(Alliance News) - Stock prices in London are set to rebound on Friday, following a higher close on Wall Street overnight from stimulus hopes, as a roller coaster week draws to an close.
In early UK company news, Wizz Air said October's capacity is expected to be half of that a year ago, Shaftesbury decided against a final dividend, and Boohoo unveiled a raft of changes in response to an independent review into its supply chain.
IG says futures indicate the FTSE 100 index of large-caps to open 28.22 points higher at 5,851.00 on Friday. The FTSE 100 closed down 76.48 points, or 1.3%, at 5,822.78 on Thursday. The UK blue-chip index is down 3.1% since the week began.
In the US on Thursday, the Dow Jones Industrial Average ended up 0.2%, the S&P 500 up 0.3%, and the Nasdaq Composite up 0.4%.
"US equities finished slightly higher Thursday, as investors turn more optimistic on the possibility of a US stimulus bill that would provide a lively bounce to the economy at the perfect time, just as consumers turn downcast with the coronavirus showing signs of 2nd and 3rd wave propensity," said AxiCorp's Stephen Innes.
House Speaker Nancy Pelosi said Democrats had started putting together a USD2.4 trillion rescue package and that they were still looking to find an agreement.
At the same time, Treasury Secretary Stephen Mnuchin reiterated that a new deal was still needed, adding: "If Democrats are willing to sit down, I'm willing to sit down any time for bipartisan legislation. Let's pass something quickly."
In early UK company news, water utility Pennon said it is on track to deliver "resilient" results in line with internal expectations.
Ahead of its results for the half-year to September 30, Pennon said the damage from Covid-19 to date has been broadly in line with its initial assumptions for a net revenue hit in the current financial year of GBP10 million. The largest impact of Covid-19 on water usage has been among businesses and commercial customers, Pennon added.
The group remains in a "strong" financial position with expected cash and committed facilities well in excess of GBP3 billion at the end of September.
Wizz Air said it now expects to operate half of last year's capacity in October, as it noted on-going travel restrictions due to Covid-19 and a drop in demand for travel over the winter.
"Furthermore, should the level of restrictions remain at the current level, Wizz Air anticipates not to operate at a higher level of capacity during winter than its projection for October," the central and eastern Europe-focused airline said.
The protection of its balance sheet and liquidity position, as well as minimising costs, remain Wizz Air's "top priority". The FTSE 250 constituent added that it believes it will emerge from the crisis as a "structural winner".
Shaftesbury said it has decided against a final dividend for its soon-to-end financial year as Covid-19 dissipates footfall and trading in London's West End.
The property investor, which owns a portfolio in London's West End, said the Covid-19 pandemic continues to have a "significant impact" on travel, business activity and consumer spend. The West End has seen a gradual recovery in footfall since lockdown measures in the UK began to be relaxed, and most of its 611 restaurants, cafes, pubs and shops have reopened since late June.
For the six months to September 30, 41% of rent due has been collected, while 10% is expected to be subject to deferred collection arrangements. Shaftesbury said 23% is being waived and 26% remains outstanding.
"The course of the pandemic in the short and medium term will continue to dictate the extent of restrictions imposed by the UK and other governments to contain the spread of the Covid-19 virus, with implications for the global economy and the pace of recovery. As an international destination, local trading conditions in the West End will inevitably be affected by these macro uncertainties," said Chief Executive Brian Bickell.
Shaftesbury added that, in light of the uncertain short-term outlook, the board has decided not to declare a final dividend in respect of the financial year ending on Wednesday. It did not declare an interim dividend either.
The firm does, though, plan to resume payouts "as soon as it considers prudent."
Online clothing retailer Boohoo laid out a series of changes it plans to make after an independent review found "significant and clearly unacceptable issues" in its supply chain.
The review identified "many failings" in the Leicester supply chain and recommended improvements to Boohoo's corporate governance, compliance and monitoring processes. Alison Levitt, who was appointed to run the review, was satisfied that Boohoo did not deliberately allow poor conditions and low pay to exist within its supply chain, however.
Levitt is "confident that the adaptations which Boohoo should make involve a relatively easily-achieved realignment of its priorities and governance systems and that the board should not feel discouraged. It has already made a significant start on putting things right."
Boohoo said it will appoint two new non-executive directors, which will strengthen the board, and it plans for one of these roles to be filled by someone experienced in dealing with environmental, social and governance matters.
The retailer has recently appointed a new group director of responsible sourcing - who joins from a "major global apparel retailer" - and it plans to consolidate its approved supplier list. Boohoo will work more closely with suppliers to ensure they are able to "manage a more consistent and predictable flow of orders".
Boohoo Chief Executive John Lyttle said: "Today we publish Levitt's independent review in full. This has identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and compliance. As a result, the group is implementing necessary enhancements to its supplier audit and compliance procedures, and the board's oversight of these matters will increase significantly."
In Asia on Friday, the Japanese Nikkei 225 index closed up 0.6%. Against the yen, the dollar was quoted at JPY105.32, down versus JPY105.50.
In China, the Shanghai Composite is down 0.1%, while the Hang Seng index in Hong Kong is down 0.7%. Â
Chinese government debt is set to be included on a key global bonds index, which could see tens of billions of dollars of foreign investment in the country's increasingly internationalised financial markets.
The move by FTSE Russell comes as trading in China becomes an increasingly controversial move in Washington as relations between the superpowers grow increasingly fraught.
But analysts said the attraction of higher yields – the yield on 10-year Chinese government bonds is 2.4 percentage points higher than US Treasuries – and a relatively stable currency have made the country an attractive prospect for investors.
Inclusion in the FTSE World Government Bond index, which could begin next October if approved, means CGBs will be a must-have asset for investment giants such as pension funds desperate for good returns as the global bond market is battered by the virus pandemic.
Sterling was quoted at USD1.2759 early Friday, higher than USD1.2713 at the London equities close on Thursday.
Data from the Office for National Statistics showed UK public sector net borrowing was estimated to have been GBP35.9 billion in August, GBP30.5 billion more than a year ago and the third highest borrowing in any month since records began in 1993.
The euro traded at USD1.1673, up from than USD1.1645 late Thursday.
Gold was quoted at USD1,867.77 an ounce early Friday, higher than USD1,859.50 on Thursday. Brent oil was trading at USD41.97 a barrel, rising from USD41.52 late Thursday.
The economic events calendar on Friday has US durable goods orders at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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