(Alliance News) - Stock prices in London were seen opening higher on Monday, with traders in Europe drawing confidence from an afternoon turnaround for US equities on Friday.
Monday's handover from Asia was cautious, however, as investors there remain mindful of the Covid-19 situation in China.
In early UK corporate news, Kingfisher said first-quarter sales were above pre-pandemic levels but had weakened year-on-year. The B&Q owner also unveiled a GBP300 million share buyback.
IT service provider Kainos posted a revenue rise, though annual profit fell. Retailer Ted Baker said it has progressed talks with a preferred suitor to the due diligence phase as its formal sales process continues.
IG futures indicate the FTSE 100 index will open 72.5 points, 1.0%, higher at 7,442.68. The blue-chip index closed up 87.24 points, or 1.2%, at 7,462.48 on Friday.
In Tokyo, the Nikkei 225 closed 1.0% higher. The Shanghai Composite was marginally lower in late trade, while the Hang Seng in Hong Kong was 1.2% lower. The S&P/ASX 200 ended fractionally higher in Sydney.
In the US on Friday, the Dow Jones Industrial Average and S&P 500 staged a late rally to close flat, reversing heavy losses. The Nasdaq Composite lost 0.3%.
"The week starts with an improved sentiment. The S&P 500 just avoided closing in the bear market last Friday, but the index sank its teeth into the bear zone for the first time since the pandemic sell-off, and fell for the seventh straight week, for the first time since 2001. US futures are in the positive this Monday, as some investors see opportunity in the actual market dip. But the trading conditions will likely remain choppy, and gains may remain short-lived," Swissquote analyst Ipek Ozkardeskaya commented.
In London, FTSE 100-listed Kingfisher said group sales in the three months to April 30 fell 5.8% year-on-year to GBP3.25 billion. At constant currency, sales were down 4.2%. On a like-for-like basis, they were 5.4% lower.
The DIY retailer said its quarterly performance was "in line with our expectations".
Sales were 16% higher on a like-for-like basis compared to three years earlier, before the onset of the pandemic.
In the UK & Ireland unit alone, which includes B&Q and Screwfix, sales were down 14% yearly to GBP1.57 billion.
Chief Executive Thierry Garnier said: "While facing very strong comparatives in the prior year, our continued strategic progress has enabled us to retain a significant proportion of the increased sales during the pandemic.
"Looking forward, we are reiterating our profit guidance for [financial year 2023]. We are focused on delivering on our strategic objectives and growth initiatives, including the growth of our scalable e-commerce marketplace, the expansion of Screwfix in the UK and France, new store openings in Poland, further increasing our trade customer base."
Kingfisher expects adjusted pretax profit of GBP770 million for the current financial year, which runs to the end of January 2023. This would be a 4.5% improvement from GBP737 million in financial 2022.
Group sales for the two weekends ended May 14 were down 2.5% on a like-for-like basis. CEO Garnier said the company is managing "inflationary and supply chain pressures".
The company also has more "surplus capital", which in line with policy will be returned to shareholders.
"Further to the ordinary dividend and the recently completed GBP300 million share buyback, the board is pleased to announce the return of a further GBP300 million of surplus capital via a share buyback programme. The first tranche of this programme will commence soon," Kingfisher said.
FTSE 250-listed Kainos said revenue in the year that ended March 31 climbed 29% to GBP302.6 million from GBP234.7 million. The figure topped a GBP297 million forecast from Shore Capital Markets.
Pretax profit declined 8.6% to GBP46.0 million from GBP50.3 million. Adjusted pretax profit inched up 3.0% to GBP58.8 million from GBP57.1 million.
The Belfast-based company provides digital services to the public sector, healthcare market and commercial customers. In addition, it is a partner of Pleasanton, California-based enterprise software provider Workday.
CEO Brendan Mooney said: "Our latest business results outline the consistency of our long-term performance, as we recorded our twelfth consecutive year of growth - in terms of people, customers, revenue and profitability."
Operating expenses rose 37% to GBP93.6 million.
Kainos lowered its payout 21% to 22.2 pence from 28.2p.
Elsewhere in London, retailer Ted Baker said it has reviewed a number of non-binding takeover proposals. It has picked a "preferred counterparty", which it didn't name, and will now move into a "process of confirmatory due diligence".
"This process is likely to take several weeks. There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made," the company said.
Ted Baker kicked off a formal sales process in April. At the time, it had said that Sycamore Partners Management, the New York-based private equity firm whose spurned approaches had triggered the sales process, was participating. On Monday, however, Ted Baker said Sycamore is no longer participating in the sales process.
The dollar was weaker early Monday.
Sterling was quoted at USD1.2558 early Monday in London, rising from USD1.2463 late Friday. The euro traded at USD1.0599, up from USD1.0547. Against the yen, the dollar faded to JPY127.79 from JPY127.86.
Focus over the course of the week will be on the Davos summit of global political and business elites, the first in person after a Covid-induced two-year break.
Global leaders are now facing another crisis, Russia's invasion of Ukraine.
The theme of the World Economic Forum, "History at a Turning Point", sets the tone for the four-day meeting in the glitzy Swiss mountain resort that will be dominated by the political and economic fallout from the conflict.
When the WEF last took place in Davos in January 2020, the coronavirus was just brewing in China before morphing into a devastating pandemic.
A Davos forum took place virtually last year, with Russian President Vladimir Putin among the speakers.
Russian business and political leaders, who used to participate in debates and mingle with other A-listers at champagne parties, were barred by organisers from attending this year's gathering over the war.
Gold was priced at USD1,853.38 an ounce early Monday, up from USD1,846.32 late Friday. Brent oil was trading at USD113.28 a barrel, up from USD112.40.
Monday's economic calendar has the latest Ifo German business climate index at 0900 BST.
By Eric Cunha; ericcunha@alliancenews.com
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