(Alliance News) -Â Stock trading in London is set for a lacklustre start to Tuesday after a strong beginning to the week followed by a mixed performance in New York overnight.
Standard Life Aberdeen early Tuesday unveiled a "refreshed" focus on Asia and rebased its dividend. Retailer WH Smith said trading since the start of 2021 has been better than expected. Broadcaster ITV said it is seeing positive trends in the advertising market.
IG says futures indicate the FTSE 100 index of large-caps to open 24.93 points, or 0.4%, lower at 6,694.20 on Tuesday. The FTSE 100 closed up 88.61 points, or 1.3%, at 6,719.13 on Monday.
In the US on Monday, Wall Street indices ended mixed, with the tech-heavy Nasdaq struggling. The Dow Jones Industrial Average ended up 1.0%, the S&P 500 down 0.5%, and the Nasdaq Composite down 2.4%.
"The Dow Jones printed a new record high but finished off the session's peak, the S&P 500 fell 0.5%, while the NASDAQ 100 slumped 2.9%. Tech stocks have lost some of their appeal as their high valuations are being called into question, especially when travel and leisure stocks have a brighter future because economies are on track to re-open in the months ahead," commented David Madden at CMC Markets.
However, the improved economic outlook, driven by vaccine progress, also has raised fears over inflation and higher interest rates.
For the first time in nearly three and a half months, the US recorded fewer than 1,000 deaths in a day from Covid-19 on Monday, according to Johns Hopkins University. In 24 hours, 749 people died from the coronavirus, far below the peak of 4,473 deaths recorded on January 12.
The daily US death toll has not been below the thousand mark since November 29, when 822 people died in a 24-hour period.
The US vaccine campaign launched in December is now in full swing, with nearly 10% of the American population – about 31.5 million people – having received either the two shots necessary for the Pfizer or Moderna vaccines, or the single shot in the case of the Johnson & Johnson vaccine.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 1.0%. In China, the Shanghai Composite was down 1.1%, while the Hang Seng index in Hong Kong was up 0.6%. The S&P/ASX 200 in Sydney closed up 0.5%.
The Japanese economy grew at an annualized rate of 12% in the October-to-December period, downgraded from a preliminary figure of 13%, a government report showed.
In 2020, the economy shrank by 4.8% due to a consumption tax hike and the Covid-19 pandemic, marking the first contraction in 11 years, the Cabinet Office said in a statement. In the last quarter of 2020, corporate spending grew 4.3% quarter-on-quarter, revised down from an initial reading of 4.5% reported last month, and an improvement from a 2.4% contraction in the July-to-September period, the office said.
Against the yen, the dollar rose to JPY108.89 versus JPY108.82 in London last Monday.
In early UK company news, Standard Life Aberdeen reported an improvement in net outflows as it unveiled details of its new strategy.
The investment and asset management firm reported fee-based income of GBP1.43 billion for 2020, down from GBP1.63 billion in 2019 and largely reflecting 2019 outflows. However, IFRS pretax profit of GBP838 million was up sharply on 2019's GBP243 million, reflecting lower impairments of goodwill and intangibles, as well as increased profit on disposal of interests in associates.
Net outflows reduced to GBP3.1 billion from GBP17.4 billion in 2019 excluding Lloyds Banking Group tranche withdrawals, driven by a "significant improvement" in Institutional and Wholesale net flows. Assets under management & administration edged down to GBP534.6 billion from GBP544.6 billion, reflecting GBP25.9 billion LBG tranche withdrawals, partially offset by improvements in markets.
"The board remains committed to delivering a dividend that is sustainable over the medium term. Reflecting current operating profitability, industry trends, and economic and market uncertainties, the board is rebasing the dividend to a level from which it can be grown," Standard Life said, recommending a final payout of 7.3p to bring the total for the year to 14.6p, down by a third from 21.6p for 2019.
On strategy, Standard Life said it is seeking to deliver client-led growth through Investments, Adviser and Personal, and it has a "clear growth strategy" for each of these areas. Growth in Asia, UK adviser and consumer markets, Solutions and Responsible investing have all be identified as strategic priorities.
Back in February, Standard Life Aberdeen had said it would sell the 'Standard Life' brand to Phoenix Group during the course of 2021. On Tuesday, Standard Life said rebranding activity is underway to bring the business under "one unifying brand".
"We have seen growing momentum in the second half of 2020 with improved investment performance and flows which represent an inflection point as we pull out of the post-merger era. We remain on track to deliver targeted synergies and have identified more that we can deliver. We have exited some non-core businesses and made an acquisition that has extended our capabilities in private markets. We have simplified and clarified leadership structures across the business and placed a refreshed focus on Asia," said Chief Executive Stephen Bird.
He added: "At this reset point for this business, we have rebased to set firm foundations on which we can build something great. I'm excited about what's to come."
Broadcaster ITV reported a fall in 2020 profit but said it has seen recent encouraging trends in the television advertising market.
Total group revenue for 2020 fell 16% to GBP3.26 billion, with ITV Studios revenue down 25% to GBP1.37 billion, while total advertising revenue fell 11% to GBP1.58 billion. Pretax profit slumped to GBP325 million from GBP530 million.
ITV Studios revenue was hit by disruption to the majority of its productions from March onward, the company noted.
"While total revenues and profits were down our financial performance was ahead of expectations driven by a strong end to Q4 and our firm control over costs," said Chief Executive Carolyn McCall.
"We are seeing more positive trends in the advertising market in March and April and the majority of our programmes are now back in production. However, there remains uncertainty in all markets around the world with the potential risk of lockdowns, which if they materialise will affect revenues."
ITV declared no dividend for 2020 after paying out 8.0p for 2019. The firm said it intends to restore payouts "as soon as circumstances permit".
Retailer WH Smith said it has extended its bank financing arrangements with its existing banks, adding that trading has been better than expected.
The company has extended the maturity of its two existing GBP200 million term loans to October 2023 and agreed a new minimum liquidity covenant for both the August 2021 and February 2022 covenant tests. These changes have allowed it to cancel its existing GBP120 million liquidity loan which was undrawn and due to expire in November 2021.
The stationery and magazines seller said that despite the current lockdown, it has delivered a better-than-expected trading performance.
"We adapted well to the evolving trading environment on the high street, despite reduced footfall, with revenue in our High Street business in January 2021 at 74% of 2019 levels and 84% of 2019 levels in February 2021, ahead of our expectations," said WH Smith.
As a result, cash burn has improved and is now expected to be around GBP12 million to GBP17 million a month for the January to March period versus the previously guided GBP15 million to GBP20 million.
Ultra Electronics hailed an "excellent" performance in 2020. Revenue rose 4.2% to GBP859.8 million while pretax profit grew 14% to GBP103.7 million.
"We enter 2021 with a record order book giving us strong visibility, and we remain well positioned in key growth areas to support customers' evolving priorities," said Chief Executive Simon Pryce.
Ultra raised its dividend by 5.0% to 56.9p for the year.
Pryce said: "This excellent performance gives us further confidence in Ultra's exciting potential and our ability to deliver exceptional value for all stakeholders over the longer term."
Sterling was quoted at USD1.3873 early Tuesday, higher than USD1.3810 at the London equities close on Monday. The euro traded at USD1.1874 early Tuesday, firm on USD1.1862 late Monday.
Gold was quoted at USD1,695.19 an ounce early Tuesday, higher than USD1,682.85 on Monday. Brent oil was trading at USD67.90 a barrel, down on USD68.55 late Monday.
The economic events calendar on Tuesday has eurozone GDP readings at 1000 GMT.
By Lucy Heming;Â lucyheming@alliancenews.com
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