(Alliance News) - Stock prices in London on Tuesday are set to reverse gains notched in the previous session as inflationary worries, driven by heightened energy prices, weighed on market sentiment overnight.
In early UK company news, Entain reported robust double-digit online net gaming growth and easyJet was upbeat on the year ahead following a relaxation of UK travel rules. Less positive for the London market, Marley Group pulled its planned initial public offering, citing "market volatility".
The pound was unmoved after data showed the UK workforce returned to pre-pandemic levels last month, while vacancies hit a record high.
IG says futures indicate the FTSE 100 index of large-caps will open down 70.25 points, or 1.0%, at 7,076.00 on Tuesday. The FTSE 100 closed up 51.30 points, or 0.7%, at 7,146.85 on Monday.
"While investors want to believe the narrative that stock markets can continue to move higher, this belief is bumping up against the reality of how the continued rise in energy prices, as well as supply chain pressures are likely to impact company profit margins," said Michael Hewson, chief market analyst at CMC Markets.
Brent oil was trading at USD83.92 a barrel early Tuesday, firm on USD83.77 late Monday and continuing to trade around three-year highs. Crude prices have more than doubled compared to this time a year ago.
Hewson said: "As we look ahead to today's European open, we can expect to see more of the same, with markets expected to open lower after last night's late US sell-off, and this morning's weakness in Asia markets, as once again concerns over rising energy prices outweigh optimism over the recovery in demand."
Wall Street ended lower on Monday, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.7% and the Nasdaq Composite down 0.6%
The Nikkei 225 index in Tokyo closed down 0.9% on Tuesday. Against the yen, the dollar was quoted at JPY113.14, soft versus JPY113.28 but still trading around three-year highs.
In China, the Shanghai Composite was down 1.8%, while the Hang Seng index in Hong Kong was down 1.7%. The S&P/ASX 200 in Sydney ended down 0.3%.
In early UK company news, Entain backed full-year guidance following a "strong" third quarter.
Net gaming revenue in the third quarter of 2021 was up 4% on a year ago, with online growth of 7% but retail revenue slipping 1%. On a constant currency basis, online growth was 10% and retail registered a 1% rise, resulting in total net gaming revenue growth of 6% for the quarter.
The sports-betting and gaming firm continued to expect 2021 earnings before interest, tax, depreciation and amortisation in line with previous guidance of GBP850 million to GBP900 million.
"These results demonstrate Entain's continuing ability to deliver sustainable, consistent and diversified growth. Our powerful Entain platform provides customers with great products and experiences, which enables us to grow ahead of our markets as demonstrated by 23 consecutive quarters of double-digit online growth," said Chief Executive Jette Nygaard-Andersen.
easyJet said it managed to trim losses in its fourth quarter, leading to a better-than-expected full-year result.
It now expects a headline pretax loss for the financial year that ended September 30 of around GBP1.14 billion to GBP1.18 billion, compared to consensus of a GBP1.18 billion loss.
The budget short-haul carrier flew 17.3 million seats in its fourth quarter, operating 58% of pre-pandemic capacity after flying just 17% of 2019 volumes in the third quarter - and positively, it expects this to improve further to 70% in the first quarter of the new financial year.
"While intra-European demand led the recovery over the summer, the recent UK government announcement to remove and relax restrictions and testing has created positive booking momentum into Q1," said easyJet.
The airline expects capacity to continue to grow through the 2022 financial year.
Stagecoach said it remains in merger talks with National Express as it reported a recovery in regional bus demand.
The public transport operator said regional bus journey numbers were in excess of pre-virus levels by the end of September. Meanwhile, Stagecoach is "pleased with the continued strong operational and financial performance" of its London bus business.
"The momentum in passenger journeys and sales reflects a pick up in activity and travel across the UK, and growing confidence to return to public transport. While there remains some uncertainty around how the recovery continues, our outlook for the year ending 30 April 2022 is unchanged from when we announced our full year results in June 2021," said Chief Executive Martin Griffiths.
Stagecoach added that talks with National Express over a potential all-share merger remain ongoing.
Marley Group, a Burton Upon Trent-based pitched roofing business, has postponed its IPO on the London Main Market, having confirmed that plan only late last month, saying it hoped to raise GBP75 million.
Marley on Tuesday cited "market volatility" for the decision, which it said was made despite "considerable institutional investor interest", saying going ahead with the IPO "is not in the best interests of the group and its stakeholders".
Sterling was little changed Tuesday morning, trading at USD1.3604 and lower than USD1.3625 at the London equities close on Monday, after data showed the UK workforce returned to pre-virus levels in September.
The unemployment rate eased in line with market expectations, standing at 4.5% in the three months to August versus 4.6% for July.
The number of payroll employees rose 207,000 to a record 29.2 million in September, returning to pre-pandemic levels. The number of job vacancies in the three months to September hit a record high of 1.1 million, an increase of 318,000 from its pre-pandemic level.
Growth in average total pay - which includes bonuses - was 7.2%, and regular pay, which strips out bonuses, was 6.0% among employees for the three months to August.
Ahead of the wind-up of the government's pandemic job retention scheme, the redundancy rate remained around pre-virus levels.
"The jobs market has continued to recover from the effects of the coronavirus, with the number of employees on payroll in September now well exceeding pre-pandemic levels," said Darren Morgan, director of Economic Statistics at the ONS.
"Vacancies also reached a new one-month record in September, at nearly 1.2 million, with our latest estimates suggesting that all industries have at least as many jobs on offer now as before the onset of Covid-19."
The euro traded at USD1.1562 early Tuesday, softening from USD1.1570 late Monday. Besides the UK jobs data, the economic events calendar on Tuesday has the Germany ZEW survey at 1000 BST.
The ZEW economic sentiment index is expected to decline to 24.0 in October from 26.5 in September.
This comes against a backdrop of political wrangling, as exploratory talks between the three parties hoping to form Germany's next government resumed in Berlin on Monday, two weeks after the Social Democrats defeated Chancellor Angela Merkel's conservatives in the country's federal election.
Representatives of the Social Democrats, the Greens and the business-friendly Free Democrats will continue to discuss areas of agreement and potential conflict. The talks are expected to take weeks, with the hope of forming a government before Christmas.
Gold was quoted at USD1,761.87 an ounce early Tuesday amid the risk-off mood, higher than USD1,758.25 on Monday.
By Lucy Heming; lucyheming@alliancenews.com
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