(Alliance News) - Stocks in London are set to open higher on Thursday as US lawmakers pledged more than USD8 billion to fight the spread of coronavirus.
In early UK company news, ITV said its results were better than anticipated, though the broadcaster noted that travel firms are delaying advertising amid the coronavirus outbreak. Melrose Industries said its results were "comfortably ahead" of expectations. Hyve issued a profit warning over Covid-19.
IG says futures indicate the FTSE 100 index of large-caps to open 9.31 points higher at 6,824.90 on Thursday. The FTSE 100 index closed up 97.39 points, or 1.5%, at 6,815.59 on Wednesday.
"US equity markets got off to a fairly decent start as the dust had settled from the major loss suffered on Tuesday. The buying of US equities was fuelled by the speculation that other central banks would lower rates also," commented David Madden at CMC Markets.
"The bulls didn't have to wait too long, as in quick succession the IMF announced a USD50 billion coronavirus health fund scheme and US lawmakers approved a fund worth [USD8 billion]. The updates helped the Dow Jones, S&P 500 as well as the NASDAQ 100 extend their gains," he said.
Wall Street surged in response Wednesday. The Dow Jones Industrial Average closed up 4.5%, the S&P 500 up 4.2% and the Nasdaq Composite up 3.9%.
In Asia on Thursday, the Japanese Nikkei 225 index ended up 1.1%. In China, the Shanghai Composite closed up 2.0%, while the Hang Seng index in Hong Kong is up 1.9%.
"This morning most Asian equity indices are trading in 'green'. Meanwhile the S&P future has erased some of its gains on the back of the state of California calling a state of emergency after its first COVID-19 death. Markets will continue to closely monitor the US spreading and with a higher reported US death rate than in the rest of the world, data implicitly suggest the amount of infected Americans could be under-reported," said Danske Bank.
California declared a state of emergency over the novel coronavirus as a cruise ship was held off the coast over fears of a new outbreak.
The measures came as the death toll in the US hit 11, including the first fatality in California, and lawmakers in Congress agreed to provide more than USD8 billion to fight the rapidly spreading disease.
California Governor Gavin Newsom announced the emergency measures as he reported the death of an elderly person who had taken a cruise to Mexico.
Meanwhile, ministers from the OPEC group of oil-producing countries will meet in Vienna Thursday to try to overcome their divisions on how to react to the fall in oil prices in the wake of the novel coronavirus epidemic.
The group already had to contend with abundant supply on global markets weighing on prices but the spread of Covid-19 across the world has sent them plunging.
The price of Brent oil sank to under USD50 a barrel on Sunday, a level not reached since July 2017.
The only option for OPEC – and its allies in the OPEC plus grouping who will be joining meetings on Friday – would appear to be another round of production cuts. An advisory committee of the 24 oil producers recommended ahead of this week's talks that their joint output should be cut by 600,000 barrels per day, around 0.6% of global production.
Brent was trading at USD51.90 a barrel early Thursday, lower than USD52.17 late Wednesday.
Gold was quoted at USD1,639.30 an ounce early Thursday, down from USD1,643.40 on Wednesday.
In early UK company news, ITV said its results for 2019 were ahead of expectations, with total advertising revenue falling by less than anticipated.
Total external revenue was up 3% to GBP3.31 billion while total advertising revenue was down 1.5%, having been guided to fall 2%.
Pretax profit for the year fell to GBP530 million from GBP567 million, though, as operating costs increased to GBP2.77 billion from GBP2.61 billion.
Looking ahead, ITV expects advertising revenue to be up 2% in the first quarter of 2020, though early indications suggest it will be down 10% in April. The broadcaster noted that it has seen travel advertising deferments relating to the coronavirus outbreak.
Britbox UK is on plan, ITV said, following the launch of the video streaming service in November.
"Early results show a good performance in line with our business plan, with brand awareness high following a successful advertising and brand launch. We are seeing strong subscriber appeal with the majority of customers converting to become paying subscribers after the free trial period," said ITV.
