(Alliance News) - Stocks in London are set to start Tuesday's session on the front foot as a mixed performance in the US led into a broadly upbeat one in Asia overnight.
In early UK company news, Royal Mail has decided to pay a one-off final dividend, while SSE affirmed its full-year earnings guidance.
IG says futures indicate the FTSE 100 index of large-caps to open 34.33 points higher, or 0.5%, at 6,770.50 on Tuesday. The FTSE 100 closed down 4.42 points, or 0.1%, at 6,736.17 on Monday.
Wall Street ended mixed on Monday, with the Dow Jones Industrial Average up 0.3%, the S&P 500 down 0.1% and Nasdaq Composite down 0.6%.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite was up 0.5%, while the Hang Seng index in Hong Kong was up 1.1%. The S&P/ASX 200 in Sydney closed down 0.9%.
"If the overnight US session was exemplified by cyclical rotation ahead of President Biden's announcement tomorrow and rising US yields, Asia's winners are those with a direct correlation to the reopening of the Suez Canal, it seems," commented Jeffery Halley, senior market analyst at Oanda.
US President Joe Biden is expected to unveil an infrastructure bill worth some USD3 billion, following hot on the heels of his USD1.9 trillion stimulus package.
Meanwhile, the MV Ever Given was refloated and the Suez Canal reopened on Monday, sparking relief almost a week after the huge container ship got stuck during a sandstorm and blocked a major artery for global trade.
Maritime data company Lloyd's List said the blockage had held up an estimated USD9.6 billion worth of cargo each day between Asia and Europe.
Brent oil was trading at USD64.73 a barrel early Tuesday, higher than USD63.85 late Monday.
"The outperformance by north Asia should be enough to lift European shares modestly at the open," Halley added. "Still, markets looked set to range in a choppy fashion ahead of the Biden presentation and a heavy data calendar starting from tomorrow."
While Tuesday just has eurozone consumer confidence at 1000 BST and German inflation at 1300 BST, things begin to pick up on Wednesday with UK GDP, German unemployment, eurozone inflation and US ADP employment. The highlight of the week's data calendar is the US monthly jobs report, due out on Friday despite the day being a market holiday.
Out overnight, Japan's unemployment rate was steady in February, slightly bettering market expectations.
According to the Statistics Bureau, the jobless rate in Japan remained steady at 2.9%, beating expectations of a slight increase to 3.0%. The jobs to applicants ratio slightly slipped to 1.09 from 1.1 in January. Meanwhile, retail sales in Japan fell annually for the third successive month, though February's decline was smaller than expected.
Retail trade sales fell 1.5% year-on-year in February, according to the Ministry of Economy, Trade & Industry, following January's 2.4% drop. A steeper fall of 2.8% was expected, according to consensus cited by FXStreet.
Against the yen, the dollar rose to JPY110.05 early Tuesday in London versus JPY109.77 at the London equities close on Monday.
Sterling was quoted at USD1.3759, down from USD1.3790 late Monday. The euro traded at USD1.1756, soft on USD1.1761.
Gold was quoted at USD1,706.09 an ounce early Tuesday, lower than USD1,711.45 on Monday.
In early UK company news, SSE held its full-year earnings guidance.
The energy utility still expects adjusted earnings per share for the financial year ending on Wednesday in a range of 85 pence to 90p. In financial 2020, SSE recorded adjusted EPS of 83.6p, meaning financial 2021 results should be up by 1.7% to 7.7%.
Weather conditions have meant that the shortfall in output from renewable sources has increased to around 9% below plan as at March 23 from 5% below in the nine months to the end of December. However, SSE expects Covid-19 to hit adjusted operating profit by around GBP180 million for the full-year, in the bottom half of its GBP150 million to GBP250 million range.
As such, earnings guidance was held, and SSE intends to recommend a full-year dividend of 80p per share plus the annual increase in the UK retail prices index.
"It has been a uniquely challenging year for us all, but, thanks to strong operational performance and delivery against our net-zero strategy throughout 2020/21, we are on course to meet our financial objectives for the year," said SSE Finance Director Gregor Alexander.
Tobacco firm Imperial Brands reported a good start to its financial year, with performance in line with expectations. Imperial's half-year finishes on Wednesday.
The Davidoff cigarettes maker said it remains on track to deliver full-year results in line with guidance, with first-half net revenue expected to grow by at least 1% on an organic, constant currency basis, driven by continued strong pricing in tobacco, as well as some benefit from growth in NGP revenue against a weak comparator period.
"Adjusted organic operating profit growth is expected to be least mid-single digit at constant currency, benefiting primarily from significantly reduced losses in NGP and increased Logistics profit," the company added.
Royal Mail said trading has been in line since the update released earlier in March, and said it intends to pay a dividend this year.
Adjusted operating profit for the financial year ending on Wednesday is still expected to be around GBP700 million, the firm said, and, after reviewing its performance over the past year, has decided to pay a one-off final dividend of 10p per share. Royal Mail expects to unveil a new dividend policy as its results in May.
Royal Mail - boosted this year by the pandemic, with customers turning to online deliveries as high store stores were forced to shut - had previously said it would not pay a dividend for the 2021 financial year.
The postal operator added that it will provide a business update on medium-term targets for the GLS arm later on Tuesday. This includes a focus on international and business-to-consumer as key growth opportunities. From the 2020 financial year to 2025, GLS expects to grow revenue at a compound annual growth rate of around 12%, more than double operating profit to EUR500 million and generate EUR1 billion of free cash flow.
For financial 2021, Royal Mail expects GLS to report adjusted operating profit of GBP350 million, with a profit margin by the same measure of 8.7%.
Pennon Group said it is on track to deliver "resilient" results for the financial year ending on Wednesday.
The water utility said the financial impact from Covid-19 is in line with expectations, and it remains in a "strong" financial position with expected cash and committed facilities well in excess of GBP3 billion at the year's end.
"Pennon believes there is significant value potential from the reinvestment of the Viridor sale proceeds in the UK water sector and continues to narrow down its review of potential growth opportunities. In the event a major value accretive investment opportunity is not available, Pennon expects to make a substantial return of capital to shareholders," the company added.
Back in July, Pennon completed the sale of recycling and waste business Viridor to funds advised by Kohlberg Kravis Roberts & Co for an enterprise value of GBP4.2 billion.
By Lucy Heming; lucyheming@alliancenews.com
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