(Alliance News) - Stock prices in London are set bounce back on Wednesday, inspired by gains in New York overnight.
In early corporate news, CRH reported a good start to 2022, QinetiQ said its results are expected to beat market forecasts, and John Wood's chief executive is stepping down. Petropavlovsk said it has received notices from Moscow-based Gazprombank demanding the repayment of loans.
IG says futures indicate the FTSE 100 index of large-caps to open up 12.02 points, or 0.2%, at 7,616.30 on Wednesday. The index closed down 15.10 points, or 0.2%, at 7,601.28 on Tuesday.
Weighing on European markets on Tuesday were worries over global growth prospects after the IMF lowered its economic outlook.
However, Wall Street ended the session strongly, with the Dow Jones Industrial Average closing up 1.5%, the S&P 500 up 1.6%, and the Nasdaq Composite up 2.2%
"Yields saw an upward jolt on the back of increasing inflation concerns, as well as an expectation that the US economy may well be able to ride out the worst of the economic hit to its economy, after the IMF only downgraded the US economy by 0.3% to 3.7%," said Michael Hewson, chief market analyst at CMC Markets.
"While yields continued to move higher US stock markets also looked resilient, buoyed by the relatively modest downgrade by the IMF, with the Nasdaq leading the gainers, as a both Charles Evans of the Chicago Fed and the Atlanta Fed's Bostic expressed in the ability of the US economy to stand on its own even when rates are rising."
In early company news in London, building materials firm CRH reported a good start to 2022 with first-quarter sales, earnings and margins ahead of a year ago.
Sales growth has been supported by improved activity levels and "continued execution" of its integrated solutions strategy.
CRH expects sales, earnings before interest, tax, depreciation and amortisation, and margin for the first half of 2022 to be ahead of a year before, with the positive demand backdrop in North America to continue.
"The continued delivery of our solutions strategy resulted in a good start to the year. Although a number of challenges and uncertainties continue, our demand backdrop remains favourable and absent any major dislocations in the macroeconomic environment, we expect first-half sales, Ebitda and margin to be ahead of the prior year period," said Chief Executive Albert Manifold.
SSE Renewables has agreed to buy Siemens Gamesa Renewable Energy's existing European renewable energy development platform for EUR580 million.
The portfolio includes 3.9 gigawatts of onshore wind development projects with scope for up to 1 gigawatts of additional co-located solar development opportunities. The deal is likely to complete by the end of September this year, subject to foreign direct investment and regulatory approvals.
Around half the portfolio is located in Spain with the remainder across France, Italy and Greece - with power utility SSE noting the transaction marks its entry into southern Europe.
Bunzl retained guidance after reporting first quarter revenue growth. The distribution and services firm said sales in the first quarter of 2022 were up 13%, while underlying revenue growth of 11% was mainly driven by inflation and continued momentum in the base business.
"Overall, inflation remained particularly supportive to our businesses in North America, while the UK & Ireland and Continental Europe delivered very strong growth compared to the prior year due to inflation and recovery of the base business," said Bunzl.
The FTSE 100-listed firm maintained its guidance, expecting moderate revenue growth in 2022, driven by acquisitions and supported by a slight increase in organic revenue.
Defence technology firm QinetiQ said it expects annual results to be marginally ahead of both previous guidance and current market consensus.
The company said order intake for the year to March 31 was "very strong" at more than GBP1.2 billion, and it expects to deliver organic revenue growth of 5% with an underlying operating profit of at least GBP135 million. For the 2021 financial year, QinetiQ delivered underlying operating profit of GBP151.8 million.
"Our strong performance has been driven by significant growth in EMEA Services, partially offset by the slower recovery in Global Products," said QinetiQ.
Consulting and engineering firm John Wood reported a narrowed annual loss and revealed Chief Executive Robin Watson intends to retire.
Watson was appointed CEO in January 2016, having joined the board in 2013 as CEO of Wood's PSN division. The process to appoint his replacement will now commence, and Watson will remain in his role until the successor is in place.
