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(Alliance News) - Stock prices in London are seen opening in the red on Wednesday, with investors unnerved by tensions between the US and China, after a senior US politicians touched down in Taiwan.
IG futures indicate the FTSE 100 index is to open 19.5 points, 0.3%, lower at 7,389.61. The large-cap index closed down 4.31 points, or 0.1%, at 7,409.11 on Tuesday.
In early UK corporate news, housebuilder Taylor Wimpey said its first-half outturn was ahead of expectations. Iron pellet producer Ferrexpo reported substantially lower profit as it copes with the Ukraine-Russia conflict. Insurer Hiscox reported an interim loss due to an investment loss, amid equity market sell-off in the first half of the year.
Elsewhere, the acquisition of cybersecurity firm Avast by a US peer received UK regulatory backing.
Taylor Wimpey reported a rise in interim profit as it trimmed expenses.
Revenue in the half-year that ended July 3 came in slightly lower, however, at GBP2.08 billion, down 5.4% from GBP2.20 billion a year earlier.
Pretax profit rose 16% year-on-year to GBP334.5 million from GBP412.5 million. Net operating expenses were 15% lower at GBP189.9 million.
Taylor Wimpey completed 6,790 homes during the half, excluding joint-ventures, down 7.0% year-on-year but ahead of guidance.
"The housing market continues to be resilient despite inflationary pressures in the wider economy and recent rises in the Bank of England base rate. There remains good availability of attractively priced mortgages, and we continue to see a healthy level of demand for Taylor Wimpey homes reflecting the quality of our homes and locations nationwide," it said.
Taylor Wimpey expects yearly operating profit at the top end of the current market consensus range, helped by average selling prices, which forecasts to rise 4% to 5% year-on-year.
It declared a 4.62 pence per share dividend, up 12% from 4.14p a year earlier.
"Our intention remains to return cash generated by the business in excess of that needed by the group to fund land investment, all working capital, taxation and other cash requirements of the business, and once the ordinary dividend has been met. We will review the level of excess capital and potential return in respect of 2022 at the time of the 2022 full year results in March 2023, for payment in 2023," Taylor Wimpey added.
The UK Competition & Markets Authority said it has provisionally cleared NortonLifeLock's buy of Avast, after an in-depth probe of the GBP6 billion deal.
"The CMA's investigation has found that the supply of cyber safety software to consumers is rapidly evolving. Providers of both paid-for and free services are continually developing and improving their products over time to meet different and changing customer needs," the watchdog said.
The enlarged firm still faces stiff competition, including "main rival" McAfee, the CMA explained. In addition, Microsoft's own in-house cybersecurity applications in the Window operating system are "increasingly important alternatives for consumers".
Insurer Hiscox said it swung to a loss in the half-year that ended June 30. It reported a pretax loss of USD107.4 million, swinging from a profit of USD133.4 million a year prior.
Hiscox suffered an investment loss of USD214.1 million, after a gain of USD61.9 million a year earlier. It put the poor investment result down to "to interest rates rising sharply, credit spreads widening, and equity markets selling off."
Gross written premiums increased 9.2% year-on-year to USD2.65 billion from USD2.43 billion. Its combined ratio improved to 91.3% from 93.1%, the lower figures Hiscox is making more profit from its underwriting operations.
Hiscox said it estimates its loss from the Ukraine and Russia conflict is USD48 million, net of reinsurance.
It added: "The second quarter has been relatively benign for natural catastrophe events, such that the net natural catastrophe losses in the first half are within our expectation and budget. Excluding the impact of the conflict in Ukraine, all Hiscox business divisions continued to enjoy favourable claims experience."
Iron ore pellet producer Ferrexpo has its operations in central Ukraine so its first-half financials felt the brunt of the conflict.
Sales volumes declined 21% and pellet production was 14% lower in the first half of 2022. Ferrexpo said pellet sales have been largely limited to European customers due to Russia's blockade of Ukraine's Black Sea ports. More positive, it said, pellet prices are strong due to reduced supply to global markets from Russia.
Ferrexpo's revenue declined 31% year-on-year to USD936.9 million from USD1.35 billion. Pretax profit plunged 80% to USD155.7 million from USD796.9 million a year earlier.
"Twelve months ago, we spoke in our interim results announcement of an exciting future ahead for the Ferrexpo business, and whilst this positive growth story remains in the group's plans, today we are focused on supporting the people and communities of Ukraine following more than 150 days of Russia's continued invasion. The results announced today reflect an unprecedented period in the history of Ukraine, and Ferrexpo, and should be viewed as a result derived through the strength and determination of Ferrexpo's workforce in Ukraine and those involved in facilitating the export of the group's products," Non-Executive Chair Lucio Genovese said.
"Despite the ongoing conflict in Ukraine, the group continues to invest in the future - advancing both near-term projects to completion such as the group's newly completed medium and fine crushing plant, to the development of longer term projects such as development stripping activities at the group's third mine - Belanovo, which have continued despite the current environment. The group's major capital investment programme, the Wave 1 expansion project, which will add a further three million tonnes of annual pellet production, remains paused, but will recommence once the conflict risk facing the group subsides."
Lender Bank of Ireland reported a first half profit decline.
Pretax profit fell 18% to EUR335 million in the first half of 2022 from EUR406 million a year prior. Total operating income slumped 68% to EUR904 million from EUR2.80 billion.
Net interest income alone, however, was largely flat at EUR1.08 billion. The total operating income figure was hit by a EUR1.48 billion loss in life assurance investment income, swinging from a EUR614 million gain a year prior.
In New York on Tuesday, the Dow Jones Industrial Average fell 1.2%, the S&P 500 lost 0.7%, and the Nasdaq Composite ended 0.2% lower.
US House Speaker Nancy Pelosi said Wednesday that her delegation had come to Taiwan in "peace for the region", after the visit enraged Beijing and set off a diplomatic firestorm.
She defied a string of increasingly stark warnings and threats from China, which views Taiwan as its territory and had warned it would consider her visit a major provocation.
Pelosi, second in line to the presidency, is the highest-profile elected US official to visit Taiwan in 25 years.
Stocks in Asia were mixed amid the US-China tensions. The Nikkei 225 in Tokyo closed up 0.5%. In China, the Shanghai Composite was down 0.3%, while the Hang Seng Index in Hong Kong was 0.5% higher. In Sydney, the S&P/ASX 200 was down 0.3%, however.
The dollar was stronger across the board, however.
The pound was quoted at USD1.2169 early Wednesday in London, down from USD1.2210 late Tuesday. The euro stood at USD1.0176, down from USD1.0195. Against the yen, the dollar was trading at JPY133.25, up markedly from JPY131.80.
Brent oil was quoted at USD100.26 a barrel early Wednesday UK time, firm from USD99.99 at the London equities close on Tuesday. The OPEC+ group of major oil exporters meets Wednesday to discuss its output strategy.
Gold stood at USD1,767.37 an ounce, down from USD1,778.85.
The economic events calendar on Wednesday has services PMI readings from the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. There are also eurozone retail sales and producer prices at 1000 BST.
Already out, China's services sector saw strong growth in July, the PMI survey data showed, as reduced Covid restrictions allowed for "more normal" working conditions.
The seasonally adjusted headline business activity index picked up in July, rising to 55.5 points from 54.5 in June. Any figure above 50.0 signals expansion. The print was significantly higher than market consensus, according to FXStreet, which had predicted a lowly 48.0 reading.
By Eric Cunha; ericcunha@alliancenews.com
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