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(Alliance News) - Stock prices in London are seen opening lower on Tuesday, though expectations of a bumper US stimulus passing into law lifted Asian equities, after Wall Street surged on Monday.
"Lawmakers in Washington appear to be moving closer to achieving their task: another fat stimulus bill. Treasury Secretary Janet Yellen has already indicated that she completely supports this move. Yellen doesn't see any reason why the US economy needs to suffer. It appears that for her, the stimulus bill is the medicine that the sick patient needs currently," commented AvaTrade analyst Naeem Aslam.
IG futures indicate the FTSE 100 index is to open 15.5 points lower at 6,508.03. The index of London large-caps closed up 0.5%, or 34.20 points at 6,523.53 on Monday.
In early corporate news in London, Ocado Group said annual revenue jumped by a third, helped by virus-boosted demand for online grocery purchases.
Mid-cap housebuilder Bellway reported record output in its financial first half, as the housing sector was spared from the two most recent UK Covid-19 lockdowns. Less fortunate was package holiday operator Tui, which posted a sharp first-quarter loss, succumbing to European travel restrictions, but hopes for an end to these curbs around Easter.
Ocado posted GBP2.33 billion in revenue for the financial year that ended November 29, up 33% from GBP1.76 billion. This was slightly short of the GBP2.35 billion expected by the market, according to the company-compiled consensus.
Ocado's statutory pretax loss narrowed to GBP44.0 million from GBP214.5 million, with the FTSE 100 company benefiting from a GBP104.6 million gain from exceptional items, swung from a GBP94.1 million hit in financial 2019.
The boost from exceptional items this year came from insurance proceeds from a fire at its Andover, England customer fulfilment centre.
Before exceptional items, Ocado's pretax loss widened to GBP148.6 million from GBP120.4 million. According to the company-compiled consensus, the figure was expected to be unchanged.
In Retail alone, revenue jumped 35% as the online grocer got a boost from lockdown measures in the UK.
"The rapid acceleration of many pre-existing trends in business and society has been a feature of the Covid-19 crisis and the dramatic channel shift in grocery is a clear example of this," Chief Executive Officer Tim Steiner said.
Looking ahead, Ocado said annual revenue growth is "highly dependent on length of Covid-19 restrictions". It also has earmarked around GBP700 million in total capital expenditure.
Third Bridge analyst Ross Hindle said: "Ocado couldn't have asked for better trading conditions, as customers clamoured to secure online shopping slots like never before. The question now is how much of that growth will stick, and how much will slip away as lockdowns ease. Experts believe Ocado's upper-end niche market placement is likely to shield them from this pullback effect more than its big four competitors."
Among London mid-caps, Bellway said it completed 5,656 new homes in the six months to January 31. This was a 6.3% annual improvement and also "record first half volume output" for the housebuilder.
Bellway said first-half revenue was up 12% year-on-year to GBP1.72 billion.
"In the context of challenging circumstances, the group has delivered an excellent first half performance, achieving growth in volume to a record level, while maintaining high build standards and a focus on customer service," Chief Executive Jason Honeyman added.
"Looking forward, we have a sizeable forward order book, which provides a solid platform for the second half of the financial year and beyond."
Bellway said its order book stands at 5,889 homes worth GBP1.63 billion, up from 4,598 homes worth GBP1.16 billion a year ago.
Anglo-German tour operator Tui posted an 88% revenue plunge in its first quarter ended December 31. Revenue came in at EUR468.1 million from EUR3.85 billion. Its underlying loss before interest and tax stretched to EUR698.6 million from EUR146.7 million.
The dramatic revenue drop was "as a result of extended travel restrictions across our key European markets during November and December 2020", Tui explained.
New variants of Covid-19 have meant governments in Europe have been forced to impose more international travel curbs.
"Our assumption for Q2 FY 2021, is for working capital development to correlate with vaccine programme rollout and lifting of travel restrictions, with significant upside anticipated should travel restrictions be lifted ahead of Easter (early April 2020)," Tui said.
Tui said it has enough financial liquidity to bridge to the expected summer 2021 travel recovery, with EUR2.1 billion in cash and available facilities after its recent third support package of EUR1.8 billion. It said 2.8 million customers have booked holidays for summer 2021.
In Asia on Tuesday, Japan's Nikkei 225 closed up 0.4% at 29,505.93, a 30-year high. The Shanghai Composite Index was up 1.9% in late trade, and the Hang Seng Index in Hong Kong was 0.3% higher.
Financial markets in China are closed on Thursday and Friday for the Lunar New Year holiday.
Investors are betting that US President Joe Biden will succeed in enacting most aspects of his ambitious relief package, after the jobs report on Friday missed market forecasts.
The president's rescue plan would provide for stimulus checks, expanded unemployment benefits, and aid to small businesses, though it may get whittled down from its initial USD1.9 trillion price tag as it makes its way through Congress, where his Democratic party has a slim majority in both houses.
The dollar was weak early Tuesday.
Sterling was quoted at USD1.3782, up from USD1.3740 at the London market close on Monday. The euro was quoted at USD1.2082, improved from USD1.2050 at the European equities close Monday. Against the Japanese yen, the dollar fetched JPY104.76, down from JPY105.17 at the London market close on Monday.
A barrel of Brent oil was quoted at USD61.06 early Tuesday, up from USD60.32 at the London equities close on Monday. Gold fetched USD1,841.20 an ounce, improved from USD1,836.80.
By Eric Cunha; ericcunha@alliancenews.com;
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