(Alliance News) - Stock prices in London are seen opening slightly lower on Friday, tracking falls in Asian equity markets, amid US-China tensions and as US lawmakers struggle to find agreement on an economic stimulus package.
In early UK company news, fund supermarket Hargreaves Lansdown raised its annual dividend after posting strong results. Fund manager Standard Life Aberdeen maintained its dividend despite swinging to an interim loss, while property portal Rightmove scrapped its interim dividend as it felt the effects of the coronavirus crisis.
IG futures indicate the FTSE 100 index is to open 12.84 points lower at 6,014.10. The blue-chip index closed down 77.78 points, or 1.3%, at 6,026.94 Thursday.
Hargreaves Lansdown said it delivered a strong annual performance, despite an external environment of persistent challenges.
For the financial year that ended June 30, revenue was 5% higher to GBP550.9 million from GBP480.5 million last year, and pretax profit rose 24% to GBP378.3 million from GBP305.8 million.
Net new business inflows increased 7% to GBP7.7 billion from GBP7.3 billion, while total assets under administration came in 5% higher to GBP104 billion from GBP99.3 billion.
Following the strong performance, Hargreaves Lansdown raised its total dividend by 11% to 54.9 pence from 42p.
Chief Executive Chris Hill said: "In the near term the UK economy faces a period of uncertainty as we work through the many issues arising from Covid-19. Unemployment levels have increased significantly whilst economic growth has decreased. The government has borrowed vast amounts to help the economy and society but the road to recovery could be a long one with various tax implications along the way. The impact on our clients and the wider investment community, as a result, is difficult to call. Interest rates are at all-time lows, which makes cash savings unappealing, but market uncertainty and volatility can equally deter people from investing and access to liquidity is a key part of building financial resilience.
"However, our focus on clients, the trusted relationships we have with them and the investment we have made to broaden and strengthen our proposition, means Hargreaves Lansdown is strongly positioned to help our clients navigate through these difficult times. We are clear in the structural growth opportunity, clear in our strategy and business model and these provide us with confidence in our ability to deliver sustainable and attractive growth and returns beyond the immediate uncertainties."
Standard Life Aberdeen swung to an interim loss with the asset manager pointing to the shutdowns of economic activity due to Covid-19 causing significant negative growth shocks across the world.
For the half-year ended June 30, fee-based revenue fell 13% to GBP706 million from GBP815 million last year, which the fund manager said mainly reflects 2019 outflows, client preferences changing asset mix, and Lloyds Banking Group tranche withdrawals.
In 2018, Lloyds decided to withdraw GBP109 billion of assets that were being managed by Standard Life Aberdeen.
Standard Life Aberdeen swung to a pretax loss of GBP498 million from a profit of GBP649 million last year, reflecting impairment charges relating to goodwill and intangible assets, it said.
Net inflows for the first half of 2020 amounted to GBP0.1 billion, excluding Lloyds tranche withdrawals of GBP24.9 billion, compared to GBP15.9 billion in net outflows a year ago. Assets under management and administration as at June 30, was GBP511.8 billion, lower than GBP544.6 billion at year-end 2019 largely reflecting the Lloyds tranche withdrawals.
However, the fund manager maintained its interim dividend at 7.3p.
Outgoing CEO Keith Skroch said: "There is no question that the impact of Covid-19 has played a role on our results today, and across our industry, particularly in relation to lower revenue. Our foundations are firm, we have a strong balance sheet which enables us to both invest in our business and maintain our interim dividend of 7.3p.
"We have a strong commitment to responsible investment, and a resolute belief in our purpose 'Together we invest for a better future'. This is reflected in our response to the pandemic, where we have focused on protecting the safety and wellbeing of our people, ensuring we can continue to deliver for our clients and customers, and supporting the communities in which we operate. Our people recognise this and it's reflected in the significant improvement we have seen in our culture over the last 12 months."
Rightmove reported a drop in first-half profit and scrapped its dividend after the Covid-19 crisis prompted the property portal to offer discounts to its customers.
For the half-year to June 30, pretax profit dropped to GBP61.6 million from GBP108.1 million last year, as revenue fell to GBP94.8 million from GBP143.9 million.
