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(Alliance News) - Stocks in London are set to continue the week's cautious pattern on Thursday, taking their cue from modest declines in New York and Asia overnight.
In early UK company news, Playtech received a third takeover approach, while Carlyle and Metro Bank agreed to end acquisition talks. Royal Mail warned on inflationary pressures. Crest Nicholson expects to beat market profit forecasts.
IG says futures indicate the FTSE 100 index of large-caps to open down 14.00 points, or 0.2%, at 7,277.20 on Thursday.
The FTSE 100 closed down 35.77 points, or 0.5%, at 7,291.20 on Wednesday. As of Wednesday's close, the index has slipped 0.8% so far this week. It has underperformed European peers. Frankfurt's DAX 40 has risen 0.6% and the CAC 40 in Paris has clocked a 0.4% gain.
"Yesterday saw another disappointing session for the FTSE 100, once again finding itself undermined by disappointing company earnings reports, and a rather hot October UK inflation report," said Michael Hewson, chief market analyst at CMC Markets.
He noted that the FTSE 100 has lagged its German and French counterparts so far this week, though added: "The gains we've seen this week have been incremental, rather than impulsive in nature, suggesting a certain amount of caution."
One of the factors holding back the FTSE 100 this week has been the pound's outperformance, steadily edging up against the dollar after an upbeat UK labour market update on Tuesday and stronger-than-expected inflation on Wednesday.
Sterling was quoted at USD1.3512 early Thursday, retaking the USD1.35 level and higher than USD1.3465 at the London equities close on Wednesday.
The euro traded at USD1.1328 early Thursday, up on USD1.1309 late Wednesday. Against the yen, the dollar was quoted at JPY114.10, down from JPY114.51.
In early UK company news, gaming software provider Playtech said it has received a preliminary takeover approach from JKO Play, further complicating an existing deal with Aristocrat Leisure.
JKO is a company controlled by Eddie Jordan and Keith O'Loughlin. Sky News late Wednesday reported on the third approach for Playtech.
JKO has been provided with access to due diligence information, and talks are ongoing, Playtech said, though they are at an early stage. As such, there can be no guarantee JKO will make an offer for the company, it said.
In mid-October, Playtech agreed to be bought by Sydney-listed Aristocrat in a deal worth 680 pence per share. Then earlier this month, Playtech revealed that it also had received an initial approach from Gopher Investments. It said on Thursday that talks with Gopher continue.
Aristocrat in a response on Thursday said: "Aristocrat and Playtech are continuing to work together to implement the recommended acquisition. The regulatory approval process is on track with the timetable previously announced, and Aristocrat is focussed on progressing this quickly." It noted it has financing and gambling licenses in place.
Royal Mail reported a surge in interim profit but warned on rising costs. Revenue for the half-year to September 26 rose 7.1% to GBP6.07 billion and pretax profit multiplied to GBP315 million from just GBP17 million year-on-year.
Adjusted operating profit jumped to GBP404 million from GBP37 million.
The parcels and letters delivery firm saw a recovery in profitability in its domestic unit and continued to benefit from a structural shift in parcel volumes from the Covid-19 pandemic.
The company declared an interim dividend of 6.7p, having paid none last year. It also will pay a special dividend worth GBP200 million in total and also will start a GBP200 million share buyback immediately. It didn't provide the per-share amount of the special dividend.
However, Royal Mail warned that inflationary pressures are set to persist. It flagged an increase in employer national insurance contributions and costs of the shorter working week, adding that fuel and energy hedges will start to unwind.
Rotork said order intake has remained strong, but supply chain disruption is set to continue at least in the near-term.
Order intake in the four months to October 31 was up a "high single digit percentage" year-on-year on an organic constant currency basis. However, Rotork said component sourcing over the past few months has become difficult, resulting in revenue over the four-month period being down year-on-year and hitting margins.
"The growth in order intake seen in the second quarter has continued over the summer and through October, in-line with our expectations. However, we anticipate the supply chain disruption currently being experienced will continue at least in the near term," said Rotork.
The maker of flow-control products for energy, water and chemical industries expects second half revenue similar to the first half with adjusted operating margins "slightly ahead" of the first half.
Housebuilder Crest Nicholson said full-year adjusted pretax profit is expected to be slightly ahead of consensus of GBP101.2 million due to a bigger-than-expected contribution from the Longcross Film Studio.
"While the trading environment remains robust, it has been a challenging operational environment for our sector as we have emerged from the pandemic, with disruption to supply chains and the availability of materials. I am delighted that our teams have remained focused on implementing our strategy and have managed to successfully navigate our way through these issues," said Chief Executive Peter Truscott.
Carlyle Group and Metro Bank have agreed to end talks over a possible takeover offer by the private equity firm for the retail bank. Both parties announced the decision but neither gave a reason.
"The board continues to strongly believe in the standalone strategy and future prospects of Metro Bank," the lender said.
In the US on Wednesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.6%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.3%
In Asia on Thursday, the Japanese Nikkei 225 index ended down 0.3%. In China, the Shanghai Composite ended down 0.5%, while the Hang Seng index in Hong Kong tumbled 1.4% in late trade. The S&P/ASX 200 in Sydney edged up 0.1%.
Gold was quoted at USD1,864.37 an ounce early Thursday, flat on USD1,864.44 on Wednesday.
Brent oil was trading at USD79.84 a barrel early Thursday, falling from USD81.58 late Wednesday.
US President Joe Biden called on US regulators Wednesday to look into the causes of the nationwide spike in gasoline prices, which he said is hurting workers.
Biden last week made fighting inflation a top priority after data showed consumer prices hit a 30-year high in October, fuelling a slump in his public approval.
In a letter to the Federal Trade Commission, Biden took aim at oil companies he says are raising prices at the pump even as their expenses decline and profits soar.
The economic events calendar on Thursday has the latest US jobless claims numbers at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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