thursday, Tokyo's Nikkei 225 finally relented after nine positive sessions on-the-trot, closing down 0.6%. The S&P/ASX 200 ended down 1.9%. In China, the Shanghai Composite was up 0.4% in late trade, while the Hang Seng Index was 2.0% lower.
Chinese authorities have ordered gaming giants Tencent and NetEase to end their focus on profits and cut content perceived to be breeding "effeminacy", as Beijing tries to direct youth culture, gender ideals and the reach of big tech.
Tencent and NetEase shares were down 5.1% and 7.8% in Hong Kong.
The move is the latest by authorities to tighten their grip on the embattled technology sector and sent shares in some of the industry's biggest names plunging.
Officials on Wednesday summoned gaming enterprises including Tencent and NetEase, the two market leaders in China's multi-billion-dollar gaming scene, to discuss further curbs on the industry, which has already been ordered to limit gaming time to three hours a week.
Still to come on Thursday are the latest US jobless claims numbers at 1330 BST.
By Eric Cunha; ericcunha@alliancenews.com
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