LONDON MARKET PRE-OPEN: C&C buys NewRiver pubs; Cranswick revenue up

(Alliance News) - Stock prices in London are seen opening lower on Monday, amid a weak handover from Asia, where technology stocks slumped as Beijing ramps up regulatory measures in the sector.

IG futures indicate the FTSE 100 index is to open 40.3 points, or 0.6%, lower at 6,987.28. The blue-chip index closed up 0.9%, or 59.28 points, at 7,027.58 on Friday.

"The weekend was dominated by China's announcements of a crackdown on Tencent Music, and more importantly, its intention to all but end China's multi-billion-dollar student tuition industry as we know it. Although early Asian markets followed Wall Street higher, once Mainland exchanges opened and stocks there entered a free-fall, regional markets have mostly followed suit," OANDA analyst Jeffrey Halley commented.

In early UK corporate news in London, Ryanair posted an improved first quarter, and food producer Cranswick hailed a "positive start" to its financial year. NewRiver REIT unveiled plans to sell its entire community pub business to a unit of Irish cider maker C&C.

New York futures were lower on Monday, after a record close on Friday, ahead of week dominated by earnings from Wall Street's big tech sector and a US Federal Reserve meeting.

Avatrade analyst Naeem Aslam said: "Last week, we saw another record high on Wall Street, and most of the time, investors do adopt a cautious approach when stock indices begin to post record highs. However, the major reason for the stock futures to trade lower today is mainly that this week is immensely important for bulls and bears as we not only have some tech giants reporting their earnings, but we also have some key important events as well."

The Federal Open Market Committee kicks off its two-day meeting on Tuesday, before the latest interest rate decision is announced on Wednesday. The central bank meeting is this week's "main event", analysts at Danske Bank commented.

"We do not expect the Fed to make significant changes, as the Fed still thinks that high inflation is transitory and the labour market has still not fully recovered. Also, it is one of the interim meetings without updated projections," analysts at Danske Bank said.

Sterling was trading at USD1.3744 early Monday in London, down from USD1.3754 late Friday. The euro fetched USD1.1780, up from USD1.1763. Against the yen, the dollar slipped to JPY110.31, from JPY110.53.

Ryanair posted a sharp revenue hike in its first quarter, as the budget airline carried 7.6 million more passengers than a year before.

In the three months ended June 30, revenue jumped to EUR371 million from EUR125 million a year before, but its pretax loss stretched to EUR324.5 million from EUR210.0 million.

Ryanair's customer numbers totalled 8.1 million, a sharp hike from 500,000 in the Covid-hit first quarter of financial 2021.

It sees full-year traffic between 90 million and 100 million, shifted from its previous forecast, which was at the lower end of an 80 million to 120 million range. It tips an annual result "somewhere between" a small loss and breakeven.

"We are seeing a strong rebound of pent-up travel demand into August and September, and we expect this to continue into the second half of FY22, with pre-Covid-19 growth planned to resume strongly in summer 2022," Ryanair said.

Cranswick said revenue in the 13 weeks to June 26 climbed 9.6%, as the Yorkshire-based meat producer has seen a "gradual but sustained recovery" in the food-to-go market.

The company added: "Far East export sales were well ahead of the same quarter last year, reflecting strong market prices. The UK pig price increased by 12% during the period; the average price across the quarter to June 2021 was 9% below that in the equivalent period a year earlier.

"The outlook for the current financial year remains in line with the board's expectations."

Cranswick said its investment programme also progressed, with a GBP20 million cooked bacon facility in Hull beginning commercial output during the quarter. It earmarked plans to spend a further GBP5 million "over the coming months" at the food plant.

"Work on the new premium breaded poultry facility in Hull is progressing well, with incremental investment of GBP5 million, which includes a third production line, added to what is now an overall GBP30 million build plan," Cranswick said.

NewRiver REIT on Monday said it plans to sell its Hawthorn Leisure REIT asset for GBP222.3 million. Hawthorn, either directly or indirectly, holds all of NewRiver's community pub business.

The unit will be sold to C&C Group unit Admiral Taverns.

Back in April, the retail and leisure property investor unveiled plans for a possible spin-off and listing of community pub chain Hawthorn. After a review, NewRiver said it decided to divest the community pub business in order to reset its loan-to-value ratio and provide "firepower" to reshape its portfolio.

Chief Executive Allan Lockhart said on Monday: "Over recent years, we have grown Hawthorn to become the UK's leading community and wet-led pub business. As a consequence of this, we received significant interest from a range of potential buyers for Hawthorn, following the divestment plan we announced in April 2021.

"Alongside the new dividend policy which we announced recently in our full year results, and increased transactional evidence in the parts of the retail investment market that we are focused on, we look forward with genuine confidence."

Admiral Taverns operates roughly 1,000 pubs across England, Wales and Scotland. They are largely "wet-led" pubs, meaning they focus on drinks sales rather than serving food.

In China, the Shanghai Composite was down 2.8% in late trade, while the Hang Seng index in Hong Kong was 3.6% lower. The Nikkei 225 closed up 1.0%, the index playing catch up after markets in Tokyo were closed on Thursday and Friday last week. The S&P/ASX 200 in Sydney ended largely flat.

In Hong Kong, Tencent shares were 7.3% lower. It must relinquish its exclusive music label rights, China's market regulator said Saturday, after finding that the firm had violated antitrust laws.

The ruling is the latest in a crackdown on China's tech sector after years of runaway growth, as Beijing frets over the companies' growing influence as well as the security of troves of sensitive consumer data.

Tencent acquired a majority stake in rival China Music Group in 2016, effectively controlling more than 80% of exclusively held music streaming rights in the domestic market, the State Administration for Market Regulation said in a statement.

The biggest players in China's tech sector – after years of growth thanks to lax regulation – are now facing increased scrutiny.

Also in Hong Kong, Baidu dropped 6.0% and Alibaba shed 5.6%.

Brent oil was trading at USD73.24 a barrel early Monday, down from USD73.64 at the London equity market close on Friday. Gold was trading at USD1,805.41 an ounce, up from USD1,800.34.

By Eric Cunha; ericcunha@alliancenews.com

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