(Alliance News) - Stocks in London are set to open lower on Thursday, pulling back from a rally in the previous session.
In early UK company news, J Sainsbury became the latest supermarket - after Wm Morrison late Wednesday - to follow Tesco's lead on business rates, while Phoenix Group said cash generation for 2020 is ahead of target and AJ Bell reported an increase in full-year profit as it bumped up its payout.
In focus for the morning ahead are a raft of purchasing managers' index readings out of Europe, including the UK at 0930 GMT.
IG says futures indicate the FTSE 100 index of large-caps to open 22.19 points lower, or 0.3%, at 6,441.20 on Thursday. The FTSE 100 closed up 78.66 points, or 1.2%, at 6,463.39 on Wednesday.
Already released, figures showed China's services PMI rose to 57.8 in November from 56.8 in October. Any reading over 50 indicates expansion.
"The rate of growth was the second-quickest since April 2010, exceeded only by that recorded in June 2020. The latest reading extended the current sequence of rising business activity to seven months as the sector continued to see a strong recovery from the Covid-19 outbreak earlier in the year," said Caixin.
In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong was up 0.6%. Â
In Tokyo on Thursday, the Nikkei 225 index ended flat. Against the yen, the dollar dipped to JPY104.38 versus JPY104.57 late Wednesday.
Still to come, the economic events calendar on Thursday has services PMI readings from Germany, eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively. In the afternoon, US jobless claims figures are at 1330 GMT.
"Spain, Italy, France, Germany and the UK are tipped to announce services readings of 36.6, 41.3, 38, 46.2 and 45.8 respectively. The services sector accounts for approximately 75% of British output so the UK reading will be closely watched," said David Madden at CMC Markets.
The pound and euro were both higher against the dollar ahead of the data.
Sterling was quoted at USD1.3401 early Thursday, up from USD1.3343 at the London equities close on Wednesday. The euro traded at USD1.2125 on Thursday, higher than USD1.2086 late Wednesday.
Brexit talks stretched late into the night as both sides fought their corners with the clock ticking down to the deadline for a trade deal.
It was reported that several boxes of pizza were delivered to the talks venue on Wednesday night as officials from London and Brussels tried to hammer out an agreement ahead of the end of the transition period on December 31.
The EU's chief negotiator Michel Barnier briefed ambassadors from the 27 member states on the latest negotiations amid little sign of progress on the key issues. He was said to have warned that significant differences remain over fisheries, state aid rules and the governance arrangements for any agreement.
In early UK company news, J Sainsbury followed rival Tesco in deciding to forgo business rates relief.
In March, the UK Chancellor of the Exchequer Rishi Sunak said the UK government would give all retail, hospitality and leisure businesses a 100% business rates holiday for the next 12 months, with the holiday intended to help companies weather the pandemic.
The supermarket noted that in the first half of its financial year, it spent GBP290 million as a result of Covid-19 and this was partially offset by GBP230 million of business rates relief.
The grocer said: "However, lockdown restrictions have remained in place for longer than originally expected and throughout the pandemic all Sainsbury's stores have been deemed essential retail. Almost all have been open and trading strongly, with the exception of a small number of convenience stores."
Sainsbury's sales and profit have been stronger than originally expected, particularly since the start of England's second national lockdown, and as such it has decided to forego business rates relief on all stores.
The FTSE 100 constituent now expects underlying pretax profit of at least GBP270 million of the financial year to March, including the assumption it will forgo around GBP410 million in business rates relief.
"In the event that the business delivers profits and cash generation at least in line with its current expectations, the board believes that shareholders should not bear the full short-term financial impact this year of the business making the right decisions for customers and colleagues through the Covid-19 pandemic. Therefore, when considering free cash flow allocation this year the board will prioritise payment of dividends to shareholders over net debt reduction," Sainsbury's added.
Late Wednesday, Wm Morrison Supermarkets had said it was planning to waive its business rates for financial 2021, to the tune of GBP274 million, following rival Tesco's announcement earlier that day. On Wednesday morning, Tesco said it will repay GBP585 million of business rates relief received.
Phoenix Group Holdings said cash generation is ahead of target.
The life and pensions consolidator ahead of its capital markets day reported cash generation of GBP1.71 billion in 2020, up from GBP707 million in 2019 and exceeding the upper end of its cash generation target range for the year of GBP1.5 billion to GBP1.6 billion.
"Phoenix has continued to perform strongly with full year cash generation of GBP1.7 billion now complete, exceeding the top end of our target range. Our balance sheet remains resilient, underpinned by our high-quality portfolio of assets and unique approach to risk management, and our shareholder capital coverage ratio of 159% remains robust," said Chief Executive Andy Briggs.
Standard Life Aberdeen said it has sold 27.8 million shares in HDFC Life through wholly-owned subsidiary Standard Life (Mauritius Holdings) 2006.
The shares were sold at an average price of INR619.14, which will result in Standard Life receiving INR17.03 billion, or around GBP172 million. Standard Life holds an 8.9% stake in HDFC following the transaction, with its remaining interest valued at GBP1.2 billion.
"It is also noted that SLMH06's remaining 8.89% shareholding in HDFC Life is locked in until end March 2021 and a shareholding below 10% will no longer provide SLMH06 with the right to nominate a director to the board of HDFC Life," Standard Life said.
Investment platform AJ Bell saw profit jump in its recently ended financial year, hiking its dividend as a result.
Revenue for the financial year to September 30 rose 21% to GBP126.7 million from GBP104.9 million, with pretax profit increasing 29% to GBP48.6 million from GBP37.7 million the year prior.
"This financial performance was a result of the continued success of our platform propositions. The two key drivers of our growth, customer numbers and AUA, grew by 27% and 8% respectively in the 12-month period. The 8% increase in AUA was particularly pleasing against a backdrop of the FTSE All-Share Index falling by 19% during the same period," said AJ Bell.
Total customers increased by a "record" 63,239 in the year to 295,305, the company said.
The FTSE 250 constituent declared a final dividend of 4.66 pence, taking the total payout for the year to 6.16p, up 28%.
In the US on Wednesday, Wall Street mostly ended with mild gains, with the Dow Jones Industrial Average ending up 0.2%, the S&P 500 up 0.2% and Nasdaq Composite closing a touch lower.
The US death toll from the coronavirus surpassed 2,700 in one day as of Wednesday evening, the highest since April, Johns Hopkins University said.
The new tally of 2,731 fatalities raises the overall known death toll in America to 273,181 since the pandemic started late last year. The number of new infections over the past 24 hours was 195,121, the university said.
Gold was quoted at USD1,837.74 an ounce early Thursday, up on USD1,827.01 on Wednesday. Brent oil was trading at USD48.23 a barrel, higher than USD47.90 late Wednesday.
By Lucy Heming; lucyheming@alliancenews.com
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