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(Alliance News) - Stocks in London are set to pull back on Tuesday after a strong start to the week and despite gains in New York overnight.
In early UK company news, Ashtead said it anticipates full-year results ahead of expectations. Renishaw put itself up for sale after its founders gave notice of their intention to sell their combined 53% stake.
IG says futures indicate the FTSE 100 index of large-caps to open 12.13 points lower, or down 0.2%, at 6,576.40 on Tuesday. The FTSE 100 closed up 105.10 points, or 1.6%, at 6,588.53 on Monday.
"Equity markets started off the new month on the front foot yesterday as lower bond yields combined with stimulus hopes from the US boosted sentiment. Last week, stocks saw some selling pressure as increases in government bond yields acted as an excuse for dealers to reduce their equity positions – indices were coming from a relatively high position," commented David Madden at CMC Markets.
The US Senate will start its debate "this week" on US President Joe Biden's massive economic stimulus plan, Democratic Majority Leader Chuck Schumer said Monday.
The House of Representatives, also under Democratic control, on Saturday approved the USD1.9 trillion package designed to jumpstart the US economy after the implosion caused by the Covid-19 pandemic, and which included a hike in the federal minimum wage.
After an hours-long debate, the lower chamber adopted the bill early Saturday by 219 votes, all Democratic, against 212, which included two Democrats, with the Republicans denouncing it as too costly and not specifically targeted enough.
Positive vaccine news this week also has helped to lift stocks, with a study from Public Health England showed a single shot of the Pfizer or Oxford vaccine offers dramatic protection against hospital admission and severe disease in older people.
Protection against even developing symptomatic Covid-19 in the first place ranged between 57 and 61% for one dose of Pfizer and between 60 and 73% for the Oxford/AstraZeneca vaccine, the study found.
On top of the protection against symptomatic disease, the over-80s who had been vaccinated with one dose of Pfizer had an additional 43% lower risk of emergency hospital admission and an additional 51% lower risk of death, according to the study. Meanwhile, over-80s who had been vaccinated with one dose of the Oxford vaccine had an additional 37% lower risk of emergency hospital admission, while there is currently insufficient follow-up data to assess the impact on death.
The authors said that "both vaccines show similar effects", adding: "Combined with the effect against symptomatic disease, this indicates that a single dose of either vaccine is approximately 80% effective at preventing hospitalisation and a single dose of (Pfizer) is 85% effective at preventing death with Covid-19."
Wall Street closed strongly higher on Monday. The Dow Jones Industrial Average added 2.0%, the S&P 500 2.4% and the Nasdaq Composite 3.0%.
CMC's Madden noted: "Stock markets in Asia enjoyed gains in early trading but the bullish sentiment faded so now they are in the red. European markets are on track to hand back some of yesterday's strong gains."
The Nikkei 225 index in Tokyo closed down 0.9% on Tuesday. The Shanghai Composite closed down 1.2%, while the Hang Seng index in Hong Kong is down 1.0%. The S&P/ASX 200 in Sydney closed down 0.4%.
In early UK company news, Ashtead guided to full-year results ahead of previous expectations.
The equipment rental firm said that in the third quarter, underlying rental revenue was down 1% at GBP1.08 billion, with underlying pretax profit down 10% to GBP225 million.
Statutory revenue was down 1% to GBP1.21 billion for the third quarter and down 2% to GBP3.76 billion for the nine-month period to January 31. Statutory pretax profit was down 4% to GBP210 million in the third quarter and down 17% to GBP716 million in the nine months.
"This performance illustrates the successful execution of our long-term strategy, which we embarked upon after the last recession, to broaden and diversify our end markets and strengthen our balance sheet. This has enabled us to capitalise on our increasing scale while, at the same time, maintaining the business' agility," said Chief Executive Brendan Horgan.
Horgan added: "The strength of our business model and balance sheet positions the group well in markets that are likely to remain uncertain. With our businesses performing well, we now expect full year results ahead of our previous expectations. The benefit we derive from the diversity of our products, services and end markets, coupled with ongoing structural change, enables the board to look to the future with confidence."
Flutter Entertainment's 2020 revenue more than doubled, boosted by its merger with Stars Group during the year.
The gambling firm's revenue for 2020 jumped to GBP4.40 billion from GBP2.14 billion in 2019, with adjusted earnings before interest, taxes, depreciation and amortisation also doubling to GBP889 million from GBP425 million. Pretax profit all but evaporated, dropping to GBP1 million from GBP136 million.
The sharp slide in profit came after separately disclosed items totalling GBP565 million for 2020, up from just GBP131 million in similar charges in 2019.
