(Alliance News) - Stock prices in London are seen opening lower on Thursday as hopes of an end to the coronavirus crisis were tempered by concerns over the distribution of a potential vaccine.
In early company news, luxury fashion retailer Burberry Group posted a drop in interim earnings as the coronavirus shuttered stores across the globe. Discount retailer B&M rewarded shareholders with a special payout after bumper profit. Bookmaker William Hill's takeover by Caesars Entertainment moved a step closer as Apollo formally backed away.
IG futures indicate the FTSE 100 index is to open 55.50 points lower at 6,326.60. The blue-chip index closed up 85.25 points, or 1.4%, at 6,382.10 Wednesday.
Burberry Group reported a drop in first-half earnings as the fashion house pointed out that 60% of its stores globally closed due to the coronavirus pandemic during the period.
For the half-year ended September 26, revenue was down 31% at GBP878 million from GBP1.28 billion a year before, and pretax profit was down 62% at GBP73 million from GBP193 million.
Burberry declared no interim dividend having paid out 11.3 pence last year.
"We are encouraged by the recovery in the second quarter but remain conscious of the uncertain macro-economic environment caused by Covid-19. We currently have more than 10% of our stores closed globally following the recent lockdowns in EMEIA. With the brand resonating and attracting new and younger consumers, we have taken the decision to reduce markdowns and this will be a revenue headwind in the second half with the main impact in third quarter but will serve the long-term interest of the brand. We are well-positioned to continue to drive performance and deliver growth in the medium term," the company said.
B&M European Value Retail reported a strong first half as customers turned to its discount offering during the pandemic.
For the half year to September 26, revenue was up 25% to GBP2.24 billion from GBP1.79 billion last year, and pretax profit more than doubled to GBP235.6 million from GBP106.0 million.
B&M raised its interim dividend 59% to 4.3p per share from 2.7p last year and also declared a special dividend of 25.0p.
Looking ahead, B&M said like-for-like sales growth in the UK is expected to moderate over the second half, but so far in the third quarter, trends have been at a similar level to the interim period.
"Although both the B&M UK and Heron Foods businesses remain open, there is significant uncertainty surrounding both the nature and duration of Covid-19 restrictions during the second half of the financial year. As such, the range of potential outcomes for FY21 remains unusually wide at this stage of the year and it is difficult to make a clear assessment of how consumers will react over the coming months. However, against this backdrop, whilst acknowledging the outlook for consumer confidence remains unknown, the B&M group is cautiously optimistic that its broad range of essential goods will continue to appeal to customers," the company said.
Apollo Management International confirmed that it won't make a takeover offer for William Hill, but said it reserves the right to do so if the current offer from Caesars is falters.
Market sentiment was boosted earlier this week after US pharma company Pfizer said its vaccine candidate had proved to be 90% effective.
However, a worrying spike in new infections in the US and Europe has fanned concerns about a deadly winter in the northern hemisphere with a number of countries already in lockdown.
Several major economies in Europe have shut down or have imposed strict containment measures, while a number of US cities including New York have been forced to act to contain the spread. With infection and death rates continuing to spike there are concerns the crisis will extend into the new year.
After several weeks of rapidly rising coronavirus cases, hospitals around the US are once again overwhelmed, forcing local authorities to take new measures to cope with the pandemic.
On Wednesday a record 65,368 people were in the hospital with Covid-19 across the country, marking the second day in a row and second time ever that the tally passed the 60,000 mark, according to the Covid Tracking Project.
"Now that a couple of days have gone by and we've had more time to absorb the enormity of this week's announcement, we are now starting to hear some more [dissenting] voices make their presence felt, in terms of the logistical difficulties involved in the distribution of this vaccine, as well as how effective the vaccine is likely to be on a longer-term basis," said CMC Markets analyst Michael Hewson.
"These concerns could well start to see a little profit taking start to creep in as Europe wakes up for a new trading session, with markets here set for a modestly lower open," Hewson added.
The Japanese Nikkei 225 index ended up 0.7% on Thursday. In China, the Shanghai Composite closed down 0.1%, while the Hang Seng index in Hong Kong is 0.4% lower.
The pound was quoted at USD1.3192 on Thursday morning in London, flat from USD1.3199 at the London equities close Wednesday.
The UK economy returned to growth on a quarterly basis in the third quarter as lockdown measures eased, according to figures from the Office for National Statistics.
On an annual basis, UK gross domestic product fell 9.6% in the three months to September, the economy's contraction slowing from 21.5% in the second quarter of 2020. The third-quarter reading was slightly worse than market forecasts, cited by FXStreet, for an annual contraction of 9.4%.
However, on a quarterly basis, UK GDP grew by 15.5% in the third quarter, having shrunk by 19.8% in the second quarter. The quarterly figure also slightly missed the consensus estimate, which called for 15.8% growth.
The euro stood at USD1.1772, firm from USD1.1763 late Wednesday in London. Against the yen, the dollar was trading at JPY105.25, down from JPY105.57.
Brent oil was quoted at USD43.98 a barrel Thursday morning, down from USD44.30 at the London equities close Wednesday. Gold was trading at USD1,870.85 an ounce, firm against USD1,863.53.
The economic calendar Thursday has Ireland's consumer price index reading is due at 1100 GMT and EU industrial production is due at 1000 GMT. The afternoon sees US initial jobless claims out at 1330 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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