(Alliance News) - Stock prices in London are seen opening lower on Tuesday, after a strong climb for New York equities on Monday failed to lift share prices in Asia.
IG futures indicate the FTSE 100 index will open 56.5 points, 0.7%, lower at 7,456.94. The blue-chip index closed up 123.46 points, or 1.7%, at 7,513.44 on Monday.
"While US markets closed in solidly positive territory yesterday, momentum overnight has waned with the result that today's European open looks set to be a negative one, with the main focus today on UK public sector borrowing and flash PMI data, as well as comments from ECB President Christine Lagarde," CMC Markets UK analyst Michael Hewson commented.
In early UK corporate news, Barclays is to begin a GBP1.00 billion buyback, having delayed the share repurchase programme after it had oversold financial instruments to US investors. Home repairs company Homeserve, which is under a takeover offer, posted an annual earnings rise. SSP Group, which operates food and beverage outlets in travel locations, reported a better first half.
The pound was quoted at USD1.2579 early Tuesday in London, up slightly from USD1.2575 late Monday.
UK public sector borrowing figures remained markedly above pre-pandemic levels in April, figures on Tuesday showed.
According to the Office for National Statistics, public sector net borrowing, excluding banks, amounted to GBP18.6 billion in April. It was the fourth-highest April figure since records began in 1993.
The figure was down from GBP24.2 billion a year earlier, but up from GBP10.7 billion in April 2019.
April 2022's figure was some way above an FXStreet cited forecast of GBP8.51 billion.
In London, Barclays said it will kick off a GBP1.00 billion share buyback programme on Tuesday. The programme, initially announced in February, had been delayed in March after the bank admitted it sold more products to investors than it was allowed to.
The London-based bank explained at the time that securities offered and sold under its US shelf registration statement for an approximate one-year period had exceeded a registered amount. This, the bank explained, gave the purchasers of the affected securities a right of rescission, requiring Barclays Bank to repurchase the affected securities at their original purchase price.
Late Monday, Barclays provided further explanation. "The provision for over-issuance of US securities is particularly sensitive to equity market movements, however, this would be expected to be substantially offset by hedging arrangements, including specific hedging and overall portfolio positioning," it said.
The company on Monday said it had found "one material weakness" in its internal controls.
"The material weakness that has been identified relates to a weakness in controls over the identification of external regulatory limits related to securities issuance and monitoring against these limits. As a result of this weakness, BBPLC issued securities in excess of the amount registered under the US shelf," it said.
FTSE 250-listed Homeserve reported revenue of GBP1.43 billion for the financial year ended March 31, up 10% from GBP1.30 billion a year earlier.
Pretax profit surged to GBP175.1 million from GBP47.2 million.
"Homeserve has emerged from the Covid-19 pandemic with all three of our business divisions performing strongly. Our membership-based business model continues to be resilient, predictable and highly cash generative, and we are well positioned for continued growth," Chief Executive Richard Harpin said.
Homeserve's annual results come in the wake of the company agreeing to be taken over in a GBP4 billion deal.
Hestia Bidco, a subsidiary of Brookfield Infrastructure Partners, offered 1,200p per share in cash for each Homeserve share last week Thursday.
The company is not declaring a final dividend in light of the deal. It had paid a 19.8 pence final payout a year prior. It means its total dividend for the year is 6.8p, down from 26p.
Fellow mid-cap listing SSP Group, which is unable to declare payouts of its own due to arrangements with its lenders, said on Tuesday it will "consider the best way to restart the return of capital to shareholders".
Revenue in the six months ended March 31 was up more than three-fold to GBP803.2 million from GBP256.7 million a year earlier. Compared to financial 2019 levels, however, revenue was 36% lower.
SSP's pretax loss was narrowed substantially to GBP2.3 million from GBP299.7 million.
The better top and bottom line figures were "driven by a recovery in passenger numbers, despite the impact of the spread of the Omicron variant in many of our markets in December and January", SSP said.
"The recovery has been led by leisure travellers, with business related travel recovering more slowly as expected. Encouragingly we have also seen increased spend per passenger in some markets reflecting the higher proportion of leisure travellers," SSP said.
It added: "The second half has started well with sales strengthening further to an average of 83% of 2019 levels in the first six weeks, led by Continental Europe and North America where revenues are back to well above 80%, driven by a very strong recovery in domestic and leisure demand. In the UK, sales are back to 82% of pre-Covid-19 levels, with the air sector boosted by strong leisure demand, and the rail business helped by the return of commuters in increasing numbers."
Elsewhere in London, Restaurant Group left annual expectations unchanged as like-for-like sales across its units were largely higher versus pre-virus figures.
In the Wagamama unit, like-for-like sales in 2022 to date are up 15% from 2019, while in its Pubs and Leisure segments, they are 10% and 6% higher, respectively. In Concessions, they are down 20%, however.
"Management's current expectations for FY22 remain unchanged, with continued robust trading in our Wagamama and Pubs businesses and the stronger recovery in Concession sales offsetting the increased food and drink inflationary impact in FY22," Restaurant Group said, looking ahead.
On the Beach's revenue in the half year ended March 31 jumped to GBP52.9 million from GBP4.4 million a year earlier. The travel agency's revenue was boosted by the easing of virus curbs.
Half-year revenue was below the pre-pandemic figure of GBP63.5 million.
Pretax loss in the first half of the current financial year was trimmed to GBP7.0 million from GBP12.1 million a year prior.
"Sales have remained resilient into H2 and are 33% ahead of FY19 in the 8 weeks to 22 May 2022," the company said.
In New York on Monday, stocks closed higher, boosted by US President Joe Biden's comment that he is mulling ending some China trade tariffs. The Dow Jones Industrial Average and S&P 500 rose 1.9%, while the Nasdaq Composite climbed 1.6%.
Asian equities had another nervy day on Tuesday.
In Tokyo, the Nikkei 225 ended 0.9% lower. In China, the Shanghai Composite was down 1.7% in late trade, while the Hang Seng in Hong Kong lost 1.9%. The S&P/ASX 200 in Sydney ended 0.3% lower.
The economic events calendar on Tuesday has purchasing managers' index readings from the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.
Already out, survey results showed Japan's private sector is expected to remain in expansion territory in May, mainly through fast growth in the services sector, while manufacturing expansion slowed.
The au Jibun Bank Japan flash composite PMI edged upwards to 51.4 index points from the final 51.1 points posted for April.
The flash manufacturing PMI dipped to 53.2 points in May from 53.5 points in April, marking the softest improvement in operating conditions since February.
The euro stood at USD1.0668 early Tuesday, down from USD1.0690 at the European equities close on Monday. Against the yen, the dollar was trading at JPY127.69, down from JPY127.78.
Brent oil was quoted at USD111.85 a barrel, down from USD112.23. Gold ebbed to USD1,851.50 an ounce from USD1,854.61.
By Eric Cunha; ericcunha@alliancenews.com
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