LONDON MARKET OPEN: New Unilever Chair; SSE Tweaks Annual Guidance

(Alliance News) - Stock prices in London are set to open lower on Wednesday after US President Donald Trump failed to show any signs of easing his trade policy stance towards China or Europe.

In early UK company news, energy provider SSE swung to an interim profit and lifted its full-year earnings outlook, while soft drinks bottler Coca-Cola HBC said it delivered a solid third quarter despite poor weather, and consumer goods giant Unilever appointed a new chair.

IG says futures indicate the FTSE 100 index of large-caps to open 30.34 points lower at 7,334.70 on Wednesday. The FTSE 100 index closed up 36.90 points, or 0.5%, at 7,365.44 on Tuesday.

In the US on Tuesday, Wall Street ended slightly higher, with the Dow Jones Industrial Average ending flat, the S&P 500 up 0.2% and the Nasdaq Composite up 0.3%.

Trump on Tuesday took credit for an American economic renaissance but was greeted by another salvo from US industries that blame his trade wars for jeopardizing employment, wounding business and burdening consumers with higher costs.

But Trump doubled down, threatening to jack up tariffs even further should Washington and Beijing fail to finalize the partial trade deal he announced last month.

"If we don't make a deal, we're going to substantially raise those tariffs," Trump said Tuesday.

He also hit out at the EU, calling the bloc's barriers "very, very difficult". "The barriers they have up are terrible. Terrible. In many ways, worse than China," he said.

"A deal could happen soon," Trump said following his address to the Economic Club of New York. "We'll only accept a deal acceptable for Americans."

His comments come ahead of an EU auto tariff decision due on Thursday, with AFP reporting that the administration, despite Trump's tough words in New York, plans to issue a deferral on the issue. The delay could last up to another six months, two industry sources told AFP, with the announcement expected Wednesday or later.

The Trump administration has been threatening since last year to impose tariffs of perhaps 25% on auto imports to defend the US automaking sector, a symbol of American manufacturing. Trump already postponed the auto tariff decision – the threat of which has caused uncertainty in the European car industry, especially in Germany – for 180 days in May.

The industry sources AFP spoke to Tuesday also indicated the administration's desire for concessions as part of possible agreements – investments, in other words.

Outgoing European Commission President Jean-Claude Junker said in an interview with German press last week that he believed that the US would not impose new tariffs on European cars in the coming days.

"Markets in Asia have tumbled overnight, largely on the back of increasing unrest in Hong Kong, but also a little disappointed that we didn't hear anything new from the US president. This is set to translate into a lower open here in Europe this morning," said Michael Hewson at CMC Markets.

Pro-democracy protesters stepped up Wednesday a "blossom everywhere" campaign of road blocks and vandalism across Hong Kong that has crippled the international financial hub this week and ignited some of the worst violence in five months of unrest.

The new phase in the crisis, which has forced schools and shopping malls to close as well as the shutdown of large chunks of the vital train network, prompted police to warn on Tuesday the city was "on the brink of total collapse".

In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.9%. In China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong is 2.0% lower.

In early UK company news, Anglo-Dutch consumer goods giant Unilever said Marijn Dekkers has decided to step down as chair with immediate effect. He has been replaced by Non-Executive Director Nils Andersen.

"Marijn, who was appointed as chairman of Unilever in April 2016, has chosen to stand down as chairman so that he can focus on his growing responsibilities as founder and chairman of Novalis LifeSciences, the investment and advisory firm. He will continue to serve as a non-executive director of Unilever," the Marmite spread maker explained.

Andersen has served on the Unilever board since April 2015.

Energy provider SSE lifted its full-year earnings outlook amid a swing to half-year profit.

In September, the power utility had forecast full-year adjusted earnings per share around 80p to 85p. However, the structure of the proposed disposal of its gas production interests is expected to add around 3p to its previous forecast, bringing this to around 83p to 88p.

Turning to the results, revenue for the half-year to September 30 fell to GBP3.05 billion from GBP3.32 billion, though SSE swung to a profit before tax of GBP128.9 million from a loss of GBP284.6 million a year ago.

The swing to profit was largely because SSE saw an exceptional gain of GBP154.6 million in the period, versus a hit of GBP565.4 million a year ago. On an adjusted basis, pretax profit rose to GBP263.4 million from GBP229.4 million.

SSE declared an interim dividend of 24.0p, down 18% from 29.3p a year ago, reflecting the dividend policy outlined in May 2018.

Coca-Cola HBC said it delivered a solid third quarter despite poor weather knocking industry volumes.

Forex-neutral revenue grew 3.4%, or 2.3% excluding the soft-drink bottler's recent Bambi acquisition. Volumes were up 1.1% in the quarter, though down 0.1% excluding Bambi.

Coca-Cola HBC bought Serbian biscuits and snacks manufacturer Bambi at the beginning of 2019.

Volumes in established markets grew 1.2%, while developing markets saw a 4.0% decline. Emerging markets volumes increased 3.0%, or 0.8% when excluding Bambi.

For the full-year, Coca-Cola HBC expects to deliver forex-neutral revenue growth of 4.0% to 4.5%, including a 70 basis points contribution from Bambi. Currency movements in the quarter were better than expected, with the company now expecting a EUR15 million hit for the full-year, and improvement of EUR5 million compared to prior guidance.

"As we look to the full year, we are pleased to have seen an acceleration in Q4, giving us confidence that 2019 will be a year of solid top-line growth and good margin expansion," said Chief Executive Zoran Bogdanovic.

Technology firm Smiths Group said its annual expectations remain unchanged following its first quarter performance.

Revenue for the three months to October 31 was up 11% on an underlying basis, reflecting good growth in John Crane, a strong performance from Smiths Detection, organic growth in Flex-Tek, and an "expected performance" at Smiths Interconnect.

Pub operator JD Wetherspoon said like-for-like sales were up 5.3% in the 13 weeks to October 27, or its first quarter, with total sales up 5.6%.

The company has opened one pub since the start of the financial year, and closed four. It intends to open between 10 to 15 pubs in the current financial year.

Chair Tim Martin said Wetherspoon continues to anticipate trading in line with previous expectations for the financial year.

The economic events calendar on Wednesday has inflation readings from the UK and the US at 0930 GMT and 1330 GMT respectively.

FXStreet consensus forecasts UK consumer price inflation to ease to 1.6% in October from 1.7% the month before.

Sterling was quoted at USD1.2854 early Wednesday, firm versus USD1.2841 at the London equities close on Tuesday.

By Lucy Heming; lucyheming@alliancenews.com

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