ITV said its BritBox UK venture made a loss of GBP21 million in 2019 and it expects this to widen to be around GBP55 million to GBP60 million in 2020, "broadly equivalent to the net investment we previously guided to".
Industrial turnaround specialists Melrose Industries said its 2019 results were "comfortably ahead" of expectations.
Revenue for the year jumped to GBP10.98 billion from GBP8.15 billion in 2018, while it swung to a pretax profit of GBP106 million from a GBP542 million loss.
GKN Aerospace sales grew by 7% in 2019, and the division's adjusted operating margin rose to 10.6%, up from 9.9% in 2018. GKN Automotive sales fell by 6% with a margin of 7.7% versus 6.8% in 2019.
Melrose said it has appointed advisers to explore "strategic options" for the Nortek Air Management business.
"We are delighted with the Melrose performance in 2019 and the substantial value that is being unlocked. Notwithstanding any implications of the COVID-19 outbreak, the bedrock has now been built for the GKN businesses to attain results which were not previously achievable, and, in addition, the shareholder value built up in our longer held assets is closer to being realised," said Chair Justin Dowley.
Melrose lifted its full-year dividend by 11% to 5.1 pence.
Insurer Aviva said it made good progress in 2019, "but there is much more to do".
Gross written premiums rose to GBP31.24 billion from GBP28.66 billion, with net earned premiums rising to GBP27.47 billion from GBP26.25 billion.
Boosted by net investment income of GBP40.58 billion versus an expense of GBP10.91 billion the year before, pretax profit more than doubled to GBP3.93 billion from GBP1.65 billion.
"In 2019, our customer numbers were up 2% to 33.4 million and we improved growth in premiums and managed assets. There is much more to do, simplifying our business, reducing costs and navigating competitive markets to make Aviva a stronger, simpler and better company," said Chief Executive Maurice Tulloch.
In the FTSE 250, exhibitions and conferences firm Hyve said it expects a hit from the coronavirus outbreak.
It expects a hit between GBP17 million to GBP19 million on revenue in the current financial year, translating to a GBP16 million to GBP18 million dent in profit.
This comes as it has had to postpone events, particularly in Asia, also noting that US companies are discouraging business travel, including conference attendance.
Hyve added that it has already booked GBP200 million in revenue for the current financial year, and it continues to be "highly cash generative".
Stobart said it will write down its investment in Flybe after the regional airline's collapse.
The airline announced in the early hours of Thursday it had ceased trading with immediate effect and that administrators had been appointed. Crisis talks were held throughout Wednesday to try to secure a rescue package, but no deal was agreed.
Flybe was bought by a consortium called Connect Airways, made up of Virgin Atlantic, Stobart Group Ltd and Cyrus Capital, in February 2019, after running into earlier financial problems.
"Stobart Group's initial investment was made up through the sale of Stobart Air and its aircraft leasing business, Propius. As a result, the non-cash balance sheet impact on Stobart Group is GBP43.3 million and the additional GBP7m investment made in 2020. The value of both these investments will now be written down to nil on its balance sheet," said Stobart.
Stobart added that Flybe had shown "promising signs of a turnaround", but the impact of Covid-19 on Flybe's trading means the consortium "can no longer commit to continued financial support".
"As a result of this news, London Southend Airport will see a short-term impact, with Flybe having planned to operate ten routes from the airport from Spring of this year. However, the long-term prospects of that airport remain compelling," said Stobart, which operates the airport in question.
Sterling was quoted at USD1.2875 early Thursday, higher than USD1.2812 at the London equities close on Wednesday.
The euro traded at USD1.1137 early Thursday, soft against USD1.1141 late Wednesday. Against the yen, the dollar was quoted at JPY107.28 versus JPY107.25.Â
The economic events calendar on Thursday has UK mortgage approvals at 0930 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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