(Alliance News) - Stocks in London are expected to open a touch lower on Tuesday, after a flat New York close, with investors digesting an upbeat UK jobs report.
In early UK company news, Vodafone tightened full-year earnings guidance at the upper end of its previous range. Land Securities swung to an interim profit. Restaurant Group increased its full-year expectations, after getting a lift from an improvement in UK airport passenger numbers.
IG says futures indicate the FTSE 100 index of large-caps to open down 5.96 points, or 0.1%, at 7,345.90 on Tuesday. The FTSE 100 closed up 3.95 points, or 0.1%, at 7,351.86 on Monday.
The UK unemployment report early Tuesday showed the jobless rate eased by more than expected to 4.3% in the three months to September from 4.5% in August. Consensus, according to FXStreet, had pencilled in a decline to 4.4%.
"July to September 2021 estimates show a continuing recovery in the labour market, with a quarterly increase in the employment rate, while the unemployment rate decreased, and the economic inactivity rate was largely unchanged," the Office for National Statistics said.
The ONS said it estimates there were 29.3 million payrolled employees in October, up 160,000 on September. Meanwhile, job vacancies in August to October rose to a new record of 1.2 million.
This jobs data, as well as a UK inflation reading on Wednesday, will be closely watched after the Bank of England's recent, unexpected, decision to hold interest rates.
Speaking to members of Parliament on Monday, BoE Governor Andrew Bailey admitted he is "very uneasy" about spiking inflation across the economy.
Bailey said the decision to maintain rates was a "very close call" but stressed that he had never said the bank would raise rates at the meeting, after the financial markets reacted poorly to the decision to hold.
Members of the nine-strong Monetary Policy Committee voted by 7-2 in favour of keeping rates unchanged at 0.1%. Two members, which included Michael Saunders, were outvoted in calling for a rise to 0.25%
Saunders said that he voted for a rate rise due to the tight labour market and signs there has been a pick-up in wage growth, but he shrugged off comparisons to the 1970s.
Sterling was quoted at USD1.3450 early Tuesday, rising from USD1.3428 at the London equities close on Monday on the back of the jobs figures.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, commented: "The further strong rise in payroll employee numbers in October confirms that unemployment did not jump as soon as the furlough scheme ended, but an interest rate rise at the MPC's next meeting in December still is not a done deal."
Elsewhere, the economic events calendar on Tuesday has eurozone economic growth figures at 1000 GMT and US retail sales at 1330 GMT.
The euro traded at USD1.1371 early Tuesday, down from USD1.1420 late Monday. Against the yen, the dollar rose to JPY114.24 from JPY113.95.
In early UK company news, Vodafone narrowed annual earnings guidance after solid interim growth.
Revenue for the half-year to September 30 rose 5.0% to EUR22.49 billion, but pretax profit fell 34% to EUR1.28 billion. This was largely due to Vodafone booking 'other' expenses of EUR108 million versus a gain of EUR1.06 billion a year ago.
Adjusted earnings before interest, tax, depreciation and amortisation, after leases - which doesn't include the 'other' charge - grew by 7.9% to EUR7.57 billion from EUR7.01 billion, a 6.5% rise on an organic basis.
Vodafone narrowed its full-year adjusted Ebitda after leases guidance to EUR15.2 billion to EUR15.4 billion, the top end of its prior range of EUR15.0 billion to EUR15.4 billion. Adjusted free cash flow guidance was upgraded to at least EUR5.3 billion, from at least EUR5.2 billion.
"The results show we have demonstrated good sustainable growth and solid commercial momentum. Our strengthened performance in Africa and Europe puts us on track to be at the top end of our guidance for this year, as well as firmly within our medium-term financial ambitions," said Chief Executive Nick Read.
Vodafone kept its dividend interim steady at 4.50 cents.
Imperial Brands lifted its dividend as the cigarette maker saw benefits from its new strategy during its recently ended financial year.
Revenue rose 0.7% to GBP32.79 billion in the financial year to September 30, lifted by increases in excise duty, and pretax profit improved by 49% to GBP3.24 billion from GBP2.17 billion.
Organic net revenue growth was 1.4%, driven by tobacco growth of 1.5% while next generation product sales fell 3.9%, reflecting market exits.
Imperial raised its dividend by 1.0% to 139.08 pence from 137.7p.
"This has been a year of important progress and significant change, as we begin to deliver on the new, focused strategy we announced in January 2021," said Chief Executive Stefan Bomhard.
"This approach is already delivering improved operational and financial outcomes. In tobacco, our sharper focus and increased investment in the top-five priority markets have begun to stabilise the aggregate market share performance. This is encouraging early progress in addressing the long-term historical declines. We will build on this foundation in the coming year, with further investment in brand building and sales execution."
Imperial said 2022 is the second year of its two year strengthening phase, and it will step up investment and carry out further reorganisation. It expects to deliver net revenue growth in financial 2022 at a similar level to the recent financial year, at constant exchange rates, while adjusted operating profit is expected to grow slightly slower than net revenue, reflecting the step up in investment.
Land Securities reported a 2.7% increase in EPRA net tangible assets per share to 1,012p at the end of September from 985p at March 31. The property developer and investor swung to a pretax profit of GBP275 million from a loss of GBP835 million a year ago.
While there remain risks ahead, the firm said its outlook is one of "cautious optimism".
"We are providing high-quality, sustainable office space that is very well aligned to today's customer demands; in our retail portfolio we are generally seeing leasing activity supportive of ERVs for the first time in quite a while and increasing evidence of a 'flight to prime' for which our portfolio is well placed; and we are building real momentum with our mixed-use development activity," said LandSec.
Restaurant Group upgraded guidance after strong trading in recent weeks, noting a "minor improvement" in UK airport passenger volumes, leading to a partial recovery in sales run rates for its Concessions business.
As a result, the Wagamama dining chain owner now expects full-year adjusted Ebitda in a range of GBP73 million to GBP79 million.
Wall Street ended on a subdued note on Monday, with the Dow Jones Industrial Average slightly lower, down 12.86 points, the S&P 500 flat and the Nasdaq Composite just marginally in the red.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong surged 1.1%. The S&P/ASX 200 closed down 0.7%.
Asian stocks were mixed as investors monitored a virtual summit between US President Joe Biden and China's Xi Jinping.
The video-link summit, which took place late Monday in Washington and early Tuesday in Beijing, lasted a "longer than expected" three and a half hours, a senior US official told reporters. "The conversation was respectful and straightforward."
Chinese state media reported after the summit that Xi cautioned Biden that encouraging Taiwanese independence would be "playing with fire". The White House readout after the summit was considerably more measured, but between the lines, Biden's pushback against Beijing's increasingly aggressive posture toward Taiwan was clear.
Gold was quoted at USD1,863.02 an ounce early Tuesday, rising from USD1,860.70 on Monday. Brent oil was trading at USD82.85 a barrel, up from USD81.35 late Monday.
By Lucy Heming; lucyheming@alliancenews.com
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