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(Alliance News) - Stock prices in London were set for a soft start on Wednesday as investors await a likely formal taper announcement from the US Federal Reserve.
In early UK company news, Next retained profit guidance as it warned of a sales growth slowdown in the fourth quarter. Anglo American promoted Duncan Wanblad to chief executive. Both Morgan Sindall and Pets at Home raised their financial outlooks.
IG said futures indicate the FTSE 100 index of large-caps to open 19.51 points lower, or 0.3%, at 7,255.30 on Wednesday. London's blue-chip index closed down 13.81 points, or 0.2%, at 7,274.81 on Tuesday.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its monetary policy decision at 1800 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1830 GMT.
A move this week was all but confirmed by Powell on Friday, when he said the central bank is "on track" to begin to pull back on its massive monthly bond purchases, which would be completed by mid-2022, he said. But "it would be premature to actually tighten policy by raising rates now with the effect and intent of slowing job growth."
The dollar nudged down ever-so-slightly into the Fed announcement.
Sterling was quoted at USD1.3627 early Wednesday, higher than USD1.3614 at the London equities close on Tuesday. The euro traded at USD1.1583, a touch firmer than USD1.1580 late Tuesday. However, against the yen, the dollar edged up to JPY113.88 versus JPY113.81.
In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.4%, the S&P 500 up 0.9% and the Nasdaq Composite up 0.3%.
But the mood was mixed in Asia. In China, the Shanghai Composite ended down 0.2%, while the Hang Seng index in Hong Kong was down 0.4%. The S&P/ASX 200 in Sydney rose 0.9%. Tokyo was closed for a holiday.
"Asia and Europe already look to be in pre-FOMC wait-and-see mode," said Jeffery Halley, senior market analyst at Oanda.
Besides the Fed, the economic events calendar on Wednesday has services PMI readings from the UK at 0930 GMT and the US at 1345 GMT. There is US ADP hiring data at 1215 GMT.
Data overnight showed China's services economy expanded for the second month in succession, producing a modest rise in the nation's overall private sector.
The latest Caixin China services purchasing managers' index rose to 53.8 points in October, from 53.4 in September. The latest figure was above the 50.0 no-change mark, though IHS Markit noted it was below the 54.1 long-run series average.
Gold was quoted at USD1,781.79 an ounce early Wednesday, down from USD1,788.90 on Tuesday. Brent oil was trading at USD83.74 a barrel, down from USD84.09 late Tuesday.
In early UK company news, Next backed guidance as it expects growth to wane after a strong third quarter.
Total full price sales were up 17% on two years ago in the third quarter of 2021, with sales in the last five weeks up 14%.
"As expected, sales growth has moderated in the last five weeks as the effect of pent-up demand begins to diminish," said Next.
It does not expect this pace of growth to continue, citing a likely easing of pent-up demand, "challenging" stock availability and a possible moderation in discretionary purchases after jumps in prices for essential goods, such as fuel.
Next now expects full-year sales to grow 11.0% on two years ago, as opposed to 10.7% guided previously, but its pretax profit guidance was held at GBP800 million, which would be up 6.9% on two years prior.
"During the last five weeks we have beaten our full price sales forecast by GBP14m which generated around GBP4m of profit. We anticipate that this will be largely offset by further investment in digital marketing and increased use of inbound air freight and other Online distribution costs," the retailer said in its statement.
Anglo American said it has appointed Duncan Wanblad as chief executive officer, succeeding Mark Cutifani, who is leaving after nine years in the role.
Wanblad led the miner's Base Metals business as CEO from 2013 to 2019, and took on the Strategy & Business Development portfolio as group director in 2016.
Anglo American Chair Stuart Chambers said Wanblad is "the standout and natural successor" to Cutifani.
"In both executive and non-executive roles spanning most of Anglo American's businesses, Duncan has been integral to shaping the strong competitive position of the company today. Following a rigorous global process to identify Mark's successor, including those on our internal succession plan, the board felt that Duncan is uniquely qualified to take Anglo American on the next phase of improvement," said Chambers.
Cutifani is stepping down from the board on April 19, 2022, and will remain employed by Anglo American until the end of June as support the handover.
Land Securities, just two days after revealing the GBP190 million takeover of UK property developer U&I, said it has taken a majority stake in Salford's MediaCity. LandSec will pay GBP425.6 million for a 75% stake in the office, residential and leisure development outside Manchester.
A fund managed by Vitruvian Partners has sold 11.0 million shares in cybersecurity firm Darktrace at a price of 580 pence each, raising GBP63.8 million. The price was an 8.3% discount to Darktrace's closing price of 632.5p on Tuesday.
The sale, first announced after the market close on Tuesday, was carried out by Deep Defence, a wholly-owned subsidiary of Vitruvian Investment Partnership III, a fund managed by Vitruvian Partners. Vitruvian will retain just shy of a 3% stake in Darktrace following the placing and has agreed to a 60-day lockup for these shares. Darktrace will not receive any of the placing proceeds.
Morgan Sindall said it now expects to deliver a full-year performance slightly ahead of prior expectations following recent strong trading.
The construction firm said it has had a "significant period" of winning work, with the total secured workload at the end of September standing at GBP8.9 billion, up 7% from the year-end position. Within this, the construction secured order book of GBP4.7 billion was up 20% from the 2020 year-end.
"Based on the performance to date and with good visibility of secured workload through to the end of the year, it is now expected that the group will deliver a full year performance which is slightly above its previous expectations," said Morgan Sindall.
Pets at Home upgraded its guidance and said Chief Executive Peter Pritchard plans to step down after 11 years in the business following its "successful turnaround".
He will remain "fully engaged" in his CEO role until late May next year and the search for his replacement, across internal and external candidates, has started.
Alongside this, the pets products retailer said strong trading has continued, and it now expects underlying pretax profit for the financial year ending March 31 to be at the top end of analyst expectations, ahead of previous guidance. It places the current analyst consensus range at GBP128 million to GBP135 million.
By Lucy Heming; lucyheming@alliancenews.com
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