"The growth in SDIs was primarily driven by an increase in the amortisation of acquired intangibles from GBP113 million to GBP432 million associated with the combination with [the Stars Group] and deal costs associated with the TSG merger and the initial delivery of synergies. Adjusted net interest expense reflects the significant increase in debt from the point of the combination with TSG," said Flutter.
On a proforma basis, which adjusts for the completion of the Stars Group deal in May, revenue rose a more moderate, but still robust, 27% to GBP5.26 billion and adjusted Ebitda rose 13% to GBP1.23 billion.
"2020 was an historic year for the group as we completed our merger with TSG, commenced the integration of our two businesses and increased our ownership of FanDuel in the US, whilst at the same time navigating the challenges presented by the Covid-19 pandemic," said Chief Executive Peter Jackson.
Flutter said it has seen strong momentum in 2021 with growth in player volumes across all divisions. Revenue has been up 36% year-on-year in the first seven weeks of 2021.
"Covid restrictions continue to impact our retail business in the UK and Ireland. The latest government guidelines suggest that our UK shops may re-open in mid-April while it looks like it could be May at the earliest before we are able to reopen our Irish shops. For each month that our UK estate is shut, we anticipate an EBITDA loss of GBP5 million while in Ireland, the monthly loss is expected to be GBP4 million," the firm noted.
Housebuilder Taylor Wimpey noted a good recovery in the second half of a "very challenging" year.
Completions fell 39% to 9,799, primarily due to site shutdowns in the second quarter due to the pandemic, with revenue for 2020 falling 36% to GBP2.79 billion. Pretax profit slumped 68% to GBP264.4 million.
"After an unusual and volatile year, our 2020 results are in line with market expectations," said Taylor Wimpey.
The FTSE 100 constituent continued that the 2021 selling season has started well, following on from a stronger-than-expected housing market recovery in the second half of 2020.
"In 2021, assuming the market remains broadly stable, we expect to deliver 85-90% of 2019 volumes and make further progress towards our medium term operating margin target of c.21-22%," the company said.
Taylor Wimpey added that it will be resuming ordinary dividend payments by returning GBP151 million, or 4.14 pence per share, as a final payout for 2020. The firm cancelled its 2019 final dividend and a planned special payout.
"We are not proposing to return excess capital in 2021. We will review the level of excess capital and potential return in respect of 2021 at the time of the 2021 full year results in February 2022, for payment in 2022," the company said.
Rio Tinto said it plans to dispute amended assessments brought forward by the Australian Taxation Office.
The tax office has issued the miner with amended assessments of AUD359.4 million - around USD279.8 million - primary tax and AUD47.1 million of interest. This is on top of more than AUD8.4 billion of Australian income tax paid during the same period, the company highlighted.
"The assessments relate to the denial of interest deductions on an isolated borrowing used to pay an intragroup dividend in 2015. This borrowing was repaid in 2018. Borrowing to fund the payment of a dividend is a normal commercial practice. Rio Tinto is confident of its position and will dispute the assessments," the miner said.
In line with its usual practice, Rio will pay 50% of the primary tax upfront as part of the objections process.
Engineering and scientific technology firm Renishaw said it is launching a formal sale process.
Executive Chair David McMurtry and Non-Executive Deputy Chair John Deer, the company's founders, have indicated they intend to sell their "very substantial" shareholdings in Renishaw. Together, the founders own around 53% of the group, and have expressed a preference for the disposal of their entire combined shareholding.
The board has mulled over various options with its advisers, and has unanimously concluded that it would be appropriate to investigate the sale of the company and thus is launching a formal sale process. UBS is acting as sole financial adviser and corporate broker to the company.
"We are both grateful for our continued good health, however we recognise that neither of us is getting any younger. Now finding ourselves in our 80s, our thoughts have increasingly turned to considering the future of our shareholdings in the company and how we can actively contribute to securing the future success of the business. With that in mind, we approached the rest of the board to indicate that we felt the time was now right to discuss the best way to achieve this," said McMurtry and Deer.
The dollar gained ground against major counterparts Tuesday as the mood became more cautious.
Sterling was quoted at USD1.3882 early Tuesday, lower than USD1.3953 at the London equities close on Monday.
The euro eased to USD1.2017 from USD1.2055 late Monday. Against the yen, the dollar was quoted at JPY106.87 versus JPY106.62.
Gold was priced at USD1,721.68 an ounce early Tuesday, lower than USD1,737.01 on Monday. Brent oil was trading at USD63.05 a barrel, down from USD64.94 late Monday.
The data calendar has German unemployment figures at 0855 GMT and eurozone inflation data at 1000 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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