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(Alliance News) - Stock prices in London are seen opening lower on Tuesday on fears of a possible recession in leading economies, while the euro slipped closer to parity against the dollar.
In early company news, water company United Utilities sold its renewable energy business to a London-listed energy efficiency investor. Contract-for-difference trading provider Plus500 said it expects to post annual results above market expectations. IT services provider Softcat named its new chief executive.
IG futures indicate the FTSE 100 index is to open 37.69 points lower at 7,158.90. The index closed up just 0.35 of a point at 7,196.59 on Monday.
United Utilities said it has agreed to sell its non-appointed renewable energy business, United Utilities Renewable Energy, to FTSE 250-listed SDCL Energy Efficiency Income Trust for GBP100 million enterprise value.
United Utilities said it has developed a portfolio of solar, wind and hydro renewable assets since 2014 and noted the UURE unit comprises 69 megawatts of renewable generation assets across 70 sites. Following the sale, the assets will continue to provide long-term green energy to its regulated water & wastewater business, United Utilities Water.
Further, United Utilities said the sale allows it to recycle the capital employed in the UURE business back into the next phase of its path to net-zero.
Chief Executive Steve Mogford said: "We are committed to our ambitious carbon pledges and target of achieving net zero carbon emissions by 2030. A key part of setting the foundations for that goal has been our renewable energy portfolio that, in recent years, we have built across our UU sites. With the portfolio now fully built-out and operating well, we are excited about the opportunity to recycle our investment in these assets to support the next steps in our plans to achieve net-zero".
Trading platform Plus500 said it delivered a strong operational performance during the first half of 2022, supported by its ability to "attract and retain" higher-value customers, despite lower trading volumes across financial markets during the period.
For the six months to June 30, revenue was USD511.4 million, up 48% from USD346.2 million last year. Earnings before interest, taxes, depreciation and amortisation was USD305.3 million, up 63% from USD187.6 million. Ebitda margin was 60% in the first half, up from 54% a year before.
Plus500 added 57,275 new customers during the first half, up from 136,980 customers a year before. However, active customers were 216,928, down from 333,940.
Looking ahead, Plus500 said it remains "highly confident" about the performance for 2022, and anticipates that revenue and Ebitda for the current year will be ahead of current market expectations.
CEO David Zruia said: "The group continued to deliver outstanding levels of returns to shareholders during the period, through both recent USD60.0m dividend payments and our most recent USD105.0m aggregate share buyback programmes, which emphasise the board's view of the current value of the company's shares. Our continued strategic, operational and financial momentum will ensure Plus500 delivers sustainable growth in the medium to long term, enabling the group to deliver further shareholder value in the future."
Softcat has promoted Chief Financial Officer Graham Charlton to CEO with effect from August 1, 2023. Charlton has been CFO at Softcat for the past eight years, and the company believes he is "the right person to lead the business successfully through the next stage of its growth".
Charlton will replace Graeme Watt as CEO who will, in turn, succeed Martin Hellawell as non-executive chair. Hellawell will step down from the role and board upon Watt's succession.
Softcat explained: "At the time of succession, Graeme will have been CEO of the business for over five years. This move has been carefully considered by the board, which acknowledges that the appointment of the CEO into the role of the chair is not in line with the recommendations of the UK Corporate Governance Code. However, the board was unanimous that Graeme's deep knowledge of the business, Softcat's culture and its markets made him the ideal candidate to support the interests of all our stakeholders."
Softcat also said a search for a CFO to succeed Charlton has commenced, and it will consider external as well as internal candidates.
New York ended lower on Monday. The Dow Jones Industrial Average closed down 0.5%, the S&P 500 down 1.2%, and the Nasdaq Composite down 2.3%.
In Asia on Tuesday, the Nikkei 225 index in Tokyo closed down 1.8%. In China, the Shanghai Composite was down 0.9%, while the Hang Seng index in Hong Kong was down 1.3%. The S&P/ASX 200 in Sydney ended up 0.1%.
Worries about a fresh Covid flare-up in China - fuelling fears of another round of lockdowns - added to the downbeat mood and comes just as investors prepare for a big week of economic data and US bank earnings that could have huge implications for markets.
The US Federal Reserve's sharp interest rate hikes in recent months have sent the dollar soaring against rivals. The euro is particularly under pressure, as the European Central Bank moves more slowly in tightening monetary policy and as the region faces a severe energy crisis caused by the Ukraine war.
Sanctions on oil imports from Russia and Moscow's warnings that it will shut off gas to Europe have led economists to predict the eurozone will fall into recession, pushing the euro to a 20-year low and close to parity with the greenback.
The euro was priced at USD1.0037 early Tuesday in London, down from USD1.0087 late Monday, having hit a 20-year low of USD1.006 overnight.
The pound was quoted at USD1.1870 early Tuesday, down from USD1.1898 at the London equities close Monday. Against the yen, the dollar was quoted at JPY137.32 in London, unmoved against JPY137.31.
Brent oil was trading at USD105.13 a barrel Tuesday morning, down from USD106.35 on Monday evening. Gold stood at USD1,732.71 an ounce, lower against USD1,738.10.
"US markets...had a negative session, with the Nasdaq 100 seeing the heaviest declines with the main focus on tomorrow's US consumer price index numbers for June, as investors wrestle with inflation vs recession narrative. All the while the US dollar moved to its highest levels since late 2002, as traders used the greenback as a haven, pushing the euro ever closer to parity," said CMC Markets analyst Michael Hewson.
"As we look at today's European open it's set to be a negative start after Asia markets followed the weakness from yesterday."
In the international economics calendar on Tuesday, there is the German ZEW indicator of economic sentiment at 1000 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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