(Alliance News) - Stock prices in London are seen weakening on Tuesday, despite a strong handover in Asia where stocks rose as trade data in China soothed recessionary fears.
Still, the mood in financial markets is largely upbeat, Avatrade analyst Naeem Aslam commented, with investors betting on Friday's poor US jobs data slowing any tapering plans by the US Federal Reserve.
"Financial markets are upbeat because investors interpreted Friday's disappointing jobs report as a reason for the Fed to postpone its tapering of bond purchases," Aslam explained.
In early UK corporate news, packaging firm DS Smith said box volumes are topping pre-virus levels and gambling firm 888 Holdings launched a new betting and iGaming platform in Colorado. Housebuilder Vistry said its first half topped forecasts, while retailer Ted Baker said trading is in line with expectations, with full price sales improving.
IG futures indicate the FTSE 100 index is to open 12.0 points lower, 0.2%, at 7,175.18. The blue chip index closed 48.83 points, or 0.7%, at 7,187.18 on Monday.
Markets in New York were closed on Monday to observe Labor Day.
The pound was quoted at USD1.3822 early on Tuesday morning in London, largely flat from USD1.3820 at the London equities close on Monday. The euro stood at USD1.1865, up from USD1.1860. Against the yen, the dollar was trading at JPY109.92, up from JPY109.85.
UK house prices reached another record high in August, Halifax said on Tuesday, though the pace of annual growth continues to slow, hitting a five-month low.
The average UK house price rose 0.7% monthly in August to GBP262,954. The annual growth was 7.1%, slowing from 7.6% in July.
Growth still topped market expectations, however. According to consensus cited by FXStreet, UK house prices were expected to register monthly growth of 0.4% in August, and an annual rise of 5.5%.
"Given the rapid gains seen over the past 12 months, August's rise was relatively modest and the annual rate of house price inflation continued to slow, hitting a five-month low of 7.1% (versus 7.6% in July). However, compared to June 2020, when the housing market began to reopen from the first lockdown, prices remain more than GBP23,600 higher (or 9.9%)," Halifax Managing Director Russell Galley said.
Although growth has slowed, Galley does not expect prices to go into reverse. Halifax's managing director said Covid-induced trends, such as working from home, are unlikely to go away anytime soon.
Traders have one eye on central bankers this week, with both the European Central Bank and Bank of Canada reporting monetary policy decisions.
The Reserve of Bank of Australia on Tuesday opted to press on with QE tapering plans, despite conceding that a recent rise in Covid-19 infections will hit GDP and the employment market.
Until "at least mid-February 2022", its weekly bond-buying programme will be worth AUD4 billion, about GBP2.15 billion, down from AUD5 billion previously.
The central bank left its the cash rate target at 0.1%. It said the economic effects from a surge in virus infections will be "temporary".
"RBA thereby joins a growing number of central banks scaling back its emergency bond purchase programmes. Next in focus will be the ECB's and Fed's tapering plans later this week/month," analysts at Danske Bank commented.
The S&P/ASX 200 in Sydney ended marginally higher.
In China, the Shanghai Composite was up 1.5% in late trade on Tuesday, the Hang Seng Index in Hong Kong was also up 1.5%, while Tokyo's Nikkei 225 extended its winning streak to seven days, ending 0.9% higher.
China's exports and imports enjoyed forecast-beating growth in August, as data on Tuesday showed overseas demand for cars, electronics and consumer goods surged while a domestic coronavirus resurgence was brought to heel.
The news follows a recent spate of weak figures that had suggested the recovery in the world's second-biggest economy was flattening owing to a spike in the Delta Covid variant that has forced some countries to impose strict containment measures and hit consumer sentiment.
It also came despite the shutdown of a major port caused by a virus outbreak, which observers had expected to hit shipments.
Exports jumped 26% on-year, while imports rose 33%, according to the Customs Administration. The readings were both sharply up from July and far better than estimates in a Bloomberg survey of 17% and 27%, respectively.
China's trade surplus came in at USD58.3 billion, up 2.2% on-year and higher than the USD53.2 billion expected.
Halley added: "China's data will take the heat of the recessionary fears but may also lessen the likelihood, in investors' minds, of the need for China to open the stimulus taps."
In London, FTSE 100-listed DS Smith said it is pleased with progress made since it ended its last financial year in April.
It affirmed that Covid-19 has accelerated a drive to sustainability and e-commerce.
"Accordingly, while the macroeconomic environment remains uncertain, we remain confident about the prospects for the business in this financial year and beyond," Chief Executive Miles Roberts said.
DS Smith said box volumes have grown "very strongly" in the period since May 1, rising annually and topping levels seen in 2019.
Cost pressures are mounting, however.
The company explained: "Input costs have continued to rise with notable increases in the cost of energy and transportation. Combined with the cost of old corrugated cases remaining high, this has resulted in further significant increases in the price of paper. Given the strong demand for our packaging we have seen good progress towards recovering these increases."
Elsewhere, 888 said it has launched a new "wagering experience" in the US state of Colorado, alongside Sports Illustrated. The launch in Colorado will serve as a platform for SI Sportsbook to expand in other states.
Sports betting laws in the US are being relaxed in many states for the first time following a Supreme Court ruling in 2018, allowing bookmakers to tap into the lucrative market there.
888 added: "With more than 30 million monthly unique users, Sports Illustrated will engage readers and fans by seamlessly incorporating betting information and insights from SI Sportsbook across its content, media, and gaming. 888 will provide unique and differentiated tools including a multi-sport Pickem game, betting widgets, betting education tools, and intelligent hyperlinking to create a dynamic sports betting experience for customers."
Housebuilder Vistry said its first half performance was "significantly ahead of our expectations".
Revenue in the six months to June 30 surged 82% to GBP1.10 billion from GBP606.4 million. It swung to a pretax profit of GBP156.2 million from a GBP12.2 million loss a year earlier.
It proposed a 20 pence dividend, having not declared one this time a year earlier.
Completions surged 76% to 5,351 during the half, from 3,034 a year ago, with the 2020 comparison period lapping a time which saw the UK housing sector shuttered due to Covid-19 containment measures.
"We have had a positive start to the second half with customer interest and sales remaining strong," Vistry added.
It raised its annual outlook. It now expects adjusted pretax profit of GBP345 million, ahead of consensus estimates.
Ted Baker said it has made "encouraging progress" during its second quarter ended August 14, with revenue rising 50% annually.
The company said it has "snapped back from the material negative impact from the Covid pandemic".
Reported retail sales were 30% higher than a year earlier, though also down 30% from pre-pandemic times.
Promisingly, however, full price sales have improved, meaning Ted Baker has not needed as much promotional activity to flog stock.
Margins have improved as a result. Its retail trading margin has risen over 500 basis points annually and 190 basis points from two years earlier, so before the onset of the virus.
E-commerce sales fell 25%, however, though this is a reflection of its "highly promotional stance last year".
"We have made encouraging progress, with trading over the second quarter in line with expectations, albeit the speed of recovery is different across store locations and regions. Full price sales mix has significantly improved across all our retail channels as we continue to re-establish our premium lifestyle brand positioning," CEO Rachel Osborne said.
Still to come on the economic calendar is eurozone economic growth figures at 1000 BST, and at the same time the latest ZEW economic survey in Germany is released.
Brent oil was quoted at USD72.58 a barrel early Tuesday, up from USD72.20 late Monday. Gold fetched USD1,815.61 an ounce, down from USD1,822.55.
By Eric Cunha; ericcunha@alliancenews.com
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