(Alliance News) - Stock prices in London are set to open flat on Wednesday following more drama in Westminster last night, with it now looking unlikely the UK will leave the EU at the end of the month.
In early UK company news, miners Fresnillo reported a fall in both silver and gold production for the third quarter while Antofagasta saw lower costs. Softcat was confident on its outlook following a strong set of annual results. Sports Direct International lashed out at the board of Goals Soccer Centres.
IG says futures indicate the FTSE 100 index of large-caps to open 5.59 points lower at 7,206.90 on Wednesday. The FTSE 100 index closed up 48.85 points, or 0.7%, at 7,212.49 on Tuesday.
"The Brexit saga took another twist yesterday evening, and looks set to be reflected in today's European open," said Michael Hewson, chief market analyst at CMC Markets.
"Having rallied on optimism that we might finally be coming to the end of the beginning of this long running saga, the DAX had risen to its highest levels in over a year, however last night's setback in the House of Commons means the uncertainty is set to go on for quite a bit longer, and as such we look set for a lower European open this morning," said Hewson.
UK Prime Minister Boris Johnson must now wait to hear from the heads of the EU27 after his plans to fast-track his Withdrawal Agreement Bill through the Commons before the Halloween deadline hit the buffers.
MPs voted to back Johnson's deal in principle by 329 to 299 on the second reading of the Bill, the first time the Commons has been prepared to support any Brexit deal.
However, there was anger in Downing Street after MPs rejected, by 322 votes to 308, Johnson's plan to push through the legislation approving his deal with the EU in just three days. The development makes Johnson's promise to take Britain out of the EU by October 31 "come what may" difficult to fulfil and means Brexit could be delayed until next year.
The result leaves the prime minister effectively at the mercy of EU leaders who will decide whether to grant Britain a further extension, and for how long, in order to allow it to leave with a deal. European Council President Donald Tusk said he would recommend they agree a further delay in order to avoid a no-deal Brexit.
A No 10 source indicated that if the prime minister was forced to accept a delay until the new year, he would push for a general election instead.
"The big question now is whether the prime minister pulls the bill completely, or whether he perseveres with the bill in the hope it is not amended to death, before pulling it completely, and trying to push for an election on the deal itself," said CMC's Hewson.
Sterling was quoted at USD1.2872 early Wednesday, sharply lower than USD1.2958 at the London equities close on Tuesday.
In early UK company news, both Fresnillo and Antofagasta released third-quarter production results.
Mexican miner Fresnillo said gold production was down 5.2% quarter-on-quarter to 209,800 ounces, mainly due to lower ore grade at Herradura. Annually, output was down 6.9%.
Silver production of 13.3 million ounces was down 7.9% on a sequential basis, largely due to a lower ore grade at Saucito and at San Julian Disseminated Ore Body. Year-on-year, silver output was down 15%.
Fresnillo said silver and gold production is likely to be at the lower end of guidance for 2019, though higher volumes of ore processed at Fresnillo combined with higher grades at Saucito and Fresnillo are expected to result in higher overall fourth quarter silver production.
Antofagasta, meanwhile, said it delivered another "strong" quarter in terms of production.
Copper output was 197,000 tonnes, down 0.8% on the previous quarter but year-to-date production of 582,000 tonnes was up 16% on last year.
Gold production for the year to date was 226,600 ounces, 89% higher than in the same period last year on higher grades, but for the third quarter alone was down 11% sequentially as grades declined at Centinela.
Net cash costs were USD1.12 per pound in the quarter, down 1.8% on the previous quarter.
The Chilean miner maintained its annual production guidance of 750,000 to 790,000 tonnes of copper. In 2020 production is expected to be to 725,000 to 755,000 tonnes of copper as grades decline at Centinela Concentrates before rising again in 2021.
IT infrastructure provider Softcat reported a strong set of annual results, with revenue and profit both up.
Revenue for the financial year ended July 31 was GBP991.8 million, up 24%, while pretax profit rose to GBP84.8 million from GBP68.1 million.
The firm declared a final dividend of 10.4 pence, up 18% on a year ago, and a special dividend of 16.0p, up 6.0% on last year's 15.1p.
Softcat said it is in "great health" and "strategically well-positioned".
"We think the structural drivers for growth in our industry will continue despite current political and economic uncertainty. The board also remains confident in the company's ability to gain market share and targets further growth during 2020," said Softcat.
The FTSE 250 constituent added that trading in the first eleven weeks of the new financial year has been on track.
"Whilst our key aims of winning new customers and selling more to existing customers remain unchanged, we are doing much to further expand our addressable market and as a result the company enters the new financial year in a strong position and with good momentum" said Softcat Chief Executive Graeme Watt.
Sports Direct International accused the board of investee Goals Soccer Centres of "incredible incompetence and ignorance" and called for an investigation by AIM regulators.
On Monday, Sports Direct said it did not intend to make a takeover offer for Goals, saying it had "limited" and "fitful" access and cooperation from the board to support a possible offer. A spokesperson for Goals, however, had said the firm had provided Sports Direct with all information requested.
Noting this response from the Goals spokesperson, Sports Direct said Goals and its board "did not truly engage with an offer process", reiterating that access and co-operation was "limited" and "fitful".
Key information including access to forensic accounting reports as well as the ability to engage with the main lender was provided to Sports Direct "extremely late" in the process. the FTSE 250 constituent said, and Goals' board was "not then willing - or able - to agree to an extension of time" for consideration of the potential offer.
The sportswear retailer said the behaviour of the Goals board "amounts to incredible incompetence and ignorance, wilful or otherwise, at the very least and potentially far worse". Sports Direct said it believes "all relevant matters" should be investigated by AIM regulators and an independently appointed third party.
Goals shares were suspended from AIM at the end of September after an investigation into VAT tax owed forced the 5-a-side football pitch operator into a series of profit warnings.
Metro Bank said Vernon Hill has decided to step down from the role of chair with immediate effect, and will remain a non-executive director until the end of the year.
The Metro Bank founder has agreed to accept the honorary position of emeritus chair in recognition of the "extraordinary contribution" made to the challenger bank.
Michael Snyder has been appointed as interim chair with immediate effect until a permanent successor is appointed.
In the US on Tuesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.2%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.7%.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is 0.9% lower.
In Tokyo, shares in SoftBank closed down 2.5% after the Japanese technology investor agreed to provide a "significant" funding package of USD8 billion to the owner of workspace rental firm WeWork.
SoftBank will provide We Co with USD5 billion in new financing as well as launching a tender offer at USD19.19 per share of up to USD3 billion for existing shareholders in the firm. SoftBank also will accelerate its existing commitment to fund USD1.5 billion for We Co.
Following closure of the tender offer, SoftBank will have an 80% economic ownership of We Co. SoftBank will not, however, have a majority of the voting rights and thus We Co will not become a subsidiary of the Tokyo-based firm.
In the economic calendar, there are UK mortgage approvals at 0930 BST and EU consumer confidence at 1500 BST.
By Lucy Heming; lucyheming@alliancenews.com
