(Alliance News) - Stock prices in London are set for a lower open on Wednesday as stocks in US and Asia traded cautiously overnight ahead of the latest interest rate decision from the Federal Reserve, while in the UK investors face a pre-Christmas general election.
In early UK company news, Next kept its annual guidance unchanged despite seeing stronger October sales, while Smurfit Kappa reported third-quarter earnings growth, and Standard Life Aberdeen sold more shares in its Indian joint venture. Lender StanChart reported a rise in quarterly profit.
IG says futures indicate the FTSE 100 index of large-caps to open 7.66 points lower at 7,298.60 on Wednesday. The FTSE 100 index closed down 25.02 points, or 0.3%, at 7,306.26 on Tuesday.
"US stock markets had a lacklustre session on Tuesday. Major US indices consolidated gains near their historical high levels ahead of the Federal Reserve decision due later today, a decision that could dash some cold water on the actual stock rally," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
Stocks in Asia traded "with limited enthusiasm", she added.
In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average ending down 0.1%, the S&P 500 down 0.1%, and the Nasdaq Composite shedding 0.6%.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite ended down 0.5%, while the Hang Seng index in Hong Kong is 0.5% lower.
The US Federal Reserve will announce its latest monetary policy decision at 1800 GMT, followed by a press conference with Fed Chair Powell at 1830 GMT.
The Fed is widely expected to cut interest rates for a third time this year, though focus will lie on the central bank's outlook.
"There is only a little upside potential left to be explored on the interest rate front. Hence, the accompanying statement is what matters the most to investors at today's decision announcement. The sweet blend of better-than-expected third-quarter earnings and the progress in trade negotiations with China suggests an increased likelihood of a hawkish Fed statement," said Ozkardeskaya.
Elsewhere in the economic calendar on Wednesday, there is eurozone consumer confidence at 1000 GMT and German inflation at 1300 GMT.
Meanwhile, UK Prime Minister Boris Johnson is on course for a pre-Christmas general election after MPs finally backed his demands to go to the country in an attempt to end the Brexit deadlock.
The House of Commons voted by 438 to 20 at third reading to approve the one-page Bill enabling the election to be held on December 12. Earlier, MPs voted by 315 to 295 to reject a Labour amendment for the proposed polling day to be moved to December 9 – three days earlier than ministers wanted.
"The Conservative Party are polling well but Jeremy Corbyn's Labour Party performed better than many expected in 2017, hence why some dealers are cautious. Politics has become so polarised in the UK in the last few years, there are concerns in some quarters that no clear majority could be returned to Westminster," commented David Madden at CMC Markets.
The pound was quoted at USD1.2880 early Wednesday, soft versus USD1.2887 late Tuesday.
In early UK company news, clothing and homewares retailer Next said third-quarter full price sales were slightly ahead of guidance.
Total full price sales were up 2.0% in the quarter to October 26, being last Saturday, with retail sales down 6.3%, online sales up 9.7% and finance interest income up 7.0%.
Next said it thinks strong sales in July pulled forward sales from August, while sales in September were "adversely affected by unusually warm weather". This was followed by a "significant improvement" in October when temperatures fell and the heavens opened with rain.
"We believe the improved sales growth in October recouped some of the lost sales in September and we do not expect sales growth for the rest of the year to be as strong as October," said Next.
As a result, the retailer maintained its guidance for the financial year ended in January, with total full price sales to grow 3.6% and pretax profit to edge up 0.3%.
Packaging firm Smurfit Kappa said it has delivered a "strong performance" in the year-to-date.
For the nine months to September 30, revenue was up 3% to EUR6.85 billion and earnings before interest, tax, depreciation and amortisation 11% higher at EUR1.26 billion. The firm's Ebitda margin increased 140 basis points to 18.3%.
In Europe, Smurfit's corrugated box volume growth was "close to" 4% year-on-year, or 2% on an organic basis. Corrugated pricing has been in line with expectations, the firm noted. In the Americans, organic volume growth was also 2%, with continued Ebitda improvement.
"While there have been, and continue to be, obvious macro-economic and political challenges, SKG's very strong performance against this backdrop shows, once again, the quality of our business and the benefits of our geographic diversity," said Chief Executive Tony Smurfit.
Standard Life Aberdeen said it has sold 100 million shares in its Indian insurance joint venture, HDFC Life.
Through a wholly-owned subsidiary, Standard Life sold the shares at an average price of INR575.15 for a total of INR57.0 billion, or GBP622 million.
The shares represented a 4.96% stake in HDFC, and Standard Life now has 14.7% shareholding following the sale, a stake which is valued at around GBP2.0 billion.
Standard Life last sold shares in HDFC in August, when it hold a 3.33% stake. Back in 2016, Standard Life held a 35% stake in the firm.
Oil major BP, noting "certain commentary", confirmed that no decision has yet been made about a fourth quarter, or any future, dividend.
"Any decisions with respect to future dividends will be made by the board of BP PLC following the end of each quarter," the FTSE 100 constituent said.
Medical products maker ConvaTec Group backed its annual guidance after a "solid" third quarter.
Revenue for the three months to September 30 was USD462.7 million, up 2.4% on last year, or 4.6% higher on an organic basis. In Advanced Wound Care, organic growth of 3.6% was driven by its silver portfolio, with growth of 3.0% was achieved in Ostomy Care, reflecting a "solid underlying performance against a weak 2018 performance".
Continence & Critical Care reported growth of 8.0%, "flattered" by a weaker prior year comparison, while Infusion Devices saw growth of 4.3%.
"I am pleased we have reported a solid performance in Q3, but this is a small step on the significant journey ahead of us as we focus on pivoting to sustainable and profitable growth," said Chief Executive Karim Bitar, who joined last month from agricultural biotechnology company Genus.
Released earlier on Wednesday, Standard Chartered warned of "growing headwinds" despite the bank achieving solid profit growth in the third quarter of 2019.
For the three months to September, StanChart's pretax profit rose by 4% year-on-year to USD1.11 billion, with the underlying figure up 16% to USD1.24 billion. The emerging market lender's income climbed by 7% to USD3.98 billion, and StanChart said there was "broad-based growth" across all business segments and regions.
However, StanChart warned there are "growing headwinds", in the form of continued geopolitical tensions as well as an expected slowdown in global economic growth and lower interest rates.
By Lucy Heming; lucyheming@alliancenews.com
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