"I reflect with pride on the business we have now and the opportunities we continue to unlock in some very exciting and relevant energy markets: carbon capture, hydrogen, bio-refining, minerals processing, solar and wind energy - all alongside our well-established conventional energy business...As such, I have shared with the board that I consider the sale of our Built Environment business as marking the start of the next strategic phase for Wood and an appropriate time for me to step down as chief executive," said Watson.
Turning to the results, John Wood posted revenue of USD6.40 billion for 2021, down 15% from USD7.56 billion in 2020. Pretax loss narrowed to USD80.6 million from USD148.6 million.
The year was described as "challenging" amid the pandemic and pressures across end markets.
"The full year results were mixed, with revenue growth across Consulting and Operations but a significant decline in our Projects business. This partly reflects the changes that management has made to reduce risk in our Projects business and partly reflects the ongoing challenges in our markets as customers delayed some investment decisions," said John Wood.
Given its current level of debt, the company has decided against declaring any dividends for 2021. However, it will reviewing this policy in the future following the proposed sale of the Built Environment business. John Wood said it expects to announce a sale agreement for the unit in the second quarter.
Gold miner Petropavlovsk said Russian lender Gazprombank, which is on the UK sanctions list, has sent a notice demanding the repayment of loans.
Gazprombank wants immediate repayment of USD201.0 million due under Petropavlovsk's committed term facility agreement with the bank and repayment by Tuesday next week of UD87.1 million due under the company's Russian subsidiaries' revolving credit facilities.
"The company is considering the implications of these notices with its advisers," said Petropavlovsk.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.9%. In China, the Shanghai Composite was down 1.6%, while the Hang Seng index in Hong Kong was down 0.5%. The S&P/ASX 200 in Sydney closed up 0.1%.
Stocks in Shanghai moved lower despite the city allowing four million more people to leave their homes as Covid restrictions ease. A total of almost 12 million people in the city of 25 million are allowed to go outdoors following the first round of easing last week, health official Wu Ganyu said at a news conference, adding the virus was "under effective control" for the first time in some parts of the city.
On Wednesday, the Beijing government reported 19,927 new cases in China's mainland, all but 2,761 of which had no symptoms. Shanghai accounted for 95% of the total, or 18,902 cases, of which only 2,495 had symptoms.
In corporate news, eyes will be on Netflix. Shares in the streaming video service tanked 26% after-hours in New York, after it reported a loss in subscribers for the first time in more than a decade.
Netflix posted first-quarter net income of USD1.60 billion, or USD3.53 diluted earnings per share, down from USD1.71 billion, or USD3.75 diluted EPS. For the three months ended March 31, revenue was up 9.9% to USD7.87 billion from USD7.16 billion in the first quarter last year.
However, Netflix highlighted revenue growth had slowed considerably. The firm pointed to a large number of households sharing accounts, combined with rising competition from the likes of Hulu, Apple and Walt Disney which has stifled revenue growth.
Netflix reported a loss of 200,000 subscribers during the first quarter, having previously guided to add 2.5 million net subscribers during the period.
"Competition, password sharing, etc, were all cited as reasons, and so too were macro challenges to the household. Earlier in the week, news from the UK showed streaming services were a key source of household budget cuts as the cost-of-living rises – inflation fodder," commented Stephen Innes at SPI Asset Management.
Sterling was quoted at USD1.3029 early Wednesday, higher than USD1.2997 at the London equities close on Tuesday.
The euro traded at USD1.0810 early Wednesday, up from USD1.0785 late Tuesday. Against the yen, the dollar was quoted at JPY128.68, soft versus JPY128.77.
Gold was priced at USD1,940.70 an ounce early Wednesday, down from USD1,953.33 on Tuesday. Brent oil was trading at USD107.88 a barrel, firm on USD107.80 late Tuesday.
By Lucy Heming; lucyheming@alliancenews.com
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