Average revenue per advertiser was down by 34% to GBP712 per month from GBP1,077 last year.
The company elected against paying an interim dividend, having paid out 2.8p last year.
Rightmove said given uncertainties caused by Covid-19, it also had been prudent to cancel the proposed final dividend payment of 4.4p per share for 2019 in order to preserve cash and strengthen financial liquidity.
CEO Peter Brooks-Johnson said: "The positive metrics in June and July allied to the stamp duty holidays give grounds for cautious optimism that housing transaction levels will increase from the low point in second quarter. Rightmove data suggests that the significant increase in activity is being driven not only from the pent up demand from the period of lock down, but an increased number of home hunters who have decided to move following the experience of lock down. However, it is too early to assess whether the strength of this positive momentum in the housing market will be maintained against the threat of further lock downs and wider economic slowdown.
"The strong demand has led to positive trading momentum since the beginning of June. The number of branch-based Estate Agency branches increased in both June and July and the number of products sold to Estate Agents were 7% higher in July 2020 than July 2019."
In Tokyo, Nikkei 225 index closed down 0.7% on Friday. In China, the Shanghai Composite is down 1.9%, while the Hang Seng index in Hong Kong is down 2.0%.
"Global equity markets are bid into the Asia morning session, with fears of an extended gridlock in US fiscal negotiations that seemingly faded after the White House indicated immediate executive orders on extending unemployment benefits and imposing a payroll tax holiday. It is not clear if the US president can do this, but the pressure is now on the Democrats to agree to something. Clearing the fiscal malaise could drive a bear steepening in the US yield curve and might trigger a short-term correction in the US dollar and gold," said AxiCorp's Stephen Innes.
Republicans and Democrats have been holding talks for more than a week on the new package but with the Democrats' USD3.5 trillion proposal more than three times the size of the Republicans' offer, a deal appears a distant hope, despite a deadline being set for Friday.
"There are a lot of issues we are close to a compromise position on," Treasury Secretary Steven Mnuchin said after holding talks with House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer.
However, he added they were "very, very far apart on some significant issues", while White House Chief of Staff Mark Meadows said: "The differences are still significant."
US President Donald Trump on Thursday also ordered that a ban on interacting with popular social media platform TikTok or its Chinese parent company take effect in 45 days. "The US must take aggressive action against the owners of TikTok to protect our national security," Trump said in an executive order.
After taking effect, the order will bar "any transaction by any person, or with respect to any property, subject to the jurisdiction of the US, with ByteDance Ltd" or any company in which it has an interest.
Trump's order contended the step is needed to "deal with the national emergency with respect to the information and communications technology and services supply chain".
The move, which comes into force in 45 days, is the latest salvo in a tech stand-off between superpowers the US and China and adds to a laundry list of issues they have butted heads over in recent months, including Hong Kong, Huawei and the coronavirus.
Elsewhere, Chinese Defense Minister Wei Fenghe warned his US counterpart in a phone call Thursday to avoid firing up bilateral tensions, a day after Washington angered Beijing by announcing it would send a senior official to visit Taiwan.
Wei told US Defense Secretary Mark Esper in a 90-minute phone call to "stop erroneous words and deeds" and "avoid taking dangerous moves that may escalate the situation," referring directly to Taiwan and the South China Sea, the Xinhua News Agency reported.
But Esper told Wei that China was undertaking destabilizing activity, according to the Pentagon, showing no sign of backing down as the US rejects China's claims of sovereignty in both areas
The pound was quoted at USD1.3120 early Friday, lower from USD1.3137 at the London equities close Thursday.
The euro was priced at USD1.1838, soft from USD1.1845. Against the yen, the dollar was trading at JPY105.57, flat from JPY105.51 in London.
Brent oil was quoted at USD44.88 a barrel Friday morning, down from USD45.37 at the London equities close Thursday. Gold was priced at USD2,058.24 an ounce, up from USD2,052.10 late Thursday.
Friday's economic calendar has US nonfarm payrolls at 1330 BST alongside the unemployment rate and average hourly earnings.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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