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(Alliance News) - Stock prices in London are seen opening higher on Tuesday following strong gains in Asian and US equity markets amid easing worries of an imminent tapering of Federal Reserve stimulus.
In early company news, engineering and consulting firm John Wood Group said it expects a stronger recovery in the second half. Precision instruments manufacturer Spectris sold its measurement and control instrumentation unit NNDC Technologies. Science Group raised its offer for TP Group.
IG futures indicate the FTSE 100 will open 19.28 points higher at 7,128.30. The index closed up 21.12 points, or 0.3%, at 7,109.02 on Monday.
John Wood said its first-half earnings were in line with prior guidance, with improving momentum in the second quarter.
For the six months to June 30, revenue was down 23% at USD3.15 billion from USD4.09 billion a year prior, but pretax profit multiplied to USD18.4 million from USD900,000.
John Wood explained that the fall in revenue was primarily caused by Covid-19 and included a USD74 million reduction in revenue from disposed businesses. Profit was improved by smaller exceptional charges and lower finance expenses.
John Wood said it saw encouraging signs of markets recovering with its order book at June of USD7.7 billion, up 18% compared to December 2020.
The company declared no interim dividend, in line with year before, but said it was committed to reviewing the future policy as certainty over the rate of recovery in markets increases.
Looking ahead, John Wood expects full-year revenue in the range of USD6.6 billion to USD6.8 billion underpinned by trading momentum and strong order book growth, with USD3.0 billion for delivery in the second half. It posted revenue of USD7.6 billion for 2020.
"The first half of 2021 reflects improving momentum in activity in second quarter and a strong margin improvement, with increased margins in all business units and a greater weighting of high-margin Consulting activity. Trading momentum and good growth in our order book, which is up 18% year-to-date, underpin our confidence in delivering a stronger second half which will reflect a return to growth compared to both first half 2021 and second half 2020." said Chief Executive Officer Robin Watson.
Spectris said it has agreed to sell its NDC Technologies business to US dispensing equipment manufacturer Nordson Corp for USD180 million.
The precision instruments maker said the sale was in line with its strategy to simplify and focus its portfolio. It was the last of the divestments identified in 2019 as part of the company's 'strategy for profitable growth' programme. Spectris said the proceeds will be used to further strengthen its balance sheet and then be deployed in accordance with its capital allocation policy.
"I am pleased with the value that this programme has delivered for our shareholders. Additionally, with this portfolio optimisation programme completed, Spectris is now a less complex and more focused business and the retained businesses within our portfolio are aligned to key end markets with attractive growth trajectories. This positions us well to continue to deliver long-term value for our stakeholders," said CEO Andrew Health.
Science Group increased its offer for TP Group, after TP said the previous offer "significantly undervalues" the company.
Science Group raised the offer for TP Group to 6.50 pence per share from 5.80p. TP Group shares ended down 0.8% at 6.00p on Monday.
Science Group said the increased offer represents a premium of 67% to the closing share price for TP on August 6, which was the last trading day prior to Science Group's initial investment. It is the same as the issue price in the TP Group fundraising in July 2017.
Science Group said the raised offer for TP Group is final unless rival bidder emerges and added that it has an 18% stake in TP Group following recent share purchases, the highest price for which it paid its new offer price of 6.50p.
The pound was quoted at USD1.3743 early Tuesday, up from USD1.3717 at the London equities close Monday.
The euro stood at USD1.1741, up from USD1.1734. Against the Japanese yen, the dollar was priced at JPY109.81, marginally higher from JPY109.78.
Brent oil was quoted at USD69.21 a barrel Tuesday morning, higher from USD68.44 late Monday. Gold was quoted at USD1,804.11 an ounce, slightly lower from USD1,804.37.
Asian markets were higher on Tuesday. The Japanese Nikkei 225 index closed up 0.9%. In China, the Shanghai Composite was up 1.0%, and the Hang Seng index in Hong Kong was up 1.6%. The S&P/ASX 200 in Sydney ended up 0.2%.
After suffering heavy losses recently owing to concerns that the Delta variant of the coronavirus will hurt consumer demand as countries order new restrictions, investors were reassured as China reported no new local Covid-19 cases on Monday for the first time since July.
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.6%, S&P 500 up 0.9% and Nasdaq Composite up 1.6%.
The rally in equities came as the Food & Drug Administration gave full approval to Pfizer-BioNTech's vaccine and as an increase in US Covid-19 infections appeared to be peaking.
CMC Markets analyst Michael Hewson said: "With Delta infections starting to rise again the key focus, depending on where you are, is now on vaccine durability if you are in the US and UK and the need for booster doses. If you are in Europe the requirement to get everyone double jabbed by the autumn, or in Asia the requirement to get everyone their first dose.
"This may also help explain why US markets have once again outperformed, while markets in Europe have been less enthusiastic with respect to the current rebound, given the greater exposure European stocks have to a Chinese economic slowdown. Concerns about that haven't gone away despite this week's recovery, and while markets in Asia look set to see another decent session the more buoyant tone does not change the fact that little has changed in the past few days, as we look towards a positive European open."
Meanwhile, investors are looking ahead to the Jackson Hole annual central banking conference, and specifically Federal Reserve Chair Jerome Powell's speech on Friday, in which he could offer hints about a timetable for tapering the bank's massive bond purchases used to support the economy through the pandemic.
A slim economic calendar on Tuesday has US new home sales at 1500 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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