LONDON MARKET PRE-OPEN: boohoo Raises Guidance After Record Trading

(Alliance News) - Stock prices in London are seen opening marginally higher on Tuesday following a higher close in the US on Monday, as investors look ahead to earnings from big US banks later in the day.

In early UK company news, housebuilder Taylor Wimpey said annual results are set to come in line with its own expectations. Warhammer maker Games Workshop enjoyed a strong first half. Online fashion retailer boohoo raised its profit guidance after a strong fourth-month sales period.

IG futures indicate the FTSE 100 index is to open 4.00 points higher at 7,621.90. The blue-chip index closed up 29.75 points, or 0.4%, at 7,617.60 Monday.

Taylor Wimpey said its 2019 results will be in line with its expectations. The housebuilder said despite ongoing economic and political uncertainty during the year in the UK, the housing market remained stable throughout 2019.

Taylor Wimpey said total home completions increased by 5% to 15,719 in 2019, including joint ventures, from 14,933 in 2018. It ended 2019 with a record total order book valued at GBP2.18 billion, up from GBP1.78 billion in 2018.

Taylor Wimpey added that it remains "very cash generative" and, as previously announced, intends to return GBP610 million to shareholders by way of total dividend in 2020.

"While 2020 will continue to be a year of change for the UK, we welcome the increased political stability following the general election. We start the year with a strong order book and continue to target a smoother profile of completions throughout the year but expect 2020 to continue to be second half weighted," Chief Executive Officer Pete Redfern said.

Games Workshop said it delivered record sales and profit levels in during the interim period.

For the half year ended December 1, revenue rose 19% to GBP148.4 million from GBP125.2 million the year before, and pretax profit increased 43% to GBP58.6 million from GBP40.8 million. Reported sales grew by 19% to GBP148.4 million for the period.

Games Workshop declared a 45 pence per share dividend for the period.

Irish builders merchant Grafton Group said trading in November and December was better than anticipated, despite end markets remaining subdued.

For the financial year which ends on February 27, the company expects adjusted operating profit of GBP202 million, or GBP190 million on a pre-IFRS 16 basis for its continuing operations.

Grafton said it expects 2019 revenue from continuing operations to be up 2.7% to GBP2.67 billion and like-for-like revenue up 1.9%.

In the UK, Grafton said, households continued to be very cautious about spending as uncertainty persisted during the fourth quarter. The weak markets of September and October continued into November and December but did not deteriorate further, Grafton noted.

Boohoo Group said it continued to see strong growth across all brands in all regions.

For the four months to December 31, revenue was up 44% to GBP473.7 million from GBP328.2 million last year.

The fast fashion retailer expects annual revenue growth of 40% to 42%, which is ahead of the 33% to 38% range previous guided. In addition, boohoo expects an annual adjusted Ebitda margin of 10.0% to 10.2%. This is ahead of previous guidance of 10%. All other guidance remains unchanged.

"I am delighted to report the group has enjoyed record trading in the last four months of 2019. All of our brands have performed exceptionally well and delivered strong market share gains. We have continued to see operating leverage in our more established brands, and will continue to invest into them and our newly-acquired brands. The newly-acquired brands, MissPap, Karen Millen and Coast, are showing great promise and open different target markets for the group, in line with our strategy to build our multi-brand platform," said CEO John Lyttle.

In the US earnings calendar on Tuesday, banks get fourth-quarter reporting underway with Citigroup, Wells Fargo and JPMorgan Chase & Co set to announce results before the market open in New York.

The US Treasury Department announced on Monday that it has dropped its designation of China as currency manipulator just days before the two countries are to sign an initial trade agreement.

The Trump administration roiled markets when it labelled China as a currency manipulator in August as Washington sought to pressure Beijing to meet US trade demands.

After nearly two years of tit-for-tat tariffs Washington and Beijing are set to sign a "phase one" trade deal on Wednesday.

The Japanese Nikkei 225 index closed up 0.7% on Tuesday. In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong is down 0.4%. Markets in Japan reopened after being closed for a holiday on Monday.

China's trade surplus with the US narrowed last year as the world's two biggest economies exchanged punitive tariffs in a bruising trade war, data showed.

China's total trade surplus with the US came in at around USD295.8 billion in 2019, down 8.5% from the previous year's record USD323.3 billion, according to customs data. In December, its surplus with the US was around USD23.2 billion, narrowed from USD24.6 billion the month before.

China's foreign trade volume fell slightly on-year in 2019, and its surplus with the world stood at USD421.5 billion.

The pound was quoted at USD1.2992 early Tuesday, flat from USD1.2989 late Monday.

In UK political news, Prime Minister Boris Johnson's Brexit deal has cleared its first major hurdle in the House of Lords.

Late Monday, peers backed, without a vote, the second reading of the EU (Withdrawal Agreement) Bill, enabling the UK to leave the EU on January 31. But the legislation is set to face stiffer scrutiny in its committee stage with peers likely to force votes on contentious issues at report next week.

The euro was quoted at USD1.1140 early Tuesday, flat from USD1.1144 late Monday. Against the yen, the dollar was trading at JPY110.08, up from JPY109.89 late Monday.

Oil was quoted at USD64.26 early Tuesday, flat from USD64.24 late Monday.

Gold was quoted at USD1,538.85 early Tuesday, down from USD1,551.79 late Monday.

The economic events calendar on Tuesday has US inflation readings at 1330 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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