(Alliance News) - The FTSE 100 is expected to open Wednesday's session in negative territory following several sessions of gains on hopes for a US-China trade accord.
In early UK company news, Marks & Spencer saw adjusted profit dip as it makes up for "lost time" in its Clothing & Home department, Sophos swung to a loss ahead of being taken over, and Redrow said trading has been "encouragingly resilient".
IG says futures indicate the FTSE 100 index of large-caps to open 15.78 points lower at 7,372.30 on Wednesday. The FTSE 100 index closed up 18.39 points, or 0.3%, at 7,388.08 on Tuesday, leaving it up 1.2% for the week so far.
In the US on Tuesday, Wall Street ended mixed, with the Dow Jones Industrial Average adding 0.1% but the S&P 500 slipping 0.1% and Nasdaq Composite closing flat
In Asia on Wednesday, the Japanese Nikkei 225 index finished up 0.2%. In China, the Shanghai Composite ended down 0.4%, while the Hang Seng index in Hong Kong is flat.
"Asian equity indices pull back slightly this morning. But so far, the pullback is mild, and markets are quick to stabilise as most APAC indices have bound off session lows in what appears to be little more than a healthy dose of profit-taking after a solid run to start the week," commented Stephen Innes, market strategist at AxiTrader.
"Sentiment remains positive, particularly around Hong Kong and China after the CNY broke below 7 handle," he added.
David Madden at CMC Markets said the yuan breaking the CNY7 level against the dollar was taken as further evidence China is keen to edge towards a trade deal with the US.
"When trade tensions between the two sides was were running high, Beijing allowed their currency to drift lower against the greenback as a way of getting back at the US, so a firmer yuan bodes well for the possibility of phase of the trade deal being reached," he said.
In data from Asia overnight, Japan's services activity fell in October for the first time in over three years.
The Jibun Bank Japan services purchasing managers' index fell to 49.7 points in October from 52.8 in September. This was the first fall since September 2016, pushing the sector below the 50 point mark which separates expansion from contraction. According to FXStreet compiled data, the consensus amongst economists was for an October print of 50.3 points.
Activity was hurt by rises in consumption taxes as well as the impact of the typhoon hitting Japan last month. New orders, however, continued to rise during the month.
Still in the economic calendar on Wednesday, there are a raft of European services PMI readings - including Germany at 0855 GMT and the eurozone at 0900 GMT. At 1000 GMT are eurozone retail sales.
In early UK company news, high-street stalwart Marks & Spencer said its transformation plan is progressing rapidly as it makes up for "lost time" in its Clothing & Home unit.
Revenue for the half-year to September 28 fell 2.1% to GBP4.86 billion, though pretax profit jumped 52% to GBP152.5 million. Profit before tax and adjusting items fell, however, by 17% to GBP176.5 million.
M&S booked just GBP23.0 million in adjusting items in the recent half year, compared to GBP111.7 million a year ago. This includes costs relating to strategic programmes in areas such as its UK store estate and IT restructure.
Like-for-like sales growth in the Food unit was 0.9% in the half-year, driven by volume. Clothing & Home sales, meanwhile, fell 5.5%.
M&S said it saw an improved Clothing & Home performance in October following a "difficult" first half.
"Our transformation plan is now running at a pace and scale not seen before at Marks & Spencer. For the first time we are beginning to see the potential from the far reaching changes we are making," said Chief Executive Steve Rowe.
"In Clothing & Home we are making up for lost time. We are still in the early stages, but we are clear on the issues we need to fix and, after a challenging first half, we are seeing a positive response to this season's contemporary styling and better value product," said Rowe.
Looking ahead, M&S said some improvement in trading is expected in the second half, though market conditions remain challenging.
In Clothing & Home, net store closures are expected to reduce sales by around 2%, previously seen as causing a 3% hit. The gross margin is expected to fall by 25 to 75 basis points, previously having been expected to be between up 25 basis points and down 25 basis points.
UK operating costs will fall by around 1% to 2%, previously seen somewhere between flat and down 1.0%.
Cybersecurity firm Sophos Group reported growth in revenue for its first half, though swung to a loss.
Revenue for the six months to September 30 grew 5% year-on-year to USD365.8 million with subscription revenue the main driver of growth, up 8% and offsetting an 8% decline in hardware revenue. Billings of USD372.0 million were up 5% year-on-year.
Sophos swung to a loss of USD1.5 million, however, from a USD26.0 million profit a year ago. General finance & administration costs were up to USD72.3 million from USD44.6 million.
In October, US-based private equity firm Thoma Bravo agreed a GBP3 billion takeover of Sophos. Thoma Bravo, which manages funds worth over USD35 billion, said Sophos was an "attractive opportunity" to increase its exposure to the cybersecurity market.
The offer will take place via a court-sanctioned scheme of arrangement and is set to complete in the first quarter of 2020, providing the necessary clearances and regulatory approvals are granted
Ultra Electronics said it continues to trade in line with expectations and it has seen "good" order book development since its interim results.
"The ongoing strategic evolution is progressing and there remains good long term opportunities and growth potential for Ultra. Our major markets are growing, and our strong technology base is positioning us well on existing and potential future programs," the defence firm said.
Housebuilder Redrow said trading has remained "encouragingly resilient" in the first 18 weeks of its financial year, despite ongoing Brexit uncertainty and weak demand in the housing market.
The value of net private reservations in the 18 weeks to Friday last week was 2% ahead of last year at GBP598 million, excluding a GBP119.5 million sale at Colindale Gardens. Including this, the value of private reservations was up 22% to GBP717 million.
The sales rate per outlet per week on a like-for-like basis was 0.67, compared to 0.64 last year.
"I am confident that, providing trading conditions remain stable, Redrow is on course to achieve another set of excellent results," said Chair John Tutte.
In UK political news, parliament has been dissolved to make way for December's general election.
As well as kicking off the Conservative campaign in the West Midlands on Wednesday, Prime Minister Boris Johnson is expected to visit Buckingham Palace for an audience with the Queen, and announce the start of the election drive in Downing Street.
Johnson is expected to put Britain's withdrawal from the EU, the NHS, and law and order at the centre of the Tories' campaign.
Jeremy Corbyn, meanwhile, will say on Wednesday that Labour will end the need for food banks if it takes power. He is using a speech in Telford, Shropshire, on Wednesday to insist the party will deliver "real change" and that he will be a different kind of prime minister if elected on December 12.
By Lucy Heming; lucyheming@alliancenews